Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No. 6390-PAK

STAFF APPRAISAL REPORT

PAK(ISTAN

POWER PLANT EFFICIENCY IMPROVEMENT PROJECT

March 7, 1987

Energy DivisionSouth Asia Projects Department

This document has a restricted ( stribution and may be used by recipients only in the performance oftheir official duties. Its contents may not otherwise be disclosed without World Bank authorization.

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CURRENCY EQUIVALENT

Currency Unit = Pakistan Rupees (PRs)Rupee 1 - Paisa 100Rupee 1 = US$0.0593Rupees 1,000,000 = US$59,300US$1 2 PRs 16.87US$1,0000000 = PRs 16t870,000

MEASURES AND EQUIVALENTS

1 Kilometer (km) - 0.6214 miles (mi)1 Ton (t) - 1,000 kilograms (kg)=2,200 pounds (lbs)1 Kilovolt (kV) = 1,000 volts (V)1 Megawatt (MW) = 1,000 kilowatts (kW)1 Megavolt-ampere (MVA) = 1,000 kilovolt-amperes (kVA)1 Kilowatt hour (kWh) = 1,000 watt-hours (Wh)1 Gigawatt hour (GWh) 1,000,000 kilowatt hours (kWh)1 Kilocalorie (Kcal) = 3.97 British Therma'. Units (BTU)1 Ton of oil equivalent (toe) = 10 million kilocalories

ABBREVIATIONS AND ACRONYMS

ADB - Asian Development BankADP - Annual Development PlanAEB - Area Electricity BoardANL - Argonne National LaboratoryCIDA - Canadian International Development AgencyCIP - Core Investment ProgramCDWP - Central Development Working PartyECC - Economic Coordination CommitteeENERCON - Energy Conservation UnitENERPLAN - Energy Planning UnitECNEC - Executive Committee of the National Economic CouncilERWG - Energy Review Working GroupESL - Energy Sector LoanGOP - Government of PakistanIERR - Internal Economic Rate of ReturnKESC - Karachi Electric Supply Corporation, Ltd.LRMC - Long-Run Marginal CostMPD - Ministry of Planning and DevelopmentMPNR - Ministry of Petroleum and Natural ResourcesNEPC - National Energy Policy CommitteeODA - Overseas Development AdministrationOCDC - Oil and Gas Development CorporationPARCO - Pakistan Arab CompanyPMDC - Pakistan Mineral Development CorporationPSO - Pakistan State Oil CompanySGC - Southern Gas CompanySNGPL - Sui Northern Gas Pipeline Ltd.USAID - United States Agency for International DevelopmentUNDP - United Nations Development ProgramWAPDA - Water and Power Development Authority

GOP AND WAPDA'S FISCAL YEAR (FY)

July 1 - June 30

FOR OMCIAL USE ONLY

PAKISTAN

POWER PLANT EFFICIENCY IMFROVEMENT PROJECT

Loan and Project Summary

Borrower : Water and Power Development Authority (WAPDA)

Guarantor : Islamic Republic of Pakistan

Amount : US$70.0 million equivalent

Terms : Repayable in 20 years, including five years of graceat the standard variable interest fate

Project Description: The primary objective of the Project is to improvethe efficiency of the existing power stationsand make available additional generating capacityneeded to minimize the anticipated shortfalls inelectricity at least cost to the economy. TheProject would add about 120 MW of generating capacitythrough rehabilitation and about 80 MW throughconversion of combustion turbines to combined cycleoperation. It would also promote the more efficientuse of energy by reducing the consumption of fuelper kWh of power generated. In addition, theProject would strengthen WAPDA's capability in theoperation and maintenance of thermal power stationand spare parts management. No unusual risks areforeseen in project implementation. Slippages,however, could occur due to delay in procurement andappointment of contractors. This would be minimizedby engaging consultants for the preparation ofbidding documents in accordance with the implementationschedule. Although there is a risk that currentpower and energy shortages may delay projectimplementation, this risk is minimized, given GOP andWAPDA's commitment to improving the efficiency ofgenerating units and reducing load shedding.

This document has a restricted distribution and may be used by recipients only in the performanceof their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

Estimated Costs l/ :

Local Foreign Total-- --- -...U8$ Mill ion- -------

Civil Works 7.2 0.5 7.7Main Plant Rehabilitation 11.2 29.6 40.8Conversion to Combined Cycle 11.2 27.0 38.2Fuel Handling System 0.5 0.9 1.4Substaticr Equipment 1.9 4.4 6.3Workshop Equipment 1.8 4.4 6.2Township 0.9 - 0.9Consultancy Services & Training 0.6 6.2 6.8Administration 4.0 - 4.0Total Baseline Costs 39.3 73.0 112.3

Physical Contingencies 4.7 8.7 13.4Price Contingencies 8.1 13.1 21.2

Total Project Costs 52.1 94.8 146.9Interest DuringConstruction 1.7 14.2 15.9

Total Financing Required 53.8 109.0 162.8

Financing Plar.:

IBRD _ 70.0 70.0USAID - 15.0 15.0ODA - 5.3 5.3WAPDA 53.8 - 53.8GOP - 18.7 18.7

53.8 109.0 162.8St=

Estimated Disbursements:

IBRD FY88 FY89 FY90 FY91 FY92------- U8$ Million… -

AnnuAl 6 24 27 12 1Cumulative 6 30 57 69 70

Rate of Return: 16%

: IBRD 19782

1/ Including local duties and taxes of US$25.4 million.

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PAKISTAN

POWER PLANT EFFICIENCY IMPROVEMENT PROJECT

STAFF APPRAISAL REPORT

Table of Contents

Page No.

I* THE ENERGY SECTOR * ....................................... 1

A. Energy Resources ..................................... 1B. Developments in the Energy Sector, FY73-FY85 .... ...... 1C. Review of Progress Made in Implementing the

Energy Sector Strategy 3....................*.. 3D. The Bank Group Strategy and Involvement 7............. 7

^ Organization of WAPDA ................................. 8B. Existing Facilities ................................... 9C. Power Planning 10

III. THE PROJECT .... 12

IV. FINANCE .... ................... ............... 19

V. ECONOMIC JUSTIFICATION ............ . ......... 28

A. Forecasts of WAPDA'S Electricity SaLes ................ 28B. Least Cost Alternative e 29C* Return on Investment ............................... 30

VI. AGREEMENTS AND RECOMMENDATIONS ........0o0..*.. ..... 30

This report was prepared by Messrs. S. Babbar (Engineer), H. Sharma(Economist-Consultant), R. Sharma ( Financial Analyst), and E. Linard deGuertechin (Engineer).

iv

Page No.

ANNEXES

1.1 - Review of Progress Made in Implementingthe Energy Sector Strategy ........................ 32

1.2 - Organization Chart - Energy Sector .................... 382.1 - Organization Chart - WAPDA ......... .................. 392.2 - Organization Chart - Power Wing ...................... 402.3 - Forecast Electricity Generation ...................... 412.4 - Thermal Power Generation Statistics .................. 423.1 - Project Description ................................. 44

3.2 - Project Cost .... 483.3 - Organization Chart and Staffing Plan -

Plant Improvement Group ........................... 513.4 - Implementation Schedule .............................. 523.5 - Estimated Schedule of Disbursements .................. 534.1 - WAPDA's Balance Sheets . 544.2 - WAPDA's Income Statements ........................... 554.3 - WAPDA 's Sources and Application of Funds Statements . 564.4 - Notes and Assumptions for Financial Forecasts ........ 574.5 - WAPDA's Investment Program, FY86-FY93 ................ 604.6 - Summary of Status and Plans for Strengthening

Financial and Commercial Operations under the WAPDA/USAID Power Distribution Project .................. 62

5.1 - Actual and Projected Power Demand and Energy Sales ... 675.2 - Assumptions for Rate of Return on Project ............ 686.1 - Documents and Information in the Project File ....... 71

MAP

IBRD 19782.

PAKISTAN

POWER PLANT EFFICIENCY IMPRI)VEMENT PROJECT

STAFF APPRAISAL REr;RT

I. THE ENERGY SECTOR

A. Energy Resources

1.01 Pakistan's commercielly exploitable domestic energy resources consistin order of importance of hydropower, natural gas, oil and coal. The countryalso has a large base of renewable energy in the form of agricultural andanimal wastes, and solar and wind energy. The hydropower potential isestimated at about 30,000 MW, of which only 2,897 MW has been developed and1,928 MW is under construction or at an advanced stage of preparation. Inaddition, 3,600 MW will be added when the site at Kalabagh is fullydeveloped. Natural gas is Pakistan's main commercially exploitable hydrocar-bon resource, with proven and probable reserves estimated at about 340million tons of oil equivalent (toe). Proven and probable reserves of oilare estimated at about 58 million toe. Although the prospeLcts for increasingthe supply of domestic hydrocarbons are good, this would require increasedprivate sector participation in exploration to reduce the risk borne by theGovernment of Pakistan (GOP)(para 1.08). Coal and lignite reserves areestimated at about 900 million tons, of which only 175 million tons areproven. GOP has outlined a systematic program for the formulation of acomprehensive coal exploration strategy to determine the reserves wherefurther assessment is justified. The first phase of the program would beimplemented in 1987 and 1988. GOP is also assessing, under financing fromthe United States Agency for International Development (USAID) the potentialfor stimulating increased private sector involvement in coal production usingthe reserves at Lakhra as a model (para 2.07). If the results at Lakhra arefavorable, the same model could be applied to other promising areas.

B. Developments in the Energy Sector, FY73-PY85

1.02 Pakistan's indigenous energy resources have been developed at asubstantially slower pace than warranted, mainly because of financial con-straints. Moreover, as policies to restrain the growth of consumption alsowere inadequate, the country's dependence on imported energy increased. Theimport bill for energy increased from 8% of total imports in FY73 to 18% inFY78 when medium-term planning was resumed. In recognition of the possibleadverse impact on the economy of the sustained growth in the demand forenergy and increased dependence on imported energy, the Fifth Five-Year Plan

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(FY79-FY83) emphasized the accelerated development of domestic energy resour-ces and rationalization of consumption. However, as the plan targets werenot achieved, GOP gave high priority to the development of the energy sectorin the Sixth Five-Year Plan (FY84-FY88). Accordingly, its share of theresources was increased, and several important policy measures wereinitiated. Despite these actions, it became evident during the first twoyears of the Plan that its supply targets were not likely to be achievedfully. As in the Fift:i Plan, this was mainly due to: (i) the shortage offinancial resources, precipitated by the underpricing of natural gas andelectricity (paras 1.08 and 1.09) which, in turn, stimulated consumption andresulted in severe and frequent supply interruptions; and (ii) the absence ofa system for setting priorities in investment and mobilizing resources fortheir implementation. The shortfalls in the supply targets, together withthe high likelihood that resource constraints would continue into theimmediate future, prompted GOP to formulate, with assistance from the Bank, acomprehensive development strategy to address the major sectoral issues. Itinvolves a two-pronged approach. The first focuses on minimizing the short-falls in energy during the remaining three years (FY86-PY88) of the currentPlan period. Hence, it concentrates on (i) the implementation of a CoreInvestment Program (CIP) of high priority projects; and (ii) the adoption ofpolicy actions and institutional reforms needed to mobilize sufficientresources for executing these projects, restrain the growth of demand forenergy, and enhance the efficiency of energy production and consumption. Thesecond calls for studies which would provide the inputs needed to promote theintegrated development of the sector during the Seventh and Eighth Planperiods. It was in support of this strategy that an Energy Sector Loan(ESL)(Ln. 2552-PAK) was made to the GOP to assist in covering the cost ofequipment, materials and services needed for the implementation of the CIP.The proceeds of the loan were to be released in two tranches, each contingenton satisfactory progress in the implementation of agreed measures. The fundsunder each tranche were to be disbursed until the closing of the loan andhence, the second tranche was to be released before the first was disbursedfully.

1.03 The first tranche of the ESL was released at Loan effectivenesstfollowing the adoption of a new producer pricing formula for natural gas(para 1.08) and the introduction of an increase in the Water and PowerDevelopment Authority's (WAPDA) tariffs (para 1.09). The release of thesecond tranche, originally scheduled for July 1, 1986, was contingent ont(i) satisfactory progress in the implementation of the CIP for PY86 and inmobilizing resources for the CIP for FY87; and (ii) implementation of actionsneeded to ensure that 40X of WAPDA's CIP for FY87 was financed from internalsources. The release of the second tranche, however, has been delayedbecause actions needed to comply with covenant relating to WAPDA'sself-financing ratio were not taken until October 1986, five months laterthan the agreed date. The Bank has reviewed the actions taken by GOP and hasfound them to be satisfactory (para 1.09). As the two conditions precedentto the release of the second tranche have now been met and satisfactoryprogress has been made in implementing the energy sector strategy in FY86,this tranche is expected to be released shortly.

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C. Review of Progress in Implementing the Energy Sector Strategy

1.04 The issues identified and the progress made in implementing theactions outlined to address them are discussed below and summarized in Annex1.1 under three headings: (i) investment and development; (ii) pricing anddemand management; and (iii) institutional development. Investment andDevelopment. The first step involved in the formulation of the strategy wasto revise the supply targets and outline a CIP that covers the remainingthree years of the Sixth Plan (FY86-PY88). The CIP calls for predeterminedannual allocations for the implementation of projects needed to achieve therevised supply targets and ensure a smooth transition into the Seventh Plan.The CIP for the power subsector was formulated on the basis of a least costplan and consists of generation, transmission and distribution projects to beimplemented by WAPDA and the Karac!'i Electricity Supply Corporation (KESC).The CIP for the petroleum subsector covers the Oil and Gas Development Cor-poration's (OCDC) exploration and development program of specific low riskgas and oil prone areas. A program parallel to that of OGDC was outlined forthe development of fields suitable for attracting risk capital through jointventure. In addition, CIPs consisting of priority project also were outlinedfor the Sui Northern Cas Pipeline Ltd. (SNGPL), Pakistan State Oil (PSO),Karachi Gas Company, which was subsequently merged with Indus Gas Company toform the Southern Gas Company (SGC)(para 1.06), Pakistan Mineral DevelopmentCorporation (PMDC) and the Energy Conservation Unit, which was to be estab-lished (paras 1.11 and 1.12).

