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Project Number: 37192-043 Loan Number: 2846 September 2015

MFF 0007-PAK: Power Transmission Enhancement Investment Program—Proposed Tranche 3

Project Administration Manual

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CONTENTS

I. PROJECT DESCRIPTION 5 II. IMPLEMENTATION PLANS 6

A. Project Readiness Activities 6 B. Overall Project Implementation Plan 7

III. PROJECT MANAGEMENT ARRANGEMENTS 9

A. Project Stakeholders – Roles and Responsibilities 9 B. Key Persons Involved in Implementation 9 C. Project Organization Structure 9

IV. COSTS AND FINANCING 10

A. Detailed Cost Estimates by Expenditure Category 11 B. Allocation and Withdrawal of Loan Proceeds 11 C. Contract and Disbursement S-curve 12 D. Fund Flow Diagram 13

V. FINANCIAL MANAGEMENT 14

A. Financial Management Assessment 14 B. Disbursement 14 C. Accounting 14 D. Auditing 15

VI. PROCUREMENT AND CONSULTING SERVICES 15

A. Advanced Contracting and Retroactive Financing 15 B. Procurement of Goods, Works and Consulting Services 16 C. Procurement Plan 16

VII. SAFEGUARDS 18 VIII. GENDER AND SOCIAL DIMENSIONS 19 IX. PERFORMANCE MONITORING, EVALUATION, REPORTING AND

COMMUNICATION 19 A. Project Design and Monitoring Framework 19 B. Monitoring 20 C. Evaluation 21 D. Reporting 21 E. Stakeholder Communication Strategy 22

X. ANTICORRUPTION POLICY 22 XI. ACCOUNTABILITY MECHANISM 22 XII. RECORD OF PAM CHANGES 22

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Project Administration Manual Purpose and Process

1. The project administration manual (PAM) describes the essential administrative and management requirements to implement the project on time, within budget, and in accordance with Government and Asian Development Bank (ADB) policies and procedures. The PAM should include references to all available templates and instructions either through linkages to relevant URLs or directly incorporated in the PAM.

2. The National Transmission and Despatch Company (Pvt.) Limited (NTDC) is wholly responsible for the implementation of ADB financed projects, as agreed jointly between the borrower and ADB, and in accordance with Government and ADB’s policies and procedures. ADB staff is responsible to support implementation including compliance by NTDC of their obligations and responsibilities for project implementation in accordance with ADB’s policies and procedures.

3. At Loan Negotiations the borrower and ADB shall agree to the PAM and ensure consistency with the Loan agreement. Such agreement shall be reflected in the minutes of the Loan Negotiations. In the event of any discrepancy or contradiction between the PAM and the Loan Agreement, the provisions of the Loan Agreement shall prevail.

4. After ADB Board approval of the project's report and recommendations of the President (RRP) changes

in implementation arrangements are subject to agreement and approval pursuant to relevant Government and ADB administrative procedures (including the Project Administration Instructions) and upon such approval they will be subsequently incorporated in the PAM.

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Abbreviations

ADB = Asian Development Bank ADF = Asian Development Fund AFS = audited financial statements CQS = consultant qualification selection DMF = design and monitoring framework EARF = environmental assessment and review framework EIA = environmental impact assessment EMP = environmental management plan ESMS = environmental and social management system GACAP = governance and anticorruption action plan GDP = gross domestic product ICB = international competitive bidding IEE = initial environmental examination IPP = indigenous people plan IPPF = indigenous people planning framework LAR = land acquisition and resettlement LIBOR = London interbank offered rate NCB = national competitive bidding NGOs = nongovernment organizations PAI = project administration instructions PAM = project administration manual PIU = project implementation unit QBS = quality based selection QCBS = quality- and cost based selection RRP = report and recommendation of the President to the Board SBD = standard bidding documents SGIA = second generation imprest accounts SOE = statement of expenditure SPS = Safeguard Policy Statement SPRSS = summary poverty reduction and social strategy TOR = terms of reference

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I. PROJECT DESCRIPTION

1. The Power Transmission Enhancement Investment Program Tranche 3 comprises of a total four subprojects: (i) the construction of a new 500 kilovolt (kV) transmission line circuit of about 600 kilometers (km), a new 500 kV grid station at Moro, and extension works at existing stations at Jamshoro, Dadu and Rahim Yar Khan, (ii) the construction of a new 220 kV double-circuit transmission line of about 125 km for interconnection of the existing Uch-I and the new Uch-II power plants and integration into the national grid system at the existing 220 kV Sibbi grid station, (iii) a new 220 kV grid station at Manshera, and (iv) procurement of transformers and associated equipment for replacement of outdated NTDC system 2. The existing 500 kV system of NTDC, links the country from south to north. The link makes possible the transmission of power from the major generating facilities to the load centers in the middle of the country. This subproject is located in Sindh and Punjab Provinces, and include various sections and involve the (i) construction of 600 km single circuit 500 kV transmission line from Jamshoro to Moro, Moro to Dadu, Moro to Rahim Yar Khan; and (ii) construction of a new 500 kV grid station at Moro and expansion/augmentation of existing grid stations at Jamshoro, Dadu, and Rehim Yar Khan. 3. The transmission line are divided into two sections: (i) Jamshoro to Moro, and Moro to Dadu (including a new 500 kV substation at Moro); and (ii) Moro to Qazi Mahar-Rahim Yar. Khan. The detailed components are given below:

(i) Jamshoro-Moro-Dadu 255 kms, single circuit, 500 kV transmission line; (ii) Line bay and line reactor at existing 500 kV Jamshoro Grid Station; (iii) Line bay and reactor at under construction R. Y. Khan 500 kV Grid Station; (iv) Line bay at existing 500 kV Dadu Grid Station; (v) New Grid Station at Moro, inclusive of line bays, 2 nos. line reactors, 1 no. bus

reactor, at proposed 500 kV grid station; (vi) Moro Qazi Mahar section, 172 kms, 500 kV single circuit transmission line; (vii) Line bay extensions at proposed Matiari 500 kV substation; and (viii) Qazi Mahar to Rahim Yar Khan section, 163 km single circuit transmission line.

4. The second subproject comprises of construction of (i) a total 125 km, double-circuit, 220 kV transmission line from the new Uch-II power plant to the existing Sibbi grid station, and (ii) In/Out arrangement between the existing Uch-I power plant and the new Uch-II power plant. 5. The third subproject comprises of construction of a new 220 KV grid station at Manshera, and installation of 2x250 MVA, 220/132 kV transformers. The new Manshera station will be connected to the existing 220 kV transmission line.

6. The fourth subproject is for procurement of grid station material for replacement of the existing transmission system. The equipment to be procured include transformers (220/132 kV), circuit breakers (500,220, and 132 kV), isolators, etc. NTDC will install the procured equipment for replacement and upgrading the 24 existing 220 kV and 500 kV grid stations. A. Impact and Outcome 7. Tranche 3 subprojects will contribute to enhancing power transmission operations and system management. The investments will improve transmission system efficiency and develop

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additional transmission capacity to evacuate power supply in north and west, and from south to northern load centers. B. Outputs 5. The outputs of the Tranche 3 subprojects include (i) new 600 km 500 kV transmission lines from Jamshoro to Moro, Dadu and Rahim Yar Khan, a new 500 kV grid station at Moro and expansion/augmentation of three existing 500 kV grid stations at Jamshoro, Dadu and Rahim Yar Khan, (ii) new 125 km 200 kV transmission lines from Uch-I and Uch-II power plants to the existing 220 kV Sibbi grid station, (iii) a new 220 kV grid station at Manshera, and (iv) procurement of transmission system equipment for replacement.

II. IMPLEMENTATION PLANS

A. Project Readiness Activities

2009 2010 2011 2012

Indicative Activities 10 11 03 04 11 12 01 02 Responsible

Advance contracting actions

Management consultant recruitment X

NTDC

Turnkey contracts1 X NTDC

Loan Negotiations X

ADB approval X ADB

Approval of revised project implementation arrangements X

NTDC

Loan signing X ADB

Establishment of revised PMU X NTDC

Government legal opinion provided

X NTDC

Government budget inclusion X

NTDC, EAD

Loan effectiveness X

NTDC, ADB

____________________________________________________________________________ ADB = Asian Development Bank, EAD = Economic Affairs Division, NTDC = National Transmission and Despatch Company.

1 Advanced contracting is ongoing for procurement of turnkey contracts for (i) new 600 km 500 kV transmission line

and (ii) the new 220 kV grid station at Moro, and expansion/augmentation of existing grid stations at Jamshoro, Dadu, and RY Khan.

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B. Overall Project Implementation Plan

Indicative Activities 2009 2010 2011 2012 2013 2014 2015 A. DMF Q

1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

1. Consulting Services for Project Supervision financed by NTDC

1.1 RFP issuance by NTDC

1.2 Contract award by NTDC - Q4 2009

1.3 Consulting team mobilization - Q1 2010

2. Construction of 600 km Single Circuit 500 kV Transmission Line from Jamshoro-Moro, Dadu-Moro-Qazi Mahar, and Qazi Mahar to Rahim Yar Khan

2.1 Field surveys and bidding documents completed - Q4 2010

2.2 Bidding for turnkey contract packages completed - Q2 2011

2.3 Contract award – Q4 2011

2.4 Design, procurement, construction, and erection completed - Q4 2014

2.5 Issuance of performance certificate - Q4 2015

3. Construction of a new 220 kV double circuit transmission line for interconnection of the existing Uch-I and the new Uch-II power plants

3.1 Field surveys and bidding documents completed – Q1 2012

3.2 Bidding for turnkey contract packages completed – Q2 2012

3.3 Contract award – Q2 2012

3.4 Design, procurement, construction, and erection completed – Q4 2013

3.5 Issuance of performance Certificate – Q4 2013

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Indicative Activities 2009 2010 2011 2012 2013 2014 2015