1.05 The Bank has reviewed the progress made by the eight energy sectorentities in implementing their respective CIPs for FY86 and found it to besatisfactory. WAPDA, OGDC, PMDC and ENERCON, the four public sector entitieswhose investment programs are financed through the Annual Development Program(ADP), were allocated Rs 10,980 million in FY86, a reduction of only 13Xrelative to the financial reouirement of Rs 12,660 million for the CIP.Except in the case of ENEROON, whose establishment and staffing was delayed(para 1.12), most of this reduction was in response to the slump in theinternational market which reduced the price of equipment, materials andservices needed for the implementation of the CIP. In fact, cost savings,together with the more efficient deployment of resources, enabled OGDC toreduce its expenditures to levels below those allocated under ADP and drilltwo more wells than were agreed to under the ESL, nine compared to seven.Unlike OGDC, WAPDA9, however, was unable to utilize fully the resources allo-cated under ADP and hence, fell short of achieving the physical targets ofthe CIP for generation. The shortfall in WAPDA's expenditures relative tothe ADP allocation of about Rs 1.46 billion is attributable to the:(i) delays in the effectiveness of an ADB loan for the Tarbela Units 11through 14 (Rs 879 million); (ii) disputes with a manufacturer which resultedin WAPDA delaying the release of the final payment for the Cuddu power plant(Rs 306 million); and (iii) delays in the delivery of equipment and materialfor the Kot Addu power plant (Rs 252 million). This shortfall, though notnegligible, represents a marked improvement relative to the past in that itis attributable entirely to factors other than resource constraints which,during the Fifth Five-Year Plan period and the first two years of the SixthPlan, had induced WAPDA to reduce its investment program by between 40X to501. Moreover, unlike the past, this shortfall is expected to be largelyoffset in FY87 as the Government has increased the allocation to WAPDA in

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that year by about 10% relative to the program agreed to under the ESL, Rs10,847 million compared to Rs £,813 million (para 1.07). In so doing, theGovernment has reaffirmed its commitment to the objectives of tile energysector strategy, in general, and to WAPDA's Rs 30 billion core investmentprogram for FY86-FY88, in particular, which is the minimum required toprevent power shortages from becoming more acute.

1.06 The other four entities covered under the loan, namely, KESC, SNGPL,PSO and SGC, who finance their investment programs from internal cash andborrowing, were all able to mobilize the financial resources needed for theimplementation of their respective CIPs. Despite this, only KESC and SNGPLwere able to fully implement their CIPs for FY86. The shortfalls experiencedby SEC and PSO, however, simply reflect a realignment in the phasing ofexpenditures. In the case of SGC, this was necessitated by the Government'sdecision to streamline the institutions responsible for distributing gas inthe southern part of the country, by merging the Karkohi Gas Company, theoriginal beneficiary, with the Indus Gas Company. In the case of PSO, theexpenditures were realigned to incorporate the results of the PetroleumProducts Infrastructure Study initiated under the ESL to ensure consistencybetween its investment program and overall development of the petroleumproduct subsector. As the CIPs of SGC and PSO are relatively small and giventhe success these entities had in mobilizing resources for their implementa-tion, the shortfalls experienced in FY86 would be made up fully before loanclosing and hence are unlikely to jeopardize the achievement of the physicaltargets agreed to under the ESL.

1.07 The Government's planned investment program for FY87 has also beenexamined in detail by the Bank with respect to size, subsectoral allocationof resources and project content. These were found to be consistent with theprojected availability of resources, as well as with the objectives of thelong-term strategy for the development of the energy sector. In general, theplanned investment program calls for a 10% increase in expenditures in FY87relative to the program agreed to under the Loan, Rs 17.2 billion compared toRs 15.6 billion. The bulk of this increase is earmarked for WAPDA-to offsetthe shortfalls experienced in FY86 (para 1.05). In the case of the otherentities, investment targets have been revised in consultation with the Bankto reflect the more recent developments in the sector.

1.08 Pricing and Demand Management. The petroleum products subsectorcontinues to be e net contributor to the resources of GOP. As of August 1,1986 the weighted average domestic price of petroleum products was at 238% ofthe border price, US$281/toe compared to US$118/toe. Under the prevailingprice structure, prices of all petroleum products are above their respectiveborder prices. As for natural gas, its price throughout the 1970s was lowrelative to the prices of competing petroleum products, reflecting GOP'sdecision to buffer the economy from the adverse impact of the higher cost ofimported energy. This stimulated demand and by 1981, supply constraintsstarted to emerge. Accordingly, under SAL I (1981), GOP decided to increasethe price of gas to reach two-thirds the border price of fuel oil by FY88.The same policy was reiterated under the ESL. In implementing the gas pric-ing policy, the weighted average domestic price of gas has been increasedsince 1981 at an average annual rate of about 30%. These increases and moreimportantly, the rapid decline in the international price of oil, haveenabled GOP to surpass the SAL I target. As of August 1986, the weighted

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average price of gas was about 76% higher than the border price of fuel oil,that is, US$90/toe compared to US$51/toe. In addition, in order to provideadded incentives for the internatioral petroleum firms to increase theirexploration activities in high risks gas prone areas, a new producer priceformula for natural gas was introduced in 1985, which links the price of newgas to the border price of fuel oil less a discount to be determined on afield by field basis. This formula was to be applied only to non-associatedgas from new concessions signed on or after September 30, 1986. The Govern-ment has further reaffirmed its commitment to this policy by agreeing toextend, on appropriate terms, the coverage of this formula to non-producingfields and to new gas fields to be developed in existing concessions. TheGovernment's initiative has been welcomed by the private sector: one foreignoil company is in the process of bringing into production an already dis-covered field in the southern part of the country and two new concessionshave been signed with foreign oil companies. These developments clearlyattest to the progress made in promoting private sector participation in theexploration and development of gas.

1.09 As regards electricity, the average revenue, including fuelsurcharge, in FY86 was 74 paisa/kWh for WAPDA, representing about 68% of theaverage long-run marginal cost (LRMC) of 110 paisa/kWh. Largely because ofthis divergence between average revenue and LRMC, outlays in the past wereonly about 50% of the planned investment. In order to ensure that actual andplanned investments do not diverge, GOP and WAPDA agreed under the ESL to athree-year CIP and to undertake all necessary measures including tariffincreases and annual allocations from the budget to ensure that it isfinanced fully (paras 1.04 and 4.11). Accordingly, electricity tariffs whichhad changed very little since November 1981 were increased, effective July 1,1985, by 10% across the board for all consumers and, again, in October 1986by extending the coverage of the fuel surcharge to encompass domestic con-sumers whose consumption is in excess of 250 kWh/month (para 4.09). The Banksupports the extension of the fuel surcharge clause as it represents thefirst step toward rationalizing the structure of tariffs and, in turn, theconsumption of electricity (para 4.11). In order to sustain this effort,WAPDA, is also initiating a load research and management study to compiledetailed information on the pattern of electricity consumption by consumercategory, including their capacity requirements, duration of use, load fac-tors, etc. This study would provide the inputs needed for restructuringelectricity tariffs. In addition, GOP has requested financing from UNDP toestablish a system for the collection, storage and retrieval of data on thepower system which would enable WAPDA to update and monitor the changes inthe pattern of electricity consumption (para 2.05).

1.10 Institutional Responsibilities and Development. Three ministriesshare the responsibility for .pervising the operational entities andagencies involved in the energy sector. These are the Ministry of Petroleumand Natural Resources (MPNR), the Ministry of Water and Power (MWP), and theMinistry of Production (MOP). In addition, the Energy Division of the Minis-try of Planning and Development (MPD) has responsibility for energy planning.Operational responsibilities in the sector are vested in a large number ofentities and agencies in both the public and the private sectors. As shownin the organization chart in Annex 1.2, all of these entities and agenciescome under the jurisdiction of MPNR, except for three state organizationsengaged in oil refining or petrochemicals, the two electricity supply

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organizations and the Appropriate Technology Development Corporation. Nuclearenergy comes under the office of the Prime Minister- Coordination betweenthe ministries on energy matters is secured through a uumber of committees,namely the National Energy Policy Comittee (NEP), Energy Review WorkingCroup (SRaG), the Economic Coordination Comittee (ECC), the ExecutiveCommittee of the National Economic Council (ECNEC), and the Central Develop-ment Working Party (CDWP). NEPC is responsible for the formulation of GOP'soverall energy policy. ERWG performs the functions of inter-ministerialcoordination as well as monitors the status of on-going projects in thepublic sector and endeavors to remove the operational bottlenecks. Thereview of the financial plans of the sector and the approval of energypricing proposals is under the jurisdiction of ECC. ECNEC and CDWP reviewand approve major proposals and projects in the energy sector, as in othersectors.

1.11 The main issue concerning the organization of the energy sector isthe multiplicity of ministries and committees responsible for planning,coordinating and monitoring the performance of the public and privateenterprises involved in the production, transport and delivery of energyproducts. This division of responsibility was spreading the scarce technicalresources among a large number of public agencies and reducing thee effective-ness of each agency. Consequently, under the ESL, GOP created under thepurview of MPD an energy planning unit (ENERPLAN) with USAID financing, andNational Energy Conservation Center (ENRGCON) with joint USAID and Bankfinancing. ENERPLAN is mandated to collect, compile and analyze, on anongoing basis, all relevant data on the energy sector and integrate them withthe country's annual, five-year and long-term development plans, to enableGOP to identify priorities and evaluate resource requirements to supporteffective policy formulation and investment planning. Consultants have beenrecruited, and about one-half of the sanctioned positions have been filled.Work is currently underway on (i) reviewing the performance of the energysector entities during the current plan period; and (ii) preparation of theSeventh Five-Year Plan and a long-term (20-year) plan for the energy sector.Draft reports of these plans are expected to be completed by mid-1987. Thesewould be reviewed jointly by GOP, USAID and the Bank. In a recent move, GOPhas merged ENERPLAN with the energy division of MPD to form an Energy Wing.The Bank supports this decision fully, as it would further strengthen energyplanning and streamline the institutional setting.

1.12 ENERCON was established to serve as a focal point for all conserva-tion activities. It is administered by a Council for Energy Conservation,comprising senior representatives from concerned ministries. The Council isto be guided by an Advisory Committee, consisting of representatives fromGOP, provincial governments, WAPDA and Federal Chamber of Commerce andIndustries. It is responsible for planning energy conservation actions,formulating policy guidelines, developing a data base, supporting trainingactivities and private research, undertaking development and demonstration aswell as public information activities, and monitoring the implementation ofconservation program of various public and private entities. Despite a delayin its establishment and staffing (para 1.05), NCEC also has made substantialprogress in the areas ofs (i) planning and legislation; (ii) data basedevelo pmet for transport, building and industry; (iii) energy audits;(iv) training and curriculum development; and (v) information and outreachprograms. A draft report on energy use in Pakistan's agricultural sector has

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also been completed and is expected to be submitted shortly to the Bank forreview.

D. The Bank Group Strategy and Involvement

1.13 The Bank's broad objectives in the sector are to support the policiesinitiated under the ESL, and the allocation of resources for specificprojects included in the CIP (para 1.02). In the area of primary energyproduction, the Bank would support the implementation of a comprehensive planfor the exploration and development of hydrocarbons. In addition, it wouldsupport an investment program aimed at the substitution of lower-valueproducts, particularly imported coal for gas in power generation and therelease of gas for use by industry and households as a substitute forimported petroleum products. As for hydro potential, emphasis would be onproviding technical and financial support for the development of highpriority schemes. Efforts would also be directed toward retrofitting andrestructuring the refinery subsector and other major energy consumingindustries, as well as the rationalization of the infrastructure for thetransport of liquid hydrocarbons and gas. The Bank would also support theformulation of plans for bringing domestic prices of energy products toparity with their respective cost to the economy to rationalize consumptionand mobilize resources for GOP. In the power subsector, the Bank hasdirected its efforts to strengthening WAPDA's manage3ent and technicalcapabilities (paras 2.05 and 4.02).

1.14 The Bank Group involvement in Pakistan's energy sector began in 1955,with a loan to KESC for the construction of a thermal power station. Sincethen, it has assisted in financing projects in all energy subsectors. In thepower subsector, the Bank has participated in the Indus Basin DevelopmentProjects, which include the hydro developments at Mangla and Tarbela. Aseries of four credits/loans were made to XESC between 1955 and 1967 for thedevelopment of its generation capacity. Since 1970, the Bank has been moredirectly involved in GOP's program for the expansion of generating capacityand transmission and distribution networks, for which six credits/loans weremade to WAPDA. The first (Cr. 213-PAK) of US$23 million, made in 1970,covered the cost of upgrading the transmission network. The second opera-tion, a Third Window loan (Ln. 1208T-PAK) of US$50 million, subsequentlyreduced by US$15 million due to savings achieved under international competi-tive bidding, was made in 1975 to finance the development of part of the500-kV transmission system to connect the hydro resources of the north withthe thermal generation in the center and south to provide the most economicmens of supplying power throughout the country. The third operation(Cr. 968-PAK) in the amount of US$45 million was made to cover four years ofVAPDA's program for the development of the secondary transmission system(FY79-1Y83), involving the erection of about 4,345 km of single and doublecircuit lines and the construction, expansion and conversion of 216 substa-t4.ons. Implementation of this project has been completed satisfactorily.The fourth (Ln. 2499-PAK), fifth (La. 2556-PAK) and sixth (La. 2698-PAK)operstions constitute the Bank's portfolio of power projects under supervi-sion. The fourth operation for an amount of US$100 million covers the con-struction of a total of about 3,890 km of transmission lines, and 227 substa-tions of the subtransmission system over the period MG6-FY9M. The fifth

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operation for an amount of US$100 million would assist WAPDA in the installa-tion of about 1,100 km of 500-kV transmission line between Lahore and Jam-shoro and new 500-kV substations at Lahore and Sahiwal, and the extension andreinforcement of existing 500-kV substations at Multan, Cuddu, Dadu andJamshoro (para 2.09). The sixth operation supports the installation of 200MW of additional generating capacity through the conversion of existingcombustion turbines to combined cycle operations at Kot Addu. Progress inthe implementation of the fourth and fifth projects has been slower thanenvisaged because of delays in the initiation of procurement. These delayswere further exacerbated by WAPDA remaining unawares of the recent changes inthe Bank's procurement procedures because of a six-year hiatus in lending toWAPDA. Consequently, initial bidding documents prepared by WAPDA had to berevised extensively with each revision taking several iterations as WAPDAcontinued to contest the Bank's requirements on issues such as evaluationcriteria, taxes and duties, use of domestic carriers, etc. These issues,however, have now been resolved and no further delays are anticipated in theimplementation of these projects. Moreover, the Bank has recently approvedstandard bidding documents for all projects to be executed by WAPDA.

1.15 In addition to the credits and loans that were made to WAPDA, theBank approved ESL in 1985 for an amount of US$178 million, to support GOP'slong term strategy for the development of the energy sector. Under theumbrella of ESL, the Bank also approved in the same year a Petroleum Resour-ces Joint Venture Project (Ln. 2553-PAK) for an amount of US$55 million witha view to financing the Government's and OGDC's share of foreign exchangecommitments under existing joint ventures with private sector operators inBadin and North Potwar blocks and new joint ventures to be firmed up duringthe next three years.

II. THE BORROWER

A. Organization of WAPDA

2.01 WAPDA, the borrower of the loan, was established in 1958 tocoordinate the development of Pakistan's water and power resources. It is asemi-autonomous agency whose capital investment program and tariffs areapproved by GOP. WAPDA is divided into two largely independent 'wings' onefor power and the other for water (Annex 2.1). The Power Wing is responsiblefor the construction and operation of power generation, transmission anddistribution facilities throughout the country, except the Karachi area whichis served by KESC. The Water Wing is responsible for the overall planningand investigation of water resources, and the design and construction ofsurface and groundwater development projects for the federal and provincialgovernments. WAPDA's governing body, referred to as the "Authority", con-sists of a chairman and three members who are in charge of power, water, andfinance, and are designated Member (Power), Member (Water) and Member(Finance) respectively. The members are appointed by the Government andfunction as chief executives of their respective groups.

2.02 Member (Power) is assisted by seven general managers in charge ofdistribution, generation (thermal), generation (hydel), transmission and grid

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stations, finance, coordination and planning, system operation and loaddispatch, and inventory control. The organization of the Power Wing which,for convenience, is herein referred to as WAPDA, is shown in Annex 2.2. Aproposal for creating the position of Managing Director (Distribution) ispresently being considered by GOP in order to strengthen WAPDA's distributiondepartment. Although WAPDA is highly centralized with respect to deci-sion-making, its distribution department is divided into eight Area Elec-tricity Boards (AEBs), which were established in 1981 to take over theresponsibility for local electricity service. Each AEB has a chairman, whois the chief engineer for the area, appointed by WAPDA for a five-year term;three full-time members, who are also directors in charge of departments; andthree part-time members representing local interests, one of whom is normallya representative of the Provincial Government. The members of AEBs areappointed for a period of three years.

2.03 In January 1986, WAPDA had about 88,000 employees, 2,100 engineers,700 other professionals, 9,200 technical and other staff, 15,000 administra-tive and accounts staff, 44,000 skilled workers and 17,000 general staff.The number of consumers served by WAPDA in that same year was about 4.5million, representing about 51 consumers per employee. The relatively lowconsumer-employee ratio, reflecting the overstaffing of the distributiondepartment, 1/ has induced WAPDA to initiate a program with the assistanceof consultants, EBASCO Services (US firm), financed by USAID, for streamlin-ing the operations of the distribution department and for updating itspolicies, procedures and methods (para 4.02). In addition, in order topromote the integrated development of the power subsector, GOP has agreedunder the ESL to review the means for reorganizing the subsector. GOP ispresently examining the legal implications of assigning to WAPDA the respon-sibilit, of generation and high voltage transmission of electricity for theentire country and restricting KESC's operation to the bulk purchase of powerfrom WAPDA for distribution in the Karachi area. Consideration is also beinggivern by GOP to private sector involvement in the power subsector. Towardthat end, GOP appointed in August 1985 a National Deregulation Commissionheaded by the Governor of the State Bank of Pakistan. One of its objectivesis to outline a strategy for increasing private sector involvement in powerdistribution. Moreover, ECC approved in September 1985 a charter of terms andconditions under which the private sector would be invited to participate inpower generation, in the context of an agreed medium and long-term plans. Adetailed framework for compensating potential private firms involved in thesupply of power in Pakistan is currently being formulated. The Bank wouldreview the means and the timetable for reorganizing the subsector in December1987.

B. Existing Facilities

2.04 In June 1986, WAPDA's total installed generating capacity was4,949 MW, comprising 2,897 MW (59%) of hydro and 2,052 MW (41%) of thermalcapacity. The maximum potential output of the existing hydro stations

1/ The distribution department accounts for about 70% of WAPDA's staff.

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amounts to about 3,100 MW when all the reservoirs are full. This potentialdrops to about 1,000 MW during dry seasons, and has to be offset by thermalgeneration, including the more extensive use of combustion turbines than forthe normal peak load, because of the overall shortage of generating capacity(Annex 2.3). According to WAPDA, the shortfall between demand and the gener-ation capability of its system, was about l,5OO MU in January 1986 and about1,200 MW in June 1986, and is expected to continue into the mid-1990s (para5.02).

C. Power Planning

2.05 The slippages in the implementation of investment program,precipitated by both resource constraints (paras 1.09, 4.01 and 4.11) and theabsence of a mechanism that would identify priority projects and the scaleand timing of investments (para 1.02), prompted WAPDA to formulate a nationalprogram for the development of generation facilities with the assistance ofArgonne National Laboratory (ANL, US agency) under financing from UNDP, withthe Bank as the executing agency. This plan was updated in December 1986 toincorporate the more recent developments in the subsector. In addition, inorder to strengthen in-house power system planning capability, ANL, under tTieauspices of the International Atomic Energy Agency, has trained WAPDA's staffin the use of the Wien Automatic System Planning (WASP III) computer modeland has successfully installed that model on WAPDA's computer in early 1985.This has enabled VAPDA to revise the national least cost plan periodically toincorporate the updated information on the operation of the subsector,including hydrology, water management and pattern of electricity consumption.GOP has also requested financing from UNDP to establish a system for thecollection, storage and retrieval of data on the power system (para 1.09).

Generation Program

2.06 Based on the long-term least cost development plan, WAPDA's installedgenerating capacity is forecast to increase from 4,949 MW in June 1986 toabout 9,500 Kw in 1993. This would involve the commissioning of projectsunder construction including the extension at Tarbela (Units 11-14,4X432 "i), a steam unit at Jamshoro (Unit No. 1,250 MW), and a set ofcombustion turbines at Kot Addu (4xlOO NW). Financing for the above projectshas been secured (para 4.15). All of these units, except the ones atTarbela, are expected to be commissioned during the Sixth Five-Year Plan.Units 11 and 12 at Tarbola are expected to be commissioned in December 1989,and units 13 and 14 in June 1990. In addition, the plan calls for thedevelopomnt of: a large hydropower scheme at Kalabagh with a total capacityof 3,600 MW when fully developed; thermal capacities at Jamshoro based onfuel oil and at Lakhra based on domestic coal; and an imported coal basedcomplez at Karachi.

2.07 GOP's original plans had called for the implementation of Kalabaghover an eight-year period, beginning end-1987. However, as the issues relat-Ing to resettlement and how the benefits of the project would be distributedamong the provinces have not boen resolved fully, the implementation ofKalabagh is likely to be delayed. In order to offset the shortfall in gener-atinl capacity that would result from this delay, WAPDA has advanced the

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implementation schedule for the expansion of generating capacity at Jamshorofrom 880 NW to about 1,840 MW. The feasibility study, originally planned forcompletion in March 1987 has been completed by consultants, Bechtel NationalInc., a US firm, under financing from USAID, three months ahead of schedule,in December 1986. GOP has requested the Bank to process the Jamshoro projectin FY87. In view of the need to expand generating capacity in a timelyfashion and given the sise of the Jamshoro project, the Bank has set theappointment of Architect and Engineering Consultant for project management ascondition of negotiations of the Project. Moreover, the clearance andissuance of bidding doccunents for the main packages would also be set as acondition of negotiation and the award of contracts would be set as a condi-tion of effectiveness. As for the imported coal based complex, aprefeasibility study has been completed by consultants, Shawinigan Integ, aCanadian firm, under financing from the Canadian International DevelopmentAgency (CIDA) and the Bank. The consultants had identified three possiblesites - two near the existing Port Qasim and the third, in the area west ofKarachi at Khalifa Point. GOP has selected Khalifa Point as the potentialsite for the development of the imported coal based complex. The feasibilitystudy and detailed engineering and preparation of bidding documents for thepower complex are expected to be completed by December 31, 1987. Thefeasibility studies for the Lakhra mine and power station have been completedby consultants, Gilbert Commonwealth, J.T. Boyd and ICF (US firms), underUSAID financing. Invitations for the submission of bids for mine developmentwere issued by GOP, in January 1987, to prequalified firms. (para 1.01).

Transmission Program

2.08 Major hydro resources are located in the north of the country andthermal facilities and load centers are concentrated in the center and thesouth, which requires the transmission of electricity over long distances.In order to ensure the efficient evacuation of power, WAPDA's long-term plancalls for the development of three extra high voltage (500-kV) transmissionlines between: (i) Tarbela and Karachi via Faisalabad, Multan, Guddu andJamshoro; (ii) Tarbela and Faisalabad; and (iii) Tarbela and Jamshoro viaLahore, Sahiwal, Multan, Guddu and Jamahoro. The Tarbela-Karachi line isalready operating at 500-kV, except for the section between Faisalabad andKarachi which is presently being operated at 220-kV. This section is beingupgraded and is expected to be fully operational at 5^9-WV by 1988. TheTarbela-Faisalabad line, which was commissioned in 1985 with financial assis-tance from CIDA, is also in service. The Tarbela-Jamshoro line is presentlybeiag constructed by WAPDA and is expected to be completed by 1990. TheTarbela-Lahore section of this line is financed by the Asian Development Bankand the Lahore-Jamshoro section is financed by the Bank (tLn. 2556-PAK). The220-kV network and subtransmission system would also be expanded under theFourth VAPDA Power Project (Ln. 2499-PAK) (para 1.14) and its developmentwould be integrated and coordinated with the expansion of the high voltagetransmission and distribution systems. As losses in the network are rela-tively high, about 261 of gross generation, WAPDA has also completed a study,with the assistance of consultants, HBASCO Services, financed by USAID, toprepare a detailed work and investment programs needed to reduce losses inthe distribution network to economically acceptable levels. The study iscurrently being reviewed by the Bank.

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Distribut.on and Rural Electrification Program

2.09 EBASCO Services, financed by USAID, is assisting WAPDA in the designand preparation of a comprehensive Master Plan for Power Distribution Systemwhich would identify the changes required to expan4 as well as improve theefficiency of WAPDA's service. The objective of this program is to reducelosses at the distribution level and provide for the economic expansion ofthe distribution network in rural as well as urban areas. The study (para2.08) focusses specifically on: the distribution organization, energy lossanalysis, establishing criteria for selection of feeders for rehabilitation,plans for efficient distribution expansion and practices, load management,voltage regulation and service reliability. The Bank, together with WAPDAand USAID, will review the Master Plan prepared by the consultants. ThisMaster Plan, along with the study on losses (para 2.08), would serve as abasis for identifying the distribution components of the three-year rollingcore investment program (para 4.15) and set a framework for selectingprojects suitable for external financing.

III. THE PROJECT

Project Setting

3.01 The power subsector is the single largest consumer of primary andseconedary energy; however, the efficiency with which it consumes theseprodui.s is relatively low because of the deterioration in the efficiency ofthe steam units precipitated by the shortage of spare parts and the postpone-ment of scheduled maintenance, inspection and overhauls necessitated by theshortfalls in generating capacity. These capacity constraints have alsoinduced WAPDA to operate some of its relatively inefficient combustion tur-bines more extensively than for the normal peak load for which they weredesigned thereby further eroding the efficiency of the system. As theefficiency of WAPDA's thermil power plants can be improved significantly in arelatively short time with comparatively small capital investments byrehabilitating and retrofitting steam units and converting suitable combus-tion turbines to combined cycle operation, GOP, in keeping with its strategyfor rationalizing the production and consumption of energy, has given highpriority to achieving this objective. Accordingly, WAPDA has completed astudy with the assistance of consultants, Stone and Webster (US firm), underfinancing from USAID, which identifies a program of work and investmentsrequired to improve the efficiency of each unit as well as the schedule forits implementation. The Bank has reviewed the study and found it to besatisfactory.