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

4. Construction of a new 500 kV grid station at Moro and extension works at Jamshoro, Dadu and Rahim Yar Khan

4.1 Field surveys and bidding documents completed - Q4 2010

4.2 Bidding for turnkey contract packages completed - Q2 2011

4.3 Contract award – Q4 2011

4.4 Design, procurement, construction, and equipment Installation completed - Q4 2014

4.5 Issuance of performance certificate – Q4 2015

5. Construction of a new grid station at Manshera

5.1 Field surveys and bidding documents completed – Q2 2012

5.2 Bidding for turnkey contract packages completed – Q3 2012

5.3 Contract award – Q4 2012

5.4 Design, procurement, construction, and equipment installation completed – Q2 2014

5.5 Issuance of performance Certificate – Q2 2014

6. Procurement of Transmission System Equipment

6.1 Bid preparation – Q1 2012

6.2 Bidding – Q3 2012

6.3 Installation by NTDC – Q4 2012

Procurement plan key activities to procure contract packages

Consultant selection procedures

Environment management plan key activities and update

Annual/Midterm Review

Project Completion Report

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III. PROJECT MANAGEMENT ARRANGEMENTS

A. Project Stakeholders – Roles and Responsibilities

Project Stakeholders Management Roles and Responsibilities

Executing Agency and Implementing Agency

National Transmission & Despatch Company (Pvt.) Ltd.

Implementation of the investment program and its individual projects as per the Project Agreements.

ADB Main project financier.

B. Key Persons Involved in Implementation

Executing Agency National Transmission and Despatch Company

Officer's Name Mr. Rasul Khan Mahsud Position Chief Executive Officer Telephone (92-42) 920 2053 Email address ceo@ntdc.com.pk

Office Address #419 WAPDA House, Lahore Email address pmu@ntdc.com.pk

ADB

Energy Division, Central and West Asia Department

Staff Name Rune Stroem Position Director Telephone No. (63-2) 632 5645 Email address rstroem@adb.org

Mission Leader Staff Name F. Cleo Kawawaki Position Principal Energy Specialist Telephone No. (63-2) 632 5950 Email address fkawawaki@adb.org

C. Project Organization Structure

6. NTDC has well-established planning, services, and implementation departments that will all be involved in the implementation of the subprojects. A Project Management Unit (PMU), headed by General Manager (Projects) has been established, including an environmental and social cell. The PMU is staffed with very limited resources and relies on different units of NTDC for compliance of actions and implementation. The coordination amongst the units involved has been very difficult and major implementation delays were observed during the implementation of Tranche 1 and Tranche 2 of the Facility. The limited PMU resources have not been effective to the extent required. Based on the past experience with the first two tranches, the PMU will be required to be strengthened with more staff and responsibilities to fast track implementation, especially for Tranche 3 and 4 where the implementation period would be short and delays not affordable. It is expected that a strengthened PMU, in accordance with the draft organogram below, will be in place before the implementation of Tranche 3 starts. NTDC design department

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prepared/approved detailed construction and installation layout and drawings for each subproject, adhering to relevant international practices and standards.

IV. COSTS AND FINANCING

7. The total cost of Tranche-3 is $287.7 million equivalent, inclusive of taxes, duties, and interest and other charges on the loan during construction. Table 1 shows the indicative financing plan.

Table 1: Financing Plan – Tranche 3 (in $ Millions)

Total Percent

Asian Development Bank (OCR) Government/NTDC

243.5 44.2

85 15

TOTAL 287.7 100 NTDC=National Transmission and Dispatch Company, OCR=Ordinary Capital Resources. Source: Asian Development Bank estimate.

8. ADB will use its ordinary capital resources (OCR) to finance the subprojects for a maximum amount of $243.5 million to the Borrower, the Government. All of the provisions of the ordinary operations loan regulations applicable to a London interbank offered rate

(LIBOR)– based loan2 will apply to this loan. The repayment period is 20 years, including a

grace period of 3 years, an interest rate will be determined in accordance with ADB’s LIBOR-based lending facility, a commitment charge of 0.15%, and a front-end fee of 1.0% and such other terms set forth in the Loan and Project Agreements. The foreign exchange risk will be borne by the Borrower.

2 ADB. 2001. Ordinary Operations Loan Regulations Applicable to LIBOR-Based Loans Made from ADB’s Ordinary

Capital Resources. Manila.

GM (Donor Funded Projects)

Manager Finance

Dy. Manager

Manager Coordination & Planning

Dy. Manager

Chief Eng. South

Project Dir

& Related Staff

Chief Eng. North

Project Dir

& Related Staff

Env & Social Cell

Procurement Manager

Dy. Manager

Attachment 2

Proposed Structure for Project Management Office at NTDC

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A. Detailed Cost Estimates by Expenditure Category

Turnkey contracts for TL 150 144 96.00% 6 4.00%

Turnkey contracts for grid station 50 45 90.00% 5 10.00%

Equipment Procurement 20 20 100.00% 0 0.00%

Environment Mitigation and Resettlement Compensation7 0 0.00% 7 100.00%

Consultants 5.5 0 0.00% 5.5 100.00%

PMU Support, results monitoring and financial reporting 7.7 0 0.00% 7.7 100.00%

Duties and Taxes 13 0 0.00% 13 100.00%

Subtotal (A) 253.2 209 82.54% 44.2 21.56%

29 29 100.00% 0 0.00%

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C. Financing Charges During

Implementation

Total Project Cost (A+B+C) 287.7 243.5 84.64% 44.2 15.36%

A. Investment Costs a

B. Contingencies

5.5

Financiers

Items

Amount

($ million) ADB (OCR) Govt/NTDC

5.5 100.00% 0 0.00%

a

In mid 2011 prices. ADB = Asian Development Bank, NTDC = National Transmission and Dispatch Company, Pakistan, OCR = ordinary capital resources. Source: Asian Development Bank estimate.