Project Objectives

3.02 The objectives of the Project are to: (i) improve the efficiencywith which hydrocarbons are used by WAPDA in power generation; (ii) provideabout 120 MW of additional generating capacity through rehabilitation ofexisting thermal units and about 80 MW through the conversion of combustionturbines to combined cycle operation; and (iii) continue the institutionbuilding efforts initiated under Bank Groupts earlier lending operations by

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strengthening WAPDA's capability in the operation and maintenance of thermalpower stations and spare parts management.

Project Description

3.03 The Project would include:

(a) equipment, spares, tools and other materials required for therehabilitation of steam units and combustion turbines at Sukkur,Guddu, Faisalabad, Quetta, Multan, Kotri and Shahdra;

(b) equipment, materials, civil works and services for conversion ofeight combustion turbines to combined cycle operation at the Kotriand Faisalabad power stations;

(c) consultancy services for detailed engineering, preparation of biddingdocuments, supervision of implementation and development of systemsfor maintenance and spare parts management; and

(d) training of WAPDA's staff in operation and maintenance.

A detailed description of the Project is presented in Annex 3.1.

Project Cost

3.04 The total cost of the Project, incluiding taxes and duties, price andphysical contingencies, is estimated at about US$147 million. The totalfinancing required, including interest during construction of about US$16.0million, is about US$163 million. Of the total financing requirement, aboutUS$109 million would be in foreign exchange and about US$54 million in localcost. These estimates are based on the information obtained from the surveyof power plants prepared by WAPDA with the assistance of consultants (para3.06) and reflect mid-1986 prices. Escalation of local cost is assumed at 8%for FY86, 7.75% for FY87, 7.50% for FY88, 7.25% for FY89, 7% for FY90, and5.50% for FY91. Escalation of foreign cost is assumed at 4.22% for FY86,6.96% for FY87, 6.82% for FY88, 6.93% for FY89, 7.06% for FY90, and 5.50% forFY91. A provision of 12% of the base cost has been made for physical contin-gencies, given the special nature of the Project. Total price escalationamounts to about 17% of the base cost and physical contingencies. Duties andtaxes are estimated at about US$25.4 million, resulting in a total projectcost, net of taxes and duties, of US$137.4 million. A summary of the projectcost is presented in Table 3.1 below and detailed estimates are given inAnnex 3.2.

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Table 3.1: PROJECT COST ESTIMATE

(Rs Million) (US$ Million)Local Foreign Total Local Foreign Total

Civil Works 121.1 8.8 130.0 7.2 0.5 7.7Main Plant Rehabilitation 188.9 499.4 688.3 11.2 29.6 40.8Conversion to Combined Cycle 189.3 455.1 644.4 11.2 27.0 38.2Fuel Handling Systems 7.9 14.6 22.5 0.5 0.9 1.4Substation Equipment 31.7 74.0 105.7 1.9 4.4 6.3Workshop Equipment 30.3 75.0 105.3 1.8 4.4 6.2Townships 15.5 - 15.5 0.9 - 0.9Consultancy Services andTraining 12.4 102.1 114.5 0.6 6.2 6.8

Administration 67.3 - 67.3 4.0 - 4.0Total Baseline Costs 664.5 1,229.0 1,893.5 39.3 73.0 112.3

Physical Contingencies 79.7 147.5 227.2 4.7 8.7 13.4Price Contingencies 136.2 220.3 356.5 8.1 13.1 21.2

Total Project Costs 880.4 1,596.8 2,477.2 52.1 94.8 146.9Interest During

Construction 28.7 239.5 268.2 1.7 14.2 15.9Total Financing Required 908.1 1,836.3 2,745.4 53.8 109.0 162.8

Project Financing

3.05 The Bank Loan of US$70 million would cover about 64% of the totalforeign exchange requirement of the Project, estimated at about US$109 mil-lion, and would be made to WAPDA with GOP as the guarantor. USAID and Over-seas Development Administration (ODA), UK, have agreed to finance anotherUS$20.3 million of the foreign cost of the Project. The balance of US$18.7million would be financed by COP. WAPDA would provide the local financing,amounting to about US$54 million equivalent. WAPDA would bear the interestrate risk and any cost overruns. GOP would bear the foreign exchange riskand provide repayment guarantee to the Bank, for which WAPDA would annuallypay 3-1/2% on the outstanding loan amount to GOP. The financing plan for theProject is summarized in Table 3.2.

Table 3.2: FINANCING PLAN

Local Foreign Total---------US$ Million---

IBRD 70.0 70.0USAID - 15.0 15.0ODA - 5.3 5.3WAPDA 53.8 - 53.8GOP - 18.7 18.7

Total 53.8 109.0 162.8

USAID financing would be from its existing Energy Commodities EquipmentProgram and, therefore, no new agreements are necessary. ODA, however, wouldhave to enter into an agreement with GOP. Therefore, as a condition of loan

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effectiveness, WAPDA would be required to confirm that all conditions prece-dent to the effectiveness of the ODA Grant have been fulfilled. tpara6.03a).

Project Preparation

3.06 The Project was prepared on the basis of a study conducted by WAPDAwith the assistance of consultant, M/S Stone and Webster, under USAID financ-ing (paras 3.01 and 3.04). The consultants assessed the operational statusand maintenance requirements of the thermal generating units in WAPDA'ssystem. Based on that assessment, a program of work and investments(Annex 3.1) required to improve the therma- efficiency of each unit andmaintenance practices was formulated and the time schedule for its implemen-tation was specified. The economic viability of implementing the program ateach unit was then ascertained to identify units whose rehabilitation andretrofitting is justified on both technical and economic grounds. The study,which was completed in November 1985, was reviewed by the Bank and foundsatisfactory.

Project Engineering and Consulting Services

3.07 The Project involves: (i) engineering of systems requiring replace-ment and retro:itting of equipment; (ii) preparation of specifications andbidding documents for equipment, materials and services required forrehabilitation and conversion of combustion turbines to combined cycle opera-tion; (iii) supervision of implementation with particular emphasis on thecoordination of rehabilitation work and plant outages with the system opera-tion needs; and (iv) training of WAPDA's staff in operation and maintenancepractices. Although WAPDA has acquired extensive experience in the installa-tion and operation of steam generating units and combustion turbines, itsexperience in design and engineering of steam power plants and combined cycleplants is limited. As WAPDA's in-house design fac-ilities also are inade-quate, it would require assistance in the design, preparation of biddingdocuments, development of project schedules and supervision of implementa-tion. Therefore, in order to ensure the timely implementation of theProject, consultants satisfactory to the Bank have been recruited underfinancing from ODA to assist WAPDA in the detailed design, preparation ofbidding documents and implementation schedules, and supervision of implemen-tation.

3.08 WAPDA's maintenance and spare-parts management systems, which arepredominantly manual, have evolved independently at individual power plantsbecause maintenance activity is decentralized. In view of the plannedincrease in WAPDA's thermal capacity and the need to ensure high plantavailability to minimize the projected shortfalls in energy (para 2.04),WAPDA should introduce a modern system for maintenance and spare-partsmanagement. As WAPDA's experience in this area is limited, it would requireassistance in the development and implementation of these systems and train-ing of WAPDA's staff in their use at a utility with proven track record inthe operation of conventional thermal and combined cycle plants. Therefore,in order to assist WAPDA in the development and implementation of maintenanceand spare parts management systems, as well as the training of WAPDA's staffin their use, consultants satisfactory to the Bank have been recruited underfinancing from ODA.

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Project Implementation

3.09 Since the Project involves the rehabiiitation and retrofitting ofoperating units, no new infrastructural facilities are needed. Adequate landis also available for the heat recovery boilers, steam turbogenerators andassociated equipment to be added to the combustion turbines at Kotri andFaisalabad.

3.10 The Project would be implemented concurrently at seven locations(para 3.03(a)). In addition, it involves procurement of a large variety ofequipment and materials financed by different donor agencies (para 3.05),whose installation would have to be coordinated with outage schedules andongoing maintenance in order to minimize the duration that each unit is outof operation. To date, WAPDA's experience in coordinating the implementationof such activities is limited as its plant maintenance and spare-partsprocurement are carried out by plant staff with minimal central coordination(para 3.08). Moreover, its staff at the power stations is fully occupiedwith routine maintenance. WAPDA, therefore, has established a group forplant improvement under the General Manager (Thermal). Its responsibilitiesare to: (i) coordinate the implementation of the Project; (ii) liaise withthe consultants; and (iii) form the counterpart staff in WAPDA to be trainedin the development and implementation of modern systems for maintenance andspare parts management. The association of this group with consultants willprovide WAPDA in-house expertise needed to ensure that these systems areimplemented at new plants and upgraded on an ongoing basis, as well as enableWAPDA to undertake rehabilitation activities, as and when required. Thestaffing plan for the group for plant improvement, presented in Annex 3.3 wasreviewed during negotiations and found satisfactory to the Bank.

3.11 Implementation of the Project has commenced. The implementationschedule for the Project is shown in Annex 3.4. WAPDA, based on the consult-ants' report (para 3.06), has prepared and submitted the project document(PC-1) for ECNEC's approval. ECNEC's approval of the PC-1 for the Project isa condition of effectiveness for the Loan (para 6.03(b).

Procurement

3.12 Procurement of equipment, materials and services financed by the Bankwill be in accordance with Bank Guidelines. Contracts financed under theLoan for tha supply and erection of equipment and materials would be awardedthrough International Competitive Bidding (ICB), except where rehabilitationwork financed under the Loan involves proprietary equipment or small quan-tities of specialized items which can be obtained economically andexpeditiously from major international manufacturers through direct contracc-ing or Limited International Bidding (LIB). The funds made available byUSAID would cover the cost of equipment and materials purchased from theUnited States. ODA funds would be used to finance consultants' services(paras 3.07 and 3.08). Procurement arrangements for the Project are sum-marized in Table 3.3.

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Table 3.3: PROCUREMENT ARRANGEMENTS /a(US$ Million)

Procurement Method /bICB LCB Other Ic Total

1. Civil Works - 10.4 - 10.42. Main Plant Rehabilitation 22.2 - 30.7 52.9

(17.7) (10.0) (27.7)3. Conversion to Combined Cycle 50.2 - - 50.2

(39.8) %39.8)4. Fuel Handling Systems - - 1.7 1.75. Substation Equipment - - 8.2 8.26. Workshop Equipment 2.0 2.0 4.0 8.0

( 1.5) ( 1.5)7. Townships - 1.2 - 1.28. Consultants & Training - - 8.9 8.9

(1.0) (1.0)9. Administration - - 5.4 5.4

74.4 13.6 61.0 146.9(59.0) (11.0) (70.0)

/a The figures in parentheses are the respective amounts which would befinanced by the Bank.

/b ICB - International Competitive Bidding.LCB - Local Competitive Bidding.Other - Direct negotiation, Limited International Bidding (LIB), or

not subject to commercial procurement./c Procurement of some of the items under this category would be financed

under cofinancing arrangement.

The equipment for retrofitting of combined cycle units at Faisalabad andKotri, estimated at about US$50 million, would be tendered assupply-and-erect contracts and would be subject to ICB in accordance withBank guidelines. All other equipment, except spare-parts financed under theLoan, would also be grouped into a number of supply-and-erect packages andprocured through ICB, LIB or direct contracting in accordance with Bankguidelines. The list of equipment and material to be procured through LIBand direct contracting under Bank financing would be approved by the Bankbefr.e their procurement and the total value of such items would not exceedUS$10 million. About 51% of works, goods and services for the Project wouldbe procured through ICB. Documents for individual contracts aboveUS$1,000,000 equivalent would be subject to prior review by the Bank. Itwill apply to about 75% of the estimated cost of Bank-financed elements.Local suppliers and manufacturers competing for supply of goods under ICBwould have a preference of 15% or the applicable duty, whichever is less.Procurement would commence by mid-1987.

Disbursements

3.13 The proceeds of the loan would be disbursed against: (i) 100Z of CIFcost of imported goods or ex-works cost of locally-manufactured goods and 80%of expenditure for erection, both being subject to ICB; and (ii) 1001 offoreign cost of training. Disbursements up to US$10 million will also be

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made against CIF cost of goods procured through LIB and direct contracting.Disbursements will be fully documented, except for paymePts not exceedingUS$250,000. Such disbursements would be made against statement of expendi-tures (SOEs), the documentation for which will not be submitted to the Bankbut retained for inspection by the supervision missions. The standard proce-dures for auditing SOEs, would apply. In order to facilitate disbursements,a Special Account would be established in a commercial bank in accordancewith terms and conditions satisfactory to the Bank. The initial deposit inthe Special Account would be US$5.0 million, representing the estimatedaverage expenditures for a four-month period for the items financed by theBank. The Project contains provision for retroactive financing of up toUS$2.5 million, for expenditures incurred for procurement of equipment andmaterials, after December 1, 1986. A schedule of disbursements is presentedin Annex 3.5.

3.14 Although the implementation of the Project is planned over athree-year period, a five-year disbursement schedule is being proposed toallow for possible delays due to operational constraints, particularly thosestemming from poor hydrological conditions. The disbursement schedule,however, is faster than the Bank's standard profile of eight years for ther-mal projects in the Region because the standard profile includes a largenumber of coal fired power stations whose construction period is relativelylong. Since the Project consists of rehabilitation, involving essentially alarge number of short duration activities, retrofitting of equipment at powerplants and given that WAPDA would be assisted by consultants in implementingthe Project, the proposed disbursement schedule is realistic. The closingdate for the Project would be June 30, 1992.

Environmental Aspects

3.15 The Project would not affect the environment adversely. In fact, byimproving the operating efficiency of the thermal power plants, it isexpected to reduce atmospheric pollution.