B. Allocation and Withdrawal of Loan Proceeds

ALLOCATION AND WITHDRAWAL OF LOAN PROCEEDS (MFF-Power Transmission Enhancement Investment Program – Tranche 3)

CATEGORY ADB FINANCING

Number Item

Total Amount Allocated for ADB Finance

($ million)

Percentage and Basis for Withdrawal from the

Loan Account

1 Turnkey for Transmission Line

144.0 96%

2 Turnkey for grid station 50.0 90%

3 Equipment 20.0 100%

4 Unallocated 29.0 100%

5 Interest during Construction

5.5 100%

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C. Contract and Disbursement S-curve

0

20

40

60

80

100

120

140

160

180

0

20

40

60

80

100

120

140

160

180

2011 (Jul-Dec)

2012 (Jan-Jun)

2012 (Jul-Dec)

2013 (Jan-Jun)

2013 (Jul-Dec)

2014 (Jan-Jun)

2014 (Jul-Dec)

2015 (Jan-Jun)

2015 (Jul-Dec)

Se

mi-

An

nu

al

Co

ntr

ac

t A

wa

rds

($

millio

n)

Cu

mu

lati

ve

Dis

bu

rse

me

nt ($

millio

n)

Semi-Annual Contract Awards

Disbursement S-Curve

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D. Fund Flow Diagram

Source: Asian Development Bank

ADB ADB

ADB

Con

tra

ct

Invoic

e

MOF

ADB

Onlending Agreement

Financing Agreement (Loan)

Suppliers of Goods

Direct Payment Procedure and/or Commitment Procedure

a

GOP

ADB

Withdrawal application

Withdrawal application

a For commitment procedure, ADB loan proceeds go directly from ADB to a nominated bank of the supplier on a

reimbursement basis.

Con

tra

ct

Invoic

e

Turnkey Contractors

NTDC

Project Execution/Implementation Agency

Project Agreement

ADB = Asian Development Bank; GOP = Government of Pakistan; NTDC = National Transmission and Despatch Company

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V. FINANCIAL MANAGEMENT

A. Financial Management Assessment

9. Financial management assessment has been carried out to evaluate NTDC’s ability to fulfill ADB’s fiduciary requirements. NTDC is implementing recommended measures to improve budgeting, accounting, internal controls, funds transfer, audit, and legislative compliance to ensure that NTDC’s funds are efficiently and effectively utilized. 10. The financial management risk is considered acceptable. NTDC’s accounting system is being computerized. The head office has been computerized and this will be extended to the branches in due course. At the current level of tariff, NTDC is able to service and contribute the counterpart funds for Tranche 3. B. Disbursement

13. The Loan proceeds will be disbursed in accordance with ADB’s Loan Disbursement Handbook (2007, as amended from time to time),3 and detailed arrangements agreed upon between the Government and ADB. 14. Pursuant to ADB's Safeguard Policy Statement (2009) (SPS),4 ADB funds may not be applied to the activities described on the ADB Prohibited Investment Activities List set forth at Appendix 5 of the SPS. All financial institutions will ensure that their investments are in compliance with applicable national laws and regulations and will apply the prohibited investment activities list (Appendix 5) to subprojects financed by ADB.

15. The project will use direct payment procedure and/or commitment procedure. 16. Before the submission of the first withdrawal application, the Government of Pakistan should submit to ADB sufficient evidence of the authority of the person(s) who will sign the withdrawal applications on behalf of the borrower, together with the authenticated specimen signatures of each authorized person. The minimum value per withdrawal application is US$100,000, unless otherwise approved by ADB. The Government of Pakistan is to consolidate claims to meet this limit for reimbursement claims. Withdrawal applications and supporting documents will demonstrate, among other things that the goods, and/or services were produced in or from ADB members, and are eligible for ADB financing.

17. For NTDC, for each invoice from the contractor, NTDC is required to prepare one withdrawal application for each account. The amounts to be charged to each account should follow the percentages indicated in the tables attached to Schedules 3A and 3B of the Loan and Project Agreements.

C. Accounting

18. NTDC will maintain separate project accounts and records by funding source for all expenditures incurred on the Project. Project accounts will follow international accounting principles and practices or those prescribed by the Government's accounting laws and regulations.