Project Risks

3.16 No unusual risks are foreseen in project implementation, except thosearising from shortage of generating capacity during periods of poorhydrological conditions which could render thermal power plants unavailablefor rehabilitation and retrofitting. However, the probability of the poorhydrological conditions recurring in all the three years is remote, and thefive-year disbursement schedule caters for such eventualities (para 3.14).Risk of damage due to fire, explosion, etc., would be covered by the respec-tive suppliers and contractors during the construction and, after commission-ing, by VAPDA through its insurance policies which are satisfactory (para4.07).

Project Monitoring

3.17 WAPDA will submit to the Bank quarterly reports, covering the work ofconsultants, physical progress, project costs, disbursements and administra-tive aspects of the Project. In addition, it would also submit annual finan-cial and administrative reports and other pertinent information to the Bank.WAPDA would also undertake to prepare and furnish to the Bank, within six

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months after the closing date, or such later date, as will be agreed for thispurpose, a Project Completion Report of such scope and detail, as the Bankshall reasonably request.

IV. FINANCE I/

Introduction

4.01 WAPDA's financial affairs are governed by the WAPDA Act whichrequires the utility to generate sufficient revenues from electricity salesto cover operating costs including depreciation, debt service and achieve areasonable return on investment. Under the First WAPDA Power Project(Cr. 213-PAK), WAPDA agreed to achieve a rate of return of 8% on revaluedaverage net fixed assets in use. However, because of GOP's reluctance torevalue assets, this covenant was replaced in FY76 under the Second WAPDAPower Project (Ln. 1208T-PAK) by an internal cash generation covenant. Itrequired WAPDA to generate annually from internal sources, 30% of the capitalexpenditures, a-veraged over the previous two years and the current yearwithout taking into account the net changes in working capital. In order toensure that adequate local funds were available for the implementation ofWAPDA's expanding investment program, the level of internal cash generationwas raised to 40% in FY80 under the Third WAPDA Power Project (Cr. 968-PAK).In each of the following six years, except FY85, WAPDA was able to complywith this covenant, but only because of substantial slippages in its invest-ment program precipitated by inadequate upward adjustments in tariffs (paras1.09 and 4.09). It -;as in the context of these slippages and the accompany-ing shortfalls in generating capacity that agreement was reached with GOP andWAPDA under the ESL on a Rs 30 billion CIP for the period FY86-FY88 (paras1.04 and 4.11).

Accounting Systems and Organization

4.02 Under previous Bank Group operations (Ln. 1208T-PAK and Cr. 968-PAK),WAPDA engaged Peat, Marwick, Mitchell and Co. (PMM) of UK as consultants tostudy the utility's financial organization and outline the means for improv-ing its financial management, particularly in the areas of accounting systemsand procedures, and organization and staffing. The study, which was com-pleted in FY82, recommended the introduction of a modern accruals basedaccounting system with a code of accounts, the updating of inventory manage-ment methods and the streamlining of financial reporting procedures. Theserecommendations were implemented by WAPDA with the assistance of PMM in FY83and FY84 and as a result, WAPDA's' billing and collection, and control overits finances have improved significantly. In addition, the appointment ofGeneral Manager and Deputy General Manager for Finance has strengthened the

11 WAPDA maintains separate accounts for the Power Wing. The financialanalysis and discussions in this chapter are confined to the operationsof WAPDA's Power Wing, which for ease of reference is referred to hereinas WAPDA.

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overali financial function and enhanced its role within WAPDA. In order tosustain this momentum, WAPDA, under financing from USAID, has engaged aconsortium of US firms referred to as Principal Technical Assistance Team(PTAT), as consult,5its to carry out additional work in the areas of FixedAsset Accounting (pdra 4.13), Internal Audit (para 4.03) and training ofstaff (paras 2.03 and 4.06).

In'ernal Audit

4.03 A basic function of an internal audit unit is to provide seniormanagement with information relating to the performance of the entity'ssystems. In addition, an effective internal audit unit can facilitate theperformance of external audit, with the latter rely .ng heavily on the former(para 4.04). Although WAPDA has a large Internal Audit Department, itssystems and procedures are outdated and its responsibilities have not beenenhanced to suit the utility's recent growth in size and complexity. Inrecognition of this, WAPDA, under financing from USAID, has engaged PTAT asconsultants to develop a modern internal auditing system. The consultantshave begun their work and are expected to complete it by March 1988. Follow-ing a review of the work by the Bank, agreement would be sought on atimetable for the implementation of the internal audit system.

External Audit

4.04 According to the WAPDA Act, the Auditor General of Pakistan (AG) isresponsible for auditing WAPDA's accounts. He discharges his responsibilitythrough the Director General, WAPDA Audit, who is assigned to WAPDA, togetherwith a staff of 400 on a permanent basis. Under an earlier operation(Cr. 1280-PAK), the Bank Group agreed to accept the AG as the independentauditor until WAPDA's accounting system was strengthened sufficiently topermit a judgment on the quality of AG's audit. It was also recognized thatan effective internal audit system, which is presently lacking, is requiredto support the external audit. The AG, with Dutch assistance, is making asignificant effort to strengthen the audit function. Tnese improvements,together with WAPDA's efforts to strengthen its accounting procedures and toinstitute an effective internal audit function, will go a long way infacilitating the AG in performing the external audit (para 4.03). Presentarrangement is to accept the Preliminary Audit Observations, together withthe balance sheet, income statement and any other relevant statements cover-ing the performance of WAPDA, as satisfying the Bank's audit requirements.The observations are normally issued within six months of the close of thefiscal year. The existing audit arrangement will continue until the newinternal audit syscem is in place and the new accounting system is fullyimplemented and operational, so that an informed judgment can be made on thequality of the AG's audit. The Bank has reserved the right to monitor thepresent audit arrangements and, if necessary, to request an audit consistentwith Bank guidelines. Under the previous WAPDA power projects, WAPDA agreed:(i) to the Bank's standard audit covenant to enable the Bank to retain theright of exercising the option of requesting an audit consistent with itsguidelines; and (ii) that the interim arrangements governing WAPDA audits,requiring WAPDA to submit its annual accounts, together with PreliminaryAudit Observations within six months of the end of the fiscal year wouldremain in force until the new internal audit system is in place. This arran-gement is renewed under the Project (para 6.02(a)).

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Financial and Commercial Operations

4.05 WAPDA's distribution department is one of the largest commercialundertakings in Pakistan with annual sales in FY85 of 13,756 GWh to over 4.5million consumers, and monthly. billing and collections amounting to aboutRs 750 million. This magnitude of operation requires efficient financial andcommercial systems and capable staff to operate them. WAPDA, however, hasbeen unable to recruit qualified mid- to high-level accounting staff becauseits current rules stipulate that such positions be filled by promotingindividuals from within WAPDA. In order to address this constraint, newrules covering WAPDA's Accounting Service have now been drafted which wouldpermit the recruitment of mid- to high-level accounting staff from outsideWAPDA. These are being reviewed by a committee prior to their presentationto the Authority for approval. Once these rules are approved, WAPDA will beable to recruit qualified financial staff to fill required positions at bothheadquarters and the eight AEBs where the shortage of qualified staff isparticularly acute.

4.06 WAPDA continues to make progress in streamlining and strengtheningits financial and commercial operations with substantial support from US ID(paras 2.11 and 4.02) which includes a large training component. Thisproject complements the institution-building work carried out by WAPDA underBank-financed projects (paras 1.14 and 4.02). WAPDA, USAID and the Bank areclosely coordinating their institution building activities. Annex 4.6 sum-marizes work being carried out in the financial and commercial areas.

Insurance

4.07 Prior to 1977, WAPDA placed its insurance with the National InsuranceCorporation of Pakistan, a Government insurance agency. Due to difficultiesin settling its claims with this agency, WAPDA elected to insure its assetsunder a self-insurance scheme. It was established, with the assistance ofactuarial consultants, to cover substations, power houses, machinery andworkshops against loss from fire and machinery breakdown. WAPDA contributesRs 15.3 million annually to the insurance fund which is administered inde-pendently by a Board of Management with assistance of actuarial consultants.As of June 30, 1985, the insurance fund amounted to Rs 73.2 million. TheBank has reviewed these insurance arrangements and found them acceptable.

Past Operations

4.08 Financial statements showing WAPDA's performance during the periodFY81-FY86, are presented in Annexes 4.1 and 4.2, and summarized inTable 4.1:

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Table 4.1: OPERATING RESULTS FY81-FY86

Year Ending June 30 FY81 FY82 FY83 FY84 FY85 FY86(Provi-sional)

kWh generated (million) 13,206 14,768 16,477 18,052 18,780 21,055kWh sold (million) 9,068 10,288 11,593 12,762 13,756 15,504System losses SX) 31 30 30 29 27 26Avg. rev/kWh sold,including fuel surcharge 51 57 62 63 64 74

Operating Rev. (Rs million) 4,777 6,011 7,361 8,214 8,992 11,761Operating Exp. (Rs million) 2,218 3,306 4,083 5,069 6,473 7,816Operating Income (Rs million) 2,559 2,705 3,278 3,145 2,519 3,945Net income (Rs million) /a 1,870 1,835 2,214 1,977 1,085 2,129Self-financing ratio(3 yr. Avg.) (Z) 56 65 82 70 37 48

Rate of Return:on Historically valued assets (%) 18.3 17.3 17.9 14.6 10.3 13.0on Revalued assets (proforma) (x) 10.4 9.5 10.0 8.2 4.0 5.3ia After interest and payment to government.

WAPDA's electricity generation increased from 13,206 GWh in FY81 to 21,055GWh in FY86, averaging about 11.7% between FY81 and FY83, 6.8% between FY84and FY85 and 12.1% in FY86. The downturn in the rate of growth of generationin FY84 and FY85 is attributable to capacity constraints precipitated by poorhydrological conditions in FY84 and FY85. The higher growth rate in FY86 isattributable to better utilization of hydro capacity due to improvedhydrological conditions in that year and the addition of 440 KW of thermalcapacity at Guddu (Combined Cycle Units) which was an integral part of theFY86 CIP. WAPDA's electricity sales during the period FY81 to FY86 followeda pattern of increase similar to that of generation. However, as WAPDA wasable to reduce losses, from 31% of g:oss generation in FY81 to 26% in FY86,by extending and upgrading the transmission network (paras 1.14 and 2.08) andstreamlining and strengthening billing collection operations (para 4.02),sales increased at higher rate of growth than generation, averaging about11.3% compared to 9.8%.

4.09 WAPDA's average revenue/kWh increased in nominal terms from 51 paisain FY81 to 74 paisa in FY86, representing an average annual increase of about9.4%. WAPDA's average revenue includes a fuel adjustment surcharge which iscalculated on the basis of the average fuel cost incurred in the 12-monthperiod ending two months prior to the month of billing. However, the fuelsurcharge clause is applicable only to consumer categories other than domes-tic and agricultural consumers. As a result, WAPDA is unable to recoverfully the cost incurred in a particular year. Recognizing that this underrecovery of fuel costs, which is projected to be about 37% in FY87, is adver-sely affecting the availability of local resources to implement the CIP, GOPhas extended the applicability of the fuel surcharge clause to domesticconsumers consuming more than 250 kWh/month (para 1.09). GOP is alsoinitiating a load research and management study which would provide inputsneeded for the restructuring of electricity tariffs (paras 1.09 and 5.02).

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4.10 WAPDA's operating revenues increased from Rs 4,777 million in FY81 toRs 11,761 million in FY86, representing an average annual rate of about 20%.By contrast, during this period operating costs increased at an averageannual rate of about 28% because of higher fuel costs stemming from greaterreliance on thermal capacity and increases in the prices of fuel (para 4.08).As a percentage of total operating costs, these increased from 22% in FY81 to46% in FY86. Higher fuel costs, which WAPDA was unable to recover fully(para 4.09), together with inadequate upward adjustments in tariffs andshortages of generating capacity, eroded the utility's profitability par-ticularly in FY84 and FY85 (paras 4.11 and 4.12). In these two years, theratio of operating income to operating revenue, declined from 54% in FY81 to38% in FY84 and 28% in FY85. In FY86, however, due to the 10% increase intariffs (para 4.11) and larger recovery of fuel cost, the ratio improved to34%.

4.11 WAPDA's self-financing ratio, calculated in accordance with theformula agreed under the Third WAPDA Power Project (Cr. 968-PAK), was 56% inFY81, 65% in FY82, 82% in FY83, 10% in FY84. The relatively highself-financing ratios were achieved mainly because of slippages in WAPDA'sinvestment program precipitated by resource constraints stemming from inade-quate tariff increases and reductions in annual budgetary allocations (paras4.01 and 4.09). In FY85, by contrast, there were virtually no slippages inthe implementation of the planned investment program which was substantiallylarger than the program for the preceding year, Rs 6,768 million compared toRs 4,621 million. However, as there were no tariff increases, WAPDA'sself-financing ratio in that year was about 37%, compared to the covenantedlevel of 40%. In order to ensure greater concurrence between planned andactual investments and enable WAPDA to achieve the covenanted self-financingratio, agreement was reached with GOP and WAPDA under the ESL on a three-yearCIP for FY86-FY88 and on the implementation of measures needed to ensure thatat least 40% of it is financed from WAPDA's internal sources (paras 1.04,1.09 and 4.01). Accordingly, tariffs were increased by 10% for all consumercategories effective July 1, 1985 (para 1.09). Unaudited accounts for FY86indicate that shortfalls in the implementation of the investment program aresmall, relative to the past, 22% compared to over 50% during the periodFY81-FY84 (para 1.09). Moreover, WAPDA achieved a self-financing ratio of48%. GOP, in reaffirming its commitment to the CIP, has increased theplanned investment program for FY87 to largely offset the shortfallsexperienced in FY86 (para 1.05). GOP and WAPDA have also agreed under FourthWAPDA Power Project (Ln. 2499-PAK) to replace, starting FY89, the existingretrospective formula with a forward looking formula for calculating internalcash generation which would require WAPDA to generate annually from internalsources 40% of its investments averaged over the previous, current and suc-ceeding years, after taking into account the changes in working capital (para4.01).

4.12 During the period FY80-FY83, WAPDA's revenues and operating incomekept pace with increases in its asset base, thereby enabling the utility toachieve an average rate of return of 17% on historically valued assets and10% on revalued assets. In FY84 and FY85, however, the rate of returndeclined to 14.6% and 10.3% on historically valued assets and 8.2% and 4.0%on revalued assets. This decline in rates of return is attributable to:(i) the commissioning of large assets during those two years, particularlyhydro capacity; (ii) the underutilization of some of WAPDA's assets in FY84

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and FY85, particularly hydro units and the associated transmission linesowing to poor hydrological conditions (para 4.08); and (iii) a deteriorationin WAPDA's profitability (para 4.10). Reflecting an improvement in WAPDA'sprofitability (para 4.11), the rate of return increased in FY86 to 13.0% onhistorical assets and 5.3% on revalued assats. WAPDA's financial projectionsfor the period FY87-FY93, in fact, show that the rates of return are expectedto improve to about 9% on revalued assets as WAPDA's tariffs are increased inline with the financial performance covenant (paras 4.01 and 4.11) and thegap between current tariff levels and LRMC is reduced.

Present Financial Position

4.13 Balance sheets showing WAPDA's financial position at the end ofFY86 1/ is presented in Annex 4.1. The book value of fixed assets is shownat historical cost, as required by GOP. As a large proportion of WAPDA'selectricity supply facilities (generating plant, and transmission and dis-tribution networks) were commissioned during the last few years, its grossfixed assets in service increased between FY80 and FY86 by about 160%; ofthese, 59% were financed from WAPDA's internal sources and 41% from borrow-ings. WAPDA is currently in the process of establishing a system that willclassify fixed assets by category to form the basis for formulating ofappropriate depreciation schedules (para 4.02). This work is expected to becompleted by end-1986. Until such time, an average rate of depreciation ofabout 3.5% is being applied, which is considered adequate by the Bank.WAPDA's capitalization as of June 30, 1986 is summarized in Table 4.2:

Table 4.2: WAPDA'S CAPITALIZATION AS OF JUNE 30, 1986

Equity Rs Million Z

Government investment 2,437 5Government equitycontribution 3,301 7

Consumer contributions 2,750 6Retained earnings 13,761 29Total 22,249 47

Long-Term Debt 24,740 53TOTAL CAPITAL 50,446 100

The Government's investment of Rs 2,437 million includes initial contributionof Rs 461 million to WAPDA at the time of its formation, capital contribu-tions of Rs 471 million for the Warsak and Mangla projects and Rs 1,414million for Tarbela. At the end of FY86, WAPDA's capitalization position wasstrong with a debt/equity ratio of 53/47 compared to a ratio of 61/39 at theend of FY79. This increase in equity is mainly due to improved earnings;retained earnings amounted to 62% of total equity at the end of FY86,compared to only 26% at the end of FY79. In addition to a strong capitaliza-tion position, the ratio of current assets to current liabilities of 3.0 and

1/ Data for FY86 are provisional.

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the coverage of debt service by gross internal cash generation of 1.9 aresatisfactory.

Government Arrears

4.14 Given the magnitude of WAPDA's operations (para 4.05), its overallaccounts receivable, amounting to 2.6 months' sales as of end FY86 are satis-factory. However, Government departments and agencies were delinquent inpaying their bilLs on time. Receivables from this category of consumers hadincreased from Rs 617 million representing 3.5 months' sales as of December31, 1985 to Rs 889 million representing 5 months' sales as of February 28,1986, despite the agreement reached under the Fourth WAPDA Power Project(Ln. 2499-PAK) which requires GOP to cause all government departments andagencies to pay their electricity bills within three months of receipt of thebill beginning January 1986. GOP and WAPDA had informed the Bank that thedelinquent departments were withholding payment because some portion of thebills are being disputed. The Bank was also informed that sinceapproximately 20% of the amount billed is under dispute, GOP had directed alldepartments and agencies in arrears to pay all uncontested receivables(approximately 80% of the outstandings) to WAPDA by March 31, 1986. Further-more, the Finance Ministry had authorized deduction of appropriate amounts atthe budgetary source, if the uncontested receivables were not paid by thespecified date. Accordingly, about Rs 393 million have been paid to WAPDA byGOP through budgetary deductions thus reducing the arrears owed by Governmentdepartments and agencies to 2.7 months' level. In order to ensure thatWAPDA's cash flows are not adversely affected by the high levels of receiv-ables from Government departments and agencies, GOP agreed during nego-tiations to cause all Federal and Provincial Governmental Agencies andDepartmAnts to pay all bills for the supply of electricity by WAPDA withinthree months of receipt of bill (para 6.01).

Investment Program and Financing Plan

4.15 WAPDA's development program for the period FY87-FY95, together withthe annual phasing of expenditures for ongoing and new projects, is presentedin Annex 4.5 and summarized in Table 4.3.

Table 4.3: CAPITATS INVESTMENT PROGRAM

Rs million US$ million % Foreign Exch.(%)

Generation 122,026 -7,233 63 46Transmission 18,889 1,120 10 45Subtransmission 22,529 1,335 11 20Distribution 30,157 1,787 16 16Total 193,601 11,475 100 40

Of the total investment program, about 63% is earmarked for the expansion ofgenerating capacity, 21% for the extension and reinforcement of the transmis-sion and subtransmission systems and 16% for the distribution system. Assubstantial investments have already been made in the development of trans-mission (paras 1.14 and 2.08) and distribution facilities (para 2.11), andbecause slippages were most acute in the commissioning of new generating

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capacity, a relatively larger share of the planned program has been earmarkedfor their expansion. The Bank has reviewed the investment plan for itscontent, size and allocation, and finds it satisfactory. In order to ensurethat WAPDA's system continues to develop along the least cost path, GOP andWAPDA agreed under the Fifth WAPDA Power Project (Ln. 2556-PAK) to an annualinvestment review with the Bank which would result in a rolling three-yearpriority investment program, starting with the core investment program forFY86-FY88 (para 2.09). A priority investment program for FY87-FY89 wasagreed to by GOP and WAPDA under the Kot Addu Combined Cycle Project(Ln. 2698-PAK). It amounts to Rs 39 billion, with annual allocation ofRs 10,751 million for FY87, Rs 11,535 nillion for FY88 and Rs 16,669 millionfor FY89. Of the total, Rs 21,749 million are earmarked for generation,Rs 10,731 million for transmission and 6,375 million for distributionfacilities. In line with this agreement, GOP has allocated Rs 10,390 millionfor WAPDA under the FY87 ADP (para 1.07).

4.16 The sources of financing for WAPDA's investment program covering theperiod FY87-FY91, the period of implementation of the Project, are summarizedin Table 4.4:

Table 4.4: FINANCING REQUIREMENTS AND SOURCES DURING FY87-FY92

Rs million US$ million %Requirements

Capital Investment 110,472 6,548 94Working Capital Increase 7,422 440 6Total Requirements 117,894 6,988 100

Sources

Gross Internal Sources 85,141 5,047 -Less: Debt Service /a 39,267 2,328Net Internal Cash Generation 45,874 2,719 39BorrowingsGOP Loans 29,992 1,777 25Foreign Loans 40,873 2,422 35Proposed Loan 1,155 70 1Total Borrowings 72,020 4,269 61

Total Sources 117,844 6,988 100

/a Includes interest during construction and Rs 20 million payment toGovernment.

During the period FY87-FY92, WAPDA's total requirement of funds would amountto Rs 117,894 million (US$6,988 million); Rs 110,472 million (US$6,548 mil-lion) for capital investment and Rs 7,422 million (US$440 million) for work-ing capital increase. Of the total funds required, Rs 45,874 million(US$2,719 million) or about 39X would be financed by WAPDA from internalsources and the balance of Rs 72,028 million (US$4,269 million) would befinanced through borrowings. GOP loans, which would be made to WAPDA by wayof ADP allocations, would amount to Rs 29,992 million (US$1,777 million) andmost of it would be in Rupees. Foreign loans amounting to Rs 42,028 million(US$2,492 million), including the disbursements under the Project, would

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finance about 35% of the total tequirements. About 53% of foreign exchangerequirementst amounting to Rs 21,663 million (US$1,284 million) have beensecured and sources for another 27%, amounting to 11,036 million (US$654million) have been identified. The balance, amounting to Rs 8,174 million(US$484 million) or about 20% of foreign exchange requirement, remains to besecured. This financing gap is not considered serious, given that (i) itoccurs in later years, particularly FY91 and FY92; and (ii) GOP and WAPDAhave, in the past, successfully mobilized adequate bilateral aid and/orsuppliers' credits.

Future Finances

4.17 Forecast balance sheets and income statements, and sources andapplications of funds statements and balance sheets for FY87-FY93 are shownin Annexes 4.1, 4.2 and 4.3. A summary of forecast operating results forthis seven-year period is presented below:

Table 4.5: FORECAST OPERATING RESULTS

FY87 FY88 FY89 FY90 FY91 FY92 FY93

Generation (GWh) 24,329 25,891 28,403 31,398 34,672 37,976 41,614Sales (GWh) 18,247 19,936 21,870 24,176 26,697 29,242 32,043Average revenue perkWh sold (paisa) /a 75 85 116 132 137 147 152

Operating revenue (Rs million) 14,087 17,303 25,669 32,320 36,945 43,455 49,143Operating expense (Rs million) 9,427 11,069 14,739 18,786 22,246 26,934 31,886

Net operating income (Rs million) 4,660 6,234 10,930 13,535 14,698 16,521 17,256Self-financing ratio(Three-year average)(%) 40 40 40 40 40 40 40

Rate of returnHistorically valued assets (Z) 13.0 14.4 20.4 20.1 17.6 16.1 14.0Proforma revalued assets (%) 5.2 6.1 9.0 8.8 9.4 9.0 8.8

Debt/equity ratio 56/44 59/41 59/41 59/41 59/41 59/41 59/41Debt service coverage 1.8 1.7 2.4 2.3 2.2 2.1 2.0/a Including fuel surcharge.

WAPDA's financial projections are based on projected increases in electricitygeneration and tariffs, and a reduction in system losses. Forecasts for FY87also take into account the reduction in price of fuel oil by 4.1% and HighSpeed Diesel by 9.4% and the reduction in the price of natural gas from Marifield to WAPDA. Electricity generation is forecast to increase at an averageannual rate of 8.9% and electricity sales by 9.6%, reflecting a sustaineddecrease in system losses. In order for WAPDA to continue to self-financenot less than 40% of its capital investment program to meet the financialperformance covenant, forecasts through FY93 show that it would need toincrease tariffs at an average annual rate of about 15% in nominal terms,amounting to about 8% in real terms, assuming an average annual inflationrate of 7%. GOP expanded the coverage of the fuel surcharge to domesticconsumer consuming more than 250 kWh/month (para 1.09). Estimates show thatthis action, together with that of reduction in price of Mari gas to WAPDA,would enable WAPDA to self-finance 401 of the CIP for FY87. In order toensure that sufficient resources are available to implement WAPDA's powerdevelopment program, it has agreed to take all necessary actions to

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self-finance 40% of its capital expenditures each year as stipulated underthe Fourth WAPDA Power Project (Ln. 2499-PAK) (para 6.02(c)).

4.18 Forecast balance sheets (Annex 4.1) show that WAPDA's gross fixedassets are expected to increase from Rs 43,531 million in FY86 to Rs 158,375million at the end of FY93. Equity is expected to increase by about threeand one-half times, from Rs 21,971 million in FY86 to Rs 76,419 million inFY93, with retained earnings accounting to 86% of this increase. Long-termdebt is forecast to increase by about four and one half times, from Rs 23,874million to Rs 110,928 million, resulting in a deterioration of debt/equityratio from 53/47 in FY86 to 59/41 in FY93 which, however, continues to bereasonable for an electric utility. The coverage of debt service by grossinternal cash generation would be satisfactory during this period as wouldthe ratio of current assets to current liabilities. Nevertheless, in orderto ensure that coverage of WAPDA's debt service coverage by gross internalcash generation continues to be satisfactory, under the ongoing Bank Groupoperations with WAPDA, it has been agreed that WAPDA would consult the Bankshould the utility seek to incur new debt that would result in its grossinternal cash generation before debt service including payment to GOP fallingbelow 1.5 times the debt service requirement. This agreement is renewedunder the Project (para 6.02(b)).

V. ECONOMIC JUSTIFICATION

A. Forecasts of WAPDA's Electricity Sales

5.01 WAPDA's actual and projected electricity sales for the periodFY76-FY95 are presented in Annex 5.1 and summarized in Table 5.1 below.

Table 5.1: HISTORICAL DEVELOPMENT AND FORECAST OF ELECTRICITY SALESBY WAPDA BETWEEN FY76 and FY95

Average Annual Average AnnualGrowth Rate Projected GrowthFY76 - FY85 (Z) Rate FY86 - FY95 (%)

Energy Sold 11.1 9.6Residential 21.4 12.0Commercial 15.2 9.0Industrial 9.4 9.0Agriculture 8.0 6.0

Electricity consumption increased between FY76 and FY85 at an average annualrate of about 11%. This relatively high rate of growth is attributable to:(i) the unprecedented increase in the demand for electricity by theindustrial sector, particularly the newly developed electricity intensiveindustries; (ii) the increased worker's remittances from the Gulf Countrieswhich maintained a buoyant demand for electricity by the household and com-mercial sectors; and (iii) maintenance of tariff increases at levels substan-tially below the increases in the general price level which further stimu-lated the demand for electricity.