3 Available at: http://www.adb.org/Documents/Handbooks/Loan_Disbursement/loan-disbursement-final.pdf

4 Available at: http://www.adb.org/Documents/Policies/Safeguards/Safeguard-Policy-Statement-June2009.pdf

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D. Auditing

19. NTDC will cause the detailed consolidated project accounts to be audited in accordance with International Standards on Auditing and/or in accordance with the Government's audit regulations by an auditor acceptable to ADB. The audited accounts will be submitted in the English language to ADB within 6 months of the end of the fiscal year by the executing agency. The annual audit report will include a separate audit opinion on the use of the imprest accounts, SGIA, and the SOE procedures, as applicable. The Government and NTDC have been made aware of ADB’s policy on delayed submission, and the requirements for satisfactory and acceptable quality of the audited accounts. ADB reserves the right to verify the project's financial accounts to confirm that the share of ADB’s financing is used in accordance with ADB’s policies and procedures. For revenue generating projects only, ADB requires audited financial statements (AFS) for each executing and/or implementation agency associated with the project.

VI. PROCUREMENT AND CONSULTING SERVICES

20. Procurement of two turnkey contracts is being implemented in accordance with ADB’s Procurement Guidelines (2010, as amended from time to time). International competitive bidding will be used for the turnkey contracts being funded under Tranche 3. For international competitive bidding procurement mode, single stage, one envelope bidding procedure shall be used with prior review by ADB. The procurement plan and contract packages for the subprojects under Tranche 3 have been discussed with NTDC. 21. Consulting services will be required for (i) initial route survey, (ii) bidding documents preparation and bid evaluation; (iii) construction supervision and contract management. To expedite the Project implementation, NTDC has recruited a project supervision consultant entirely from their own resources, and engaged the consultants in accordance with its procedures acceptable to ADB. NTDC confirmed that the consulting service contract was awarded on October 2009. During the first phase, the consultant is assisting NTDC in (i) initial route survey and (ii) bidding documents preparation, bid evaluation and contract award. Once the project is approved, the consultant will assist NTDC in (i) construction supervision and contract management and (ii) monitoring implementation of safeguard policies. A. Advanced Contracting and Retroactive Financing

22. All advance contracting and retroactive financing will be undertaken in conformity with ADB’s Procurement Guidelines (2010, as amended from time to time) (ADB’s Procurement Guidelines). 5 The issuance of invitations to bid under advance contracting and retroactive financing will be subject to ADB approval. The borrower and NTDC have been advised that approval of advance contracting and retroactive financing does not commit ADB to finance the Project. 23. Advanced Contracting. ADB approved advanced contracting for procurement of two turnkey contracts: (i) construction of new 600 km, 550 kV transmission line and (ii) construction of a new 500 kV grid station at Moro, and expansion/segmentation of three existing grid stations at Jamshoro, Dadu, and Rahim Yar Khan. 24. Retroactive Financing. NTDC has requested retroactive financing for expenditures incurred under advanced contracting during the 12-month period immediately prior to the

5 Available at: http://www.adb.org/Documents/Guidelines/Procurement/Guidelines-Procurement.pdf

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signing of the loan agreement and do not exceed an amount equivalent to 20% of the loan amount. Such financing will be subject to compliance with involuntary resettlement requirements stated in subproject resettlement plan.

B. Procurement of Goods, Works and Consulting Services

25. All procurement of turnkey contracts will be undertaken in accordance with ADB’s Procurement Guidelines. 26. International competitive bidding procedures will be used for turnkey (works) contracts estimated to cost above $1 million. C. Procurement Plan

Basic Data Project Name: Power Transmission Enhancement Investment Program, Tranche 3 Country: Islamic Republic of Pakistan Executing Agency: National Transmission and

Despatch Company (NTDC) Loan Amount: [$243.5.0 million] Loan (Grant) Number: TBD Date of First Procurement Plan: [December 2011] Date of this Procurement Plan: [3 June 2009]

1. Process Thresholds, Review and 18-Month Procurement Plan

a. Project Procurement Thresholds

27. Except as the Asian Development Bank (ADB) may otherwise agree, the following process thresholds shall apply to procurement of goods and works.

Procurement of Goods and Works

Method Threshold

International Competitive Bidding (ICB) for Works Above $1,000,000

b. ADB Prior or Post Review

28. Except as ADB may otherwise agree, the following prior or post review requirements apply to the various procurement and consultant recruitment methods used for the project.

Procurement Method Prior or Post Comments

Procurement of Goods and Works

ICB Works Prior

c. Goods and Works Contracts Estimated to Cost More Than $1 Million

29. The following table lists goods and works contracts for which procurement activity is either ongoing or expected to commence within the next 18 months.

General Description Contract

Value Procurement

Method Prequalification of Bidders (y/n)

Advertisement Date

(quarter/year)

Comments

Procurement of Plant – Design, Supply, Installation, Testing and Commissioning of 500 kV Transmission Line 3

rd Circuit:

Lot 1: Jamshoro-Moro,

$120 m ICB No 1st Quarter 2011

Single-stage, One-envelope

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General Description Contract

Value Procurement

Method Prequalification of Bidders (y/n)

Advertisement Date

(quarter/year)

Comments

Lot 2: Dadu-Moro-Qazi Mahar, Lot 3: Qazi Mahar-Rahim Yar Khan

Procurement of Plant – Design, Supply, Installation, Testing and Commissioning of 500 kV Substation at Moro and Extension Works at Jamshoro, Dadu and Rahim Yar Khan

$35m ICB No 1st Quarter 2011

Single-stage, One-envelope

Procurement of Plant – Design, Supply, Installation, Testing and Commissioning of 220 kV Substation at Mansehra

$15m ICB No 1st Quarter 2012

Single-stage, One-envelope

Procurement of Plant – Design, Supply, Installation, Testing and Commissioning of 220 kV Transmission Line from the new Uch-II power plant to the existing Sibbi grid station

$30m ICB No 1st Quarter 2012

Single-stage, One-envelope

Procurement of Goods – transmission equipment

$20m ICB No 1st Quarter 2012

Single-stage, One-envelope

ICB = international competitive bidding

2. Indicative List of Packages Required Under the Project

30. The following table provides an indicative list of all procurement over the life of the project. Contracts financed by the Borrower and others should also be indicated, with an appropriate notation in the comments section.