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5.02 WAPDA's forecast for the period FY86-FY95 show that the historicalpattern of electricity consumption is not expected to continue over the nextdecade, mainly because of the shortage of generating capacity precipitated bythe slippages in the implementation of its investment program (para 4.06).In order to minimize these shortages which started to emerge in 1982 and areexpected to continue into the mid 1990s, GOP, in keeping with its comprehen-sive development strategy, intends to take all necessary measures includingtariff increases to ensure that the core investment program is implemented.The tariff increases required between FY86 and FY93 to enable WAPDA tofinance 40% of its core program from internal sou:res would amount in realterms to about 8% annually (para 4.11). In addition, the load research andmanagement study being initiated by WAPDA would form the basis for restruc-turing electricity tariffs. These changes in the structure and level oftariffs together with the initiation of the conservation program agreed tounder the ESL, involving the audit and rehabilitation of the major energyconsuming industries which include the large electricity consumers,e.g. steel, cement, glass, etc., are expected to restrain the growth ofdemand by inducing consumers to use electricity more rationally.

5.03 In view of the proposed measures, the rate of growth of electricityconsumption is forecast to drop from 11.1% in FY76-FY85 to 9.6% in FY86-FY95.Among consumer categories, the household and commercial sectors are expectedto show the largest drop, primarily because of the planned adjustments in thestructure and level of tariffs (paras 1.09 and 5.02). The growth of demandby the industrial sector, by contrast, is expected to remain virtuallyunchanged despite the conservation measures and the planned investments inindustrial rehabilitation, mainly because its increased reliance over thepast few years on captive plants to avoid the disruption caused by theshortage of power. Consequently, although the higher tariffs and conserva-tion measures would reduce the power consumption per unit of output, theincreased dependence on public supply for power brought about by theaccelerated development of the subsector would leave the growth of demand forelectricity at the level observed for FY76-FY85. As for the agriculturesector, the load research and management study would provide the inputsneeded to restructure tariffs for the low voltage consumers, includingagriculture uses. This together with the projected increases in the tariffis expected to arrest the growth of demand for electricity in the agricul-ture sector, reducing the rate from 8% for FY76-FY85 to 6% for FY86-FY95.

B. Least Cost Alternative

5.04 The rehabilitation and retrofitting of the operating thermal plantswas introduced in the planning model (WASP III) used by WAPDA as one of theoptions for meeting the sustained growth in demand for electricity. Theresults of the optimization showed this option to be part of the least costdevelopment program for the period (1986-1995), as it improves plantavailability, reduces fuel consumption per kWh of power generated and makesavailable additional 200 MW of generating capacity annually. The Bankreviewed the assumptions used in the optimization and the results and foundthem satisfactory.

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C. Return on Investment

5.05 Since the Project involves both rehabilitation and retrofitting ofthermal power plants in WAPDA's system, a separate economic rate of returnwas calculated first for each of these components and then for the project asa whole, based on measurable costs and benefits. The measurable costsinclude: (i) the capital cost of equipment, materials and services requiredfor the rehabilitation and retrofitting of WAPDA's thermal power plants;(ii) incremental fuel cost associated with additional generating capacitymade available through rehabilitation; and (iii) operation and maintenancecosts which are assumed at about 5% of the capital cost of equipment. Theinvestments in the existing power plants to be rehabilitated and retrofittedare considered sunk and were not included in the calculations. Themeasurable benefits include revenues associated with incremental salesattributable to the Project and savings in fuel consumption due to improve-ment in heat rate. Details relating to the assumptions and calculations arepresented in Annex 5.2.

5.06 Based on measurable costs and benefits, the economic rate of returnis about 15.7% for the rehabilitation component of the Project and about16.3% for the component involving the conversion of combustion turbines tocombined cycle operation. On the same basis, the economic rate of return forthe Project taken as a whole is about 16%. These rates of return arefavorable relative to the opportunity cost of capital of 10%, and attest tothe economic viability of the Project and to the fact that it was designed totake advantage of investment decisions already made.

VI. AGREEMENTS AND RECOMMENDATIONS

Agreements

6.01 During negotiations, GOP agreed to cause all Federal and ProvincialGovernmental Agencies and Departments to pay all bills for the supply ofelectricity by WAPDA within three months of receipt of the bill (para 4.14);

6.02 During negotiations, WAPDA agreed:

(a) (i) to the Bank's standard audit covenant to enable the Bank toretain the right of exercising the option of requesting an auditconsistent with its guidelines; and (ii) that the interim arrange-ments governing WAPDA's audits, requiring WAPDA to submit its annualaccounts, together with Preliminary Audit Observations, within sixmonths of the end of the fiscal year, would remain in force until thenew internal audit system is in place (para 4.04);

(b) to consult the Bank should it seek to incur new debt that wouldresult in WAPDA's internal cash generation before debt service andpayment to GOP falling below 1.5 times the debt service requirement(para 4.18); and

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(c) to take all necessary actions to self-finance at least 401 of itscapital expenditures each year, as stipulated under the Fourth WAPDAPower Project (Ln. 2499-PAK)(para 4.17).

6.03 The following would be the conditions of effectiveness:

(a) fulfillment by WAPDA/GOP of all conditions precedent to the effec-tiveness of the ODA grant (para 3.05); and

(b) approval by ECNEC of the PC-I for the Project (para 3.11).

Recommendation

6.04 Subject to the above conditions, the Project is suitable for a Bankloan of US$70.0 million equivalent.

PAKISTAN

WATER AND POWER DEVELOPMENT AUTHORITY

POWER PLANT EFFICIENCY IMPROVEMENT PROJECT

ProRress Made in Implementing the Enerav Sector Strategy

Current StatusSummary Description of Program Target Date and Remarks

I. Development and Investment

1. Hydropower. Employment of consultants Not yet dueto initiate the preparation of a detailed -W APDA has prepared the project documentsite investigation, engineering and cost December 31,1986 (PC II) required to obtain GOP's approvalestimates for the Basha site. for the study.

- Financing for the study is expected to besecured from CIDA and other bilateralagencies.

2. Petroleum Products Subsector. March 31, 1986 The consultants Foster & Wheeler (FW) havesubmitted the final report to GOP in

Completion of a study to (complete the November 1986. The report is beingestablish a least cost plan study) currently revieved by the concernedfor the development of infra- Ministries and agencies; on completion ofstructure for the production, this review, the report will be discussedtransport and delivery of June 30, 1986 by the GOP's Energy Review Group (ERG) andproducts; and review of the (review with Economic Coordination Committee of theresult of such study with the the Bank) Cabinet (ECC). Those Projects which theBank. ERG and ECC consider to be justified would

then form a part of the core investmentprogram and reflected in the formulationof the the Seventh Five-Year Plan.

3. Coal. Completion of a study September 30, Consultants, Energy Development Interna-on promotion of accelerated 1986 tional (EDI) and Price Waterhouse, havedevelopment to identify the (complete the submitted the draft report, which ismain operational constraints; study) under review by GOP.and initiation of a plan ofaction to address such con- a "straints.

I-.a/ As per schedule 5 of the Loan Agreement, and 0%Policy (Annex IV of the President's Report).

4. Core Investmeat Proaram (CIP). April 30, 1986 The Bank has reviewed with GOP the progressGOP has outlined a CIP which en- made in implementing the CIP for FY86 and incompasses high priority projects mobilizing resources for the CIP for FY87 andto be completed or initiated during has found it to be satisfactory.the years FY86 to FY88. Implementa-of the CIP is to be monitored indetail annually.

5. Hydrocarbon. Development of a April 30, 1986 OGDC has submitted to the Bank theirnational policy aimed at increasing (first review FY87 development program comprising comple-the level of private equity invest- with Bank) tio,n of ongoing wells and drilling of newment in botb exploration and develop- n,'fw exploratory and development wells. Thement and balancing the public and Bank has also reviewed the status of newprivate sector involvement. GOP joint ventures in four-concession areaswould review annually with the Bank recently signed with two private sectorthe progress made in increasing pri- companies -Crescent and Pakistan Oilfieldsvate sector participation and in im- Ltd. - and found it to be encouraging.plementing OGDC's Core InvestmentProgram (CIP).

6. Power Subsector. Formulation of a least December 31, The revised national long-term least costcost national plan based on more detailed plan, vhich incorporates the more recentdata to replace the existing interim pro- 1986 (review developments in the subsector was completedgram. with the Bank) end-December 1986. The plan would be

reviewed jointly by GOP, WAPDA and the Bankin March 1987.

II. Pricing and Demand Manaaement

7. Gas Consumer Prices. Undertake gradual June 30, 1988 GOP increased the gas consumer pricesincreases in the domestic price of natural effective July 1985 by about 50% on angas to reach two-thirds of the border price overall basis to reach abtut 65% of theof fuel oil, and thereafter review vith the then border price of fuel oil of US$143Bank the general strategy and further mea- per ton. With the recent drop in oilsures for inducing consumers to use gas more prices, the average consumer price of gasrationally and mobilize resources for the is at about 120% of the border price ofdevelopment of the subsector. fuel oil of about US$75 per toe.

8. Gas Producer Prices. Announce the new June 30, 1985 GOP announced the formula on June 8, 1985,producer pricing formula linking it to (announce the and widely publicized it in the press.the international price of fuel oil, formula) It links the price paid to producers of gas Sand wilely publicize it within oil in- discovered after September 30, 1985 to 662dustry circles. In addition, keep the of fuel oil price less a negotiable discountoperation of this formula under review. for geological risk, location of the conces-

sion, etc. This initiative has been welcomed 0by the private sector: one foreign oilcompany is in the process of bringing into

production an already discovered gas fieldin the southern part of Pakistan and two newconcessions have been signed with foreignoil companies. Moreover, the Government, onappropriate terms, intends to consider theapplication of this formula to fields whichwere already discovered, but not yet inproduction, and to future gas fields whichwould be developed in the existing conces-sions.

9. Coal Imuorts. Allow the imports of coal December 31, The prefeasibility study was completed in Aprilfor power generation around Karachi, fol- 1987 1986 by consultants SKARINIGAN INTEG, underlowing the completion of the feasibility (complete the financing from CIDA and the Bank. The detailedstudy and detailed engineering and the study) feasibility study of the power and marineestsblishment of a coal-fired power facilities at the 'Khalifa point' site west ofcomplex Karachi, for which GOP has already approved the

project document PC-II, is proposed to befinanced under the ongoing Fifth WAPDA Project.VAPDA bas issued on January 1, 1987 the letterof i-vitation alongvith terms of reference tothe five shortlisted consultants for submissionof their proposals.

10. Coal Pricina. Complete a study to: November 30, The study is being financed under the ongoing

(i) outline a atrategy for corporate 1986 Technical Assistance Credit. GOP has awarded £

restructuring of Pakistan Mineral (complete the the contract to British Nining ConsultaaztsDevelopmeLt Corpcration (WiDC) and study) (BMC), wbo have started the vork in October

technical improvements to promote 1986 and expect to complete the study bythe more efficient operation of mines April 1987.in the public sector; and (ii) providea basis for reviewing the role of thepvblic sector in coal mining.

11. Gaas 7Sad WARalaement. Initi^te a study December 31. The study is being financed under the energyto revise (i) revise GOP's Development 1985 (initiate sector loan. GOP and S*GPL have accepted inPlar. to deteimine the optimal supply and the study) August 1986 the offer of Gas Developmentutilization pattern for the next five Corporation, USA to undertake the study.years; and (ii) outline a demand manage- December 31, However, the signing of contract agreementsent policy aimed at improving the 1986 (review between GDC and GOP has been delayed by overefficiency of gas supply and consumption. the results of four months because of GOP's reluctance to

the study with grant a tax waiver to consultants. In thethe Bank) event that GDC starts the work in March

1987, as is presently envisaged, the draft w ,

final report would be available by September o .1987 and the final report by November 1987.

12. Demand Manaieent in the Public Sector: November 1, ENAR Petrotech, local consultauts have alreadyInitiate a program of energy audits in 1985 (initiate surveyed and identified the 20 largest energy

at least 20 of the largest energy consum- the audits) consuming plants in tbe public sector-; and areing plants, in accordance with TOR and the now in the process of undertaking energy auditstimetable for energy audits and related June 30, 1987 of these plants. In addition, GOP has requestedfeasibility studies acceptable to the (complete the the Bank that the total loan amount of US$3Bank, with the work to be performed by program) million be utilized for the instrumentsaton andlocal and foreign consultants. other immediate energy conservation teeds of

Pakistan Steel.

III. Institutional Develonment

13. Onerational Autonomy of OGDC. June 30, 1986 In order to strengthen OGDC's organizationalIdentify and take measures to strengthen (review with structure and to move it toward financialOGDC's managerial and technical capabi- the Bank) self-reliance, assistance would be required inlities and to move OGDC towards financial areas of: (i) accounting from an internationalself-reliance. firm to produce without qualification and

accounting audit and balance sheet of OGDC;(ii) a modern management information systemfocussed inter alia on cost accounting,inventory, and stores control. In addition,assistance would also be required in theimplementation of above systems. Under thePirkoh Gas Project (Phase II) financed byADB, OGDC has recruited consultants inNovember 1986 to undertake an operationalstrategy study with a view to possiblerestructuring of its subsidiary, PirkohGas Company, Ltd.

14. Reorganization of Power Subsector. June 30, 1986 As a first step, a new Power DistributionReview the means for reorganizing the Wing has been created in WAPDA and itspower subsector, including the possi- functions have been consolidated under thebility of separating distribution of position of a Deputy Managing Director. Inelectricity from WAPDA and assigning addition, in order to promote the integratedWAPDA with the responsibility of development of the power subsector, GOP isgeneration and transmission of presently examining the legal implicationselectricity for the entire country, of assigning to WAPDA the responsibility oftogether with the schedule of their generation and high voltage transmission ofimplementation. electricity for the entire country and

restricting KESC's operation to the bulkpurchase of power from WAPDA for distributionin the Karachi area. Consideration is also " zbeing given by GOP to private sector involve- >

ment in the power subsector for which aNational Deregulation Commission headed bythe Governor of the State Bank of Pakistan uwas appointed by GOP in August 1985. ECC

has also approved a charter of terms andconditions under which the private sectorwould be invited to participate in powergeneration. A detailed framework forcompensating potential private firmsinvolved in the supply of power in Pakistanis currently being formulated in collabora-tion with the Bank and ISAID.