General Description

Estimated Value

(cumulative)

Estimated Number of Contracts

Procurement Method

Domestic Preference Applicable Comments

Procurement of Plant – Design, Supply, Installation, Testing and Commissioning of 500 kV Transmission Line 3

rd Circuit:

Lot 1: Jamshoro-Moro, Lot 2: Dadu-Moro-Qazi Mahar, Lot 3: Qazi Mahar-Rahim Yar Khan

$120.0 million

Up to three ICB Yes Turnkey contract (Single

Stage-One Envelope)

Procurement of Plant – Design, Supply, Installation, Testing and Commissioning of 500 kV Substation at Moro and Extension Works at Jamshoro, Dadu and Rahim Yar Khan

$35.0 million One ICB Yes Turnkey contract (Single

Stage-One Envelope)

Procurement of Plant – Design, Supply, Installation, Testing and Commissioning of 220 kV Substation at Mansehra

$15m One ICB Yes Turnkey contract (Single

Stage-One Envelope)

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General Description

Estimated Value

(cumulative)

Estimated Number of Contracts

Procurement Method

Domestic Preference Applicable Comments

Procurement of Plant – Design, Supply, Installation, Testing and Commissioning of 220 kV Transmission Line from the new Uch-II power plant to the existing Sibbi grid station

$30m One ICB Yes Turnkey contract (Single

Stage-One Envelope)

Procurement of Goods – transmission equipment

$20m Up to Three ICB Yes Procurement of Goods (Single

Stage-One Envelope)

Project supervision consultants $5.5 million One QCBS No Entirely financed by

NTDC

3. Review of Contract Modifications

31. ADB will review contract modifications in accordance with the procedures set forth in the loan agreement between the Borrower and ADB.

VII. SAFEGUARDS

32. Land Acquisition and Resettlement. Tranche 3 subprojects will involve the construction of transmission lines and two grid stations. The processing of land acquisition and income rehabilitation tasks for Tranche 3 has been and will be based on the requirements of the ADB’s Safeguard Policy Statement (SPS 2009) and the same stipulations set in the LARF prepared for the Program. The Tranche 3 subprojects will not require permanent land acquisitions as the land for the proposed new substations is already the property of NTDC. There will be damages to crops and other assets lying in the Right of Way of the transmission line, the access points and tower pads which have been quantified. 33. The identification and layout of the site and a technical drawing showing line profile with complete tower spotting have been made for carrying out the resettlement field surveys. The original design of the proposed transmission line was prepared in mid-1990s, following which the construction of tower foundations was begun in 1996. But then the work was discontinued mid-way in 1997, reportedly because of non-availability of funds. Considering the subproject abandoned, the local people started constructing residential and commercial structures on their lands, right in the 50 meter wide Right-of-Way of the line route. To avoid the potential social impact, NTDC has conducted a resurvey of the identified sections (6% of the total length) with existing structures and realign the route to avoid those structures. Accordingly, the LARP was updated. The LARP will be finalized by contract package based on the approved construction schedule and submitted to ADB for review. On approval of the LARPs, each sectional LARP will be implemented prior to giving notice to proceed to the contractor to commence construction activities and relevant internal monitoring reports submitted by the supervision consultant. Clearance of the sectional LARPs monitoring reports by ADB is a prerequisite for commencing civil works activities. All LARPs will be summarized and disclosed to the affected people in the relevant project implementation units (PIUS) at Multan and Hyderabad) and district libraries. PMU will submit quarterly internal monitoring reports and is responsible for compliance with the LARF, LARPs and loan agreement.

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34. Environment: In order to ensure compliance with SPS 2009, the EA will ensure implementation of the following requirements and procedures under the overall guidance of the EARF. The PMU will be responsible for: i) Completing Rapid Environmental Assessment (REA) Checklists (attached as Annex -) and

classifying subprojects; ii) Based on the completed REA checklist and as per ADB SPS 2009, and national

environmental rules and regulations, preparing EIA/IEEs and EMPs; iii) Submitting the checklists and IEE reports to ADB as part of the approval of subproject; iv) Ensuring that the EMPs are included in tender documents; v) Ensuring that all regulatory clearances are obtained before starting civil works for the

subproject; vi) Ensuring that the contractor prepares and implements Site Specific EMPs; vii) Ensuring that environment related documents are disclosed in the relevant PIUs and on

project website; viii) In case of unpredicted environmental impacts occurring during project implementation,

preparing and implementing a Corrective Action Plan (CAP). 35. Indigenous Peoples Issues. No subproject under Tranche 3 will affect people classifiable as Indigenous Peoples (IP) as defined by ADB’s SPS.

VIII. GENDER AND SOCIAL DIMENSIONS

36. Gender. The project is gender neutral, and monitoring is not required. In general, the investment will address gender equality at an institutional level at NTDC. The EA will ensure that the national anti-sexual harassment law at the workplace is appropriately implemented that women benefit from new employment opportunities and that women are included in training and career development. Currently NTDC has 2.1% of female employees with 0.5% in higher level positions. 37. Social Dimensions. The Project does not entail impacts on affordability, employment, HIV/AIDS, etc. However, the turnkey contractor’s contract will explicitly state equal opportunities for all social groups, equal pay for equal work regardless of gender, and prohibition of child labor.

IX. PERFORMANCE MONITORING, EVALUATION, REPORTING AND COMMUNICATION

A. Project Design and Monitoring Framework

Design Summary

Performance Targets/Indicators

Data Sources/Reporting

Mechanisms

Assumptions and Risks

Impact Enhanced power transmission operations and management

Full compliance with grid code and transmission license by 2012 (baseline: noncompliant in 2005) 10,500 GWh of additional power

NEPRA Grid Compliance Report NTDC’s Annual Report

Assumptions Macroeconomic growth remains stable Federal and provincial governments remain committed to power sector reforms

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Design Summary

Performance Targets/Indicators

Data Sources/Reporting

Mechanisms

Assumptions and Risks

annually supplied through the grid by 2016 (baseline: 84,375 GWh in 2010)

Planned generation projects commissioned Power demand continues to grow by 8% annually Risks Highly politicized power wheeling charge setting

Outcome Expanded and reliable transmission system

Transmission losses reduced from 3.50% in 2010 to 3.2% in 2016 Transmission capacity to evacuate 1200MW additional power from south to load centers in the north by 2016 from base line capacity of 2200 MW

NTDC’s Annual Report NTDC’s Annual Report

Assumptions Continued progress on policy, regulatory and institutional reforms in the power sector Operations of distribution companies are strengthened Risk Lack of capabilities in NTDC to operate and maintain the systems

Outputs Transmission lines and substations commissioned

600 km addition of 500 kV transmission line by 2016 125 km addition of 220 kV transmission line by 2015 Establishment of a new 500 kV grid station at Moro, a new 220 kV grid station at Manshera, expansion of 1 substation at Jamshoro, and augmentation of 2 substations at Dadu and RY Khan

Implementation progress reports and loan review mission findings Commissioning licenses

Assumptions Availability of qualified contractors Stability of NTDC expansion plans and programs Timely provision of counterpart support Risks Security uncertainties

Activities with Milestones

1. Project supervision consultants financed by NTDC engaged by Q4 2009. 2. Field surveys and bidding documents completed by Q4 2010. 3. Bidding for turnkey contract packages completed by Q2 2011. 4. Design, procurement, construction, erection, and installation of equipment for

Tranche 3 subprojects completed by Q4 2014. 5. Testing and commissioning of Tranche 3 subprojects completed by Q4 2015.

Inputs Tranche 3

ADB Loan: $243.5 million NTDC: $44.2 million

ADB = Asian Development Bank, GWh = gigawatt-hour, kV = kilovolt, NEPRA = National Electric Power Regulatory Authority, NTDC = National Transmission and Despatch Company. B. Monitoring

38. Project performance monitoring: Following indicators will be updated in the quarterly progress reports and at the time of semi-annual meetings and the midterm review expected in

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two years from the date of loan effectiveness. The financial indicators will be monitored annually at the time of submission of annual financial report.

Annual power supplied through the grid (Gwh);

Transmission losses;

Transmission capacity (MVA);

Net income after tax – annually;

Debt service coverage ratio of NTDC (the ratio of cash flow from operations to annual debt service obligations) – annually;

Self financing ratio (the ratio of cash flow from operations to average capital expenditures) – annually.

39. Compliance monitoring: Loan covenants – policy, legal, financial, economic, environmental, and others – will be monitored through semi-annual project meeting and the midterm review. 40. Safeguards monitoring will be performed by the Project Management Consultants and NTDC’s PMU. The monitoring results will be included in the quarterly progress reports, and semi-annual environmental reports. 41. Gender and social dimensions monitoring: Monitoring is not required for gender as the Project does not have gender element. Monitoring on equal employment opportunities for all social groups, equal pay for equal work regardless of gender, and prohibition of child labor will be monitored by the Project Management Consultants and NTDC’s PMU. The monitoring results will be included in the quarterly progress reports, and semi-annual environmental reports. C. Evaluation

42. Inception Mission. ADB will field an inception mission after loan signing to (i) establish a working relationship between ADB and the EA; and (ii) to ensure that the borrower and EA understand ADB's procedures. 43. Review Missions. ADB will field review missions at least once a year to review overall implementation of the project and update project implementation schedule based on mission findings. 44. Midterm Review Mission. ADB will field a midterm review mission within two years after loan signing to assess whether attainment of the Project’s immediate objective *purpose in terms of the design and monitoring framework) is still likely to be achieved. 45. Project Completion Review Mission. ADB will field a project completion review mission upon physical completion of the Project to commence preparation of ADB’s project completion report. NTDC will submit a project completion report to ADB within 6 months of physical completion of the Project. D. Reporting

46. NTDC will provide ADB with (i) quarterly progress reports in a format consistent with ADB's project performance reporting system; (ii) consolidated annual reports including (a) progress achieved by output as measured through the indicator's performance targets, (b) key

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implementation issues and solutions; (c) updated procurement plan and (d) updated implementation plan for next 12 months; and (iii) a project completion report within 6 months of physical completion of the Project. To ensure projects continue to be both viable and sustainable, project accounts and the executing agency AFSs, together with the associated auditor's report, should be adequately reviewed. E. Stakeholder Communication Strategy

47. Project information will be strategically disseminated through media at main milestones including loan signing, contract awards and project completion. Grievance redress mechanism will establish at the PMU, by phone and email, and through public consultation events.

X. ANTICORRUPTION POLICY

48. ADB reserves the right to investigate, directly or through its agents, any violations of the Anticorruption Policy relating to the Project. 6 All contracts financed by ADB shall include provisions specifying the right of ADB to audit and examine the records and accounts of the executing agency and all Project contractors, suppliers, consultants and other service providers. Individuals/entities on ADB’s anticorruption debarment list are ineligible to participate in ADB-financed activity and may not be awarded any contracts under the Project.7 49. To support these efforts, relevant provisions are included in the loan agreement/regulations and the bidding documents for the Project. Procurement will follow ADB’s Procurement Guidelines, consultant selection will adopt ADB’s Guidelines on the Use of Consultants, and disbursements will be made in accordance with ADB’s disbursement policies, guidelines, practices and procedures.

XI. ACCOUNTABILITY MECHANISM

50. People who are, or may in the future be, adversely affected by the project may address complaints to ADB, or request the review of ADB's compliance under the Accountability Mechanism.8

XII. RECORD OF PAM CHANGES

May 2009 1st version drafted. Sep 2011 2nd version drafted. October 2011 3rd version drafted.

Date Updated

PAM Section Change Appendix

21 Nov 2014 IV. Costs and Financing Increased ADB financing of physical components to 100%

1

8 Sep 2015 VI.C. Procurement Plan Updated to reflect revised packaging for grid station equipment

2

29 Sep 2015 III.B. Key Persons Involved in Implementation

Updated key persons 3

6 Available at: http://www.adb.org/Documents/Policies/Anticorruption-Integrity/Policies-Strategies.pdf

7 ADB's Integrity Office web site is available at: http://www.adb.org/integrity/unit.asp

8 For further information see: http://compliance.adb.org/.

Appendix 1

REVISED COSTS AND FINANCING (NOVEMBER 2014) A. Detailed Cost Estimates by Expenditure Category

Items Total Financing

ADB (OCR) Government/NTDC

A. Investment Costs

Turnkey contracts for transmission lines 145.00 145.00 100% 0 0%

Turnkey contracts for grid station 45.50 45.50 100% 0 0%

Equipment procurement 18.50 18.50 100% 0 0%

Environment mitigation and resettlement

Compensation 7.00 0 0% 7.00 100%

Consultants 5.50 0 0% 5.50 100%

PMU Support, results monitoring & fin reporting 7.70 0 0% 7.70 100%

B. Contingencies

26.18

26.18

100%

0

0%

C. Financing Charges During Implementation

8.06 8.06 100% 0 0%

D. Taxes and Duties 0 100% 24.00 100%

Total Project Cost (A+B+C+D) 287.44 243.24 85% 44.20 15%

B. Allocation and Withdrawal of Loan Proceeds

Category Percentages and Basis for Withdrawal from the Loan

Account Number Item

Total Amount Allocated for ADB Financing ($)

Category Subcategory

1 Works 190,500,000 100% of total expenditure claimed*

1A Transmission lines 145,000,000

1B Grid Stations 45,500,000

2 Equipment 18,500,000

3 Interest and Commitment Charges

8,060,000 100% of amounts due

4 Unallocated 26,180,000

Total 243,240,000 * Exclusive of taxes and duties imposed within the territory of the Borrower.

C. Contract and Disbursement Projections

Appendix 2

UPDATED PROCUREMENT PLAN (SEPTEMBER 2015)

Appendix 2

Appendix 2

Appendix 3

UPDATED KEY PERSONS INVOLVED IN IMPLEMENTATION (SEPTEMBER 2015)

Executing Agency National Transmission and Despatch Company

Name Mr. Muhammad Arshad Chaudry Position Managing Director Email address md.ntdc@ntdc.com.pk

` Office Address #419 WAPDA House, Lahore Name Mr. Abdul Rauf Position General Manager (Projects) Email address pmu@ntdc.com.pk

ADB Pakistan Resident Mission, Central and West Asia Department

Name Mr. Werner Liepach Position Country Director Email address wliepach@adb.org

Energy Division, Central and West Asia Department

Name Mr. Lei Zhang Position Senior Energy Specialist Email address lzhang@adb.org