15. Enera, Conservation. Establish and December 31, GOP has established a National Energythereafter maintain a National Energy 1985 Conservation Center (ENERCON) for the overallConservation Centre (ENERCON) under coordination of energy conservationGOP's Ministry of Planning and Develop- activities. It is under the purview of thement, whose structure, operational Ministry of Planning and Development and isprogram, staffing and funding is administered by a Council for Energyacceptable to the Bank. Conservation, comprising senior representa-tives from concerned ministries. The Councilis to be guided by an Advisory Committee,consisting of representatives from GOP,provincial goverrments, VAPDA, and the Federalof Chamber of Commerce and Industries. It isresponsible for planning energy conservationactions, formulating policy guidelines,developing a data base, supporting trainingactivities and private research, undertakingdevelopment and demonstration, as well as publicinformation activities, and monitoring theentities. Despite a delay in its establishmentand staffing, ENERCON has made substantialprogress in the areas of: (i) planning andlegislation; (ii) data base development fortransport, building and industry; (iii) energyaudits; (iv) training and curriculum development;and (v) information and outreach programs.A draft report on energy use in Pakistan'sagricultural sector has also been completed,which would be reviewed by the Bank.

16. Enerlv Conservgtion in the Private December 31, GOP has decided to undertake private sector-Sector. ENERCON to identify at least 1985 wide energy consumption survey, to be financed15 of the largest private sector energy (initiate under the ongoing Technical Assistance Credit.consuming industrial plants for energy audits) GOP awarded in August 1986 the contract toeQ z

audits to be performed by local and Zelin Ltd. (in association with Arthur D. Little aforeign consultants; review with the of USA) to undertake the survey which would alsoBank the TOR and the timetable for such December 31, provide an input to ENERCON for identifying the Oenergy audits and the related feasibi- 1987 plants and initiating energy audits.lity studies; and take necessary mea- (completesures to cause such audits to be initi- audits)ated and completed in the next two years.

17. Enerav Plannina. Annually review with April 30, 1986 The Government has established an Office ofthe Bank the work undertaken by the new Energy Planning under financing from the Unitedoffice of Energy Planning and Development (first review) States Agency for International Development(ENERPLAN) established under the GOP's (USAID) in the Ministry of Planning andMinistry of Planning and Development, as Development to address substantive policy issues.well as the ENERCON to be set up under Specifically, it is mandated to collect, compilethe loan. and analyze, on an ongoing basis, all relevant

data on the energy sector and integrate them withthe country's development plans to enable theGovernment to identify priorities, evaluateresource requirements, support effective policyformulation and investment planning. Consultantshave been recruited, and about one-half of thesanctioned positions have been filled. Work iscurrently underway on: (i) reviewing theperformance of the energy sector entitiesduring the current plan period; and (ii) prepa-ration of the Seventh Five-Year Plan and along-term (20-year) plan for the energy sector.Draft reports of these plans are expected to becompleted by mid-1987. These reports would bereviewed jointly by GOP, the Bank and USAID.Recently, GOP has merged ENERPLAN with theenergy division of MPD to form an Energy Wingto further strengthen energy planning andstreamline the institutional setting.

18. Manuower Development. Undertake a manpower needs - ENERPLAN has been assigned the task of under-assessment to determine: (a) ther range of tech- taking the proposed assessment. A preliminarynical, management, and analytical skills needed report was prepared end 1985 by USAID financedto accomplish the goals of energy programs; (b) consultants Arther D. Little (ADL) and submittedthe present capabilities of local institutions to ENERPLAN for review and appropriate action.to meet these needs (c) the priorities to in- Math Tech will further refine the report pre-crease skills to meet these needs; and (d) actions pared by ADL and assist in implementing thenecessary to improve existing programs for this manpower needs assessment program.purpose, together with the cost and time require-ments.

o0.**4g-

0%

PAKISTANPOWER PLANT EFFICIENCY IMPROVEMENT PROJECT

organization Chart

WC II EHJ I ECNE(HGh ae0 GCPe (endo& (pectcas

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PAKISTANWATER AND POWER DEVELOPMENT AUTHORITY

POWER PLANT EFFICIENCY IMPROVEMENT PROJECT

Organization Chart

chakmnio

rbw (Po-)

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I1

PAKISTANWATER AND POWER DEVELOPMENT AUTHORITY

POWER PLANT EFFICIENCY IMPROVEMENT PROJECT

Orqanization Chart - Power Wing

ma-o iDilecta|

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,or G,rdi ;;1 | Generoti MrK mngeiN (T, g Goni i manGer| Fi- h P) l Diibutboe GerCOmmrcIa Chie Engtine)

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projects

-41-ANNEX 2.3

PAKISTANWATER AND POWER DEVELOPMENT AUTHORITY

POWER PLANT EFFICIENCY IMPROVEMENT PROJECT

Forecast Electricity Generation

(GWh)

POWER STATION FY87 FY88 FY89 FY90 FY91 FY92 FY93…__________- ----- ---.- -____ ----- ----- ----- -----

HYDEL

TARBELA 8703 9238 9396 10175 11763 12222 12550MANGLA 5222 5313 5371 5556 5553 5580 5656WARSAK 770 1254 1270 1270 1225 1231 1250SMALL HYDEL 505 534 484 730 734 738 1686

-- …_ _ ----- ----- ----- ----- -----

TOTAL HYDEL 15200 16339 16521 17731 19275 19771 21142

THERMAL

TPS GUDDU 3323 3253 3458 3372 3316 3512 3603NGPS MULTAN 1236 1171 1222 927 1261 3127 3136SPS FAISLABAD 678 597 625 505 441 521 529GTPS FAISLABAD 336 359 417 403 0 0 0TPS SUKKUR 259 202 213 173 148 178 179NTPS HYDERABAD 149 151 158 124 69 82 82GTPS KOTRI 198 221 258 264 87 87 85GTPS SHADARA 69 131 151 154 51 36 36GTPS QUETTA 130 172 195 184 92 98 97REPCO MESCO 74 146 152 124 109 129 131GUDDU GAS TURB. 1708 164 0 0 0 0 0KOT ADU GAS TURB 689 739 1556 1704 285 291 281GUDDU - CS 280 2246 2591 2531 2489 2633 2702JOMSHORO -1 & 2 0 0 886 1618 1699 1945 1945KOT ADDU - CS 0 0 0 1056 3565 3512 3603JOMSHORO -3 &4 0 0 0 0 0 0 803FAISALABAD - CS 0 0 0 528 1785 1756 1802LAKHRA COAL 0 0 0 0 0 298 1458

_____ ---- - ----- ----

TOTAL THERMAL 9129 9552 11882 13667 15397 18205 20472

…____ -____ _____ ----- ---- _ ----

TOTAL GENERATION 24329 25891 28403 31398 34672 37976 41614C=___ ===== s==== ==s== ===== = -ss =_==

PAKISTANWATER AND POWER DEVELOPMENT AUTHORITY

POWER PLANT EFFICI ENCY IMPROVEMENT PROJECT

Thermal Power Generation Statistics

STEM UNITS

STATION PERIOD tt SERVICE CAPACITY UNIT UTILIZATION SEIERATIO' FUEL EFFICIE

TTAL AS F JUINE 30, I5 IN FY 5 TOTAL AS OF JUIE 30, 1985 IN FY 85 SIIWEM BYDATE YEARS (El) AUAL LOAD LOAD TYPE 11 FY 85 (1) QESIUtED FYSOF IN RUWNING AVERAGE PER YEAR TOTAL AVERAE FACTOR FACTOR FURNAMCE STtIKl0 tt) 81/It (tt

ULIT CIMISS. SERVICE NOMINAL EFFECTIYE HOURS (hi (h) (1 (thi ( So ib)l (1611lt2) 1 (lh) tO 1/ SAS OIL

LrTAN I 61460 25.1 65.0 60.0 135563 5402 61.7 4614 52.7 229.0 83.0 10663 32.02 611960 25.1 65.0 60.0 127912 50SW 58.2 7926 uo.5 370.2 77.9 1w663 32.03 1211963 21.6 65.0 60.0 143406 6641 75. 89002 Y1.3 367.6 76.6 10663 32.04 1211963 21.6 65.0 60.0 147427 6827 77.9 8134 92.9 332.9 68.2 10663 32.0

SUTOTAIL 260.0 240.0 1300.5AVERAE 5992 68.4 7169 91.9 325.0 75.6 68.0 32.0 10663 32.0 11996 29.4

HYDERA 1 511960 25.2 7.5 6.0 170981 6790 77.5 8263 94.3 41.5 83.7 17959 19.02 5/1960 25.2 7.5 6.0 180236 7158 81.7 8669 99.0 46.2 88.S 7958 19.03 6/1965 20.1 8.0 8.0 80227 393 45.6 3403 38.8 13.6 50.0 17958 19.04 611967 18.1 15.0 9.0 105719 5843 66.7 90 99.1 32.7 47.6 1795 19.0

SUBTOTAL 38.0 28.0 134.0AVERAGE 5946 67.9 7231 82.5 33.5 66.2 96.0 4.0 17Y59 15.0 19914 17.1

SuXvaR 1 3/1965 20.3 12.5 12.5 129828 6381 72.8 7289 83.2 68.1 74.7 14856 23.0 19776.0 17.32 3/19165 20.3 12.5 12.5 132796 6527 74.5 7763 89.6 71.7 73.9 14956 23.0 19815.0 17.23 411967 18.3 12.5 12.5 124533 6820 77.9 6244 71.3 50.1 64.2 14856 23.0 11812.0 17.24 411967 19.3 12.5 12.5 121773 6669 76.1 7565 96.4 69.7 73.7 14156 23.0 19756.0 17.3

SUBTOTAL 50.0 50.0 259.6AVERAGE 6599 75.3 7215 82.4 64.9 72.0 100.0 0.0 14856 23.0 £9790 17.2

FAISALABAD 1 611967 19.1 b6.0 60.0 119995 6577 75.1 7487 85.5 355.0 79.02 11/1967 17.7 66.0 60.0 117215 6432 75.7 6227 71.1 316.4 84.7

SUBTOTAL 132.0 120.0 9581.0 671.4AVERA 6604 75.4 6857 70.3 335.7 81.6 61.0 39.0 12057 28.3 11729 29.1

tUDDU t 3/1974 11.3 110.0 110.0 75462 7084 80.9 527.6 67.7 9099 37.52 10/1974 10.8 l10.D 110.0 61619 7670 87.6 599.4 71.0 9099 37.5 0 .3 12/1190 4.6 210.0 210.0 35575 5809 66.3 1123.2 92.1 9099 37.5

SUBTOTAL 430.0 430.0 2250.2AVERAGE 6854 5.7 562.5 76.3 Y9.0 1.0 9099 37.5 11398 29.9

TOTAL STEAR 910.0 868.0 4615.7AVERAGE 7065 76.7 74.3AVERAGE AGE/lt (Yrs.) 14.9

- -Lo- - F---- - --.------ - - - - b---- - -.- t-------- - - ------- f- - -----------I/ Ltsd Fictor(tXring atttlizattntm) - Seneration/AtmRnning RaortEffective Cqtcity)?

PAKISTANWATER AND POWER DEVELOPMENT AUTHORITY

POWER PLANT EFFICIENCY IMPROVEMENT PROJECT

Thermal Power Generation Statistics

CNUSTIO TURBINES

STATIO PERIOD IN SERVICE CAPACITY UNIT UTILIZATION 6ENRTIN FUEL EFFICIENCY

TOTAL AS OF Jim 30, t9 IN FY 85 TOTAL AS OF JNE 30, 19M IN FYT 85 B AKO ylATE YEARS (FM IIL tLo LOUD TYPE IN FY 95 1£ ESIND FMOF IN RIIN AVERE PER YEAR TOTAL AVERG FACTOR FACTOR FURNC BTU/Oh l1) BTU/KIt 11)

tINIT COlBISS. SRICE IUINAL EFFECTIVE HOURS (h l (hI (i2 (hi (2£ (GM) (G6i IU 1/ (Sh) (1) It GAS OIL

SHIAMR 1 911966 19.9 13.3 11.0 30714 1623 IB.5 2407 27.5 23.6 99.12 811966 18.9 13.3 11.0 35634 1883 21.5 2370 27.1 24.5 94.03 10t9lS9 15.8 14.9 12.0 23549 1495 17.1 2226 25.4 22.7 85.04 1011969 15.9 14.8 12.0 24931 15B2 18.1 2141 24.4 22.4 97.25 10/t969 15.8 14.6 12.0 253 1606 19.3 2255 25.7 21.7 80.26 10/1969 15.8 14.8 12.0 23421 1486 17.0 2289 26.1 22.6 82.3

SUBTOTAL 85.5 70.0 37.5AEA 1613 15.4 2291 22.9 0.0 100.0 14217 24.0 17400 19.6

lOTRI £ 2f1970 15.4 15.0 11.0 39309 2549 29.1 2476 29.3 20.2 74.22 2/1970 15.4 15.0 11.0 45244 2934 33.5 2376 27.1 19.6 75.03 1211979 6.6 25.0 25.0 19950 2378 32.9 2133 24.3 31.7 59.44 1211978 6.6 25.0 25.0 235 3573 40. 2922 33.4 42.2 57.85 511981 4.2 25.0 25.0 17276 4146 47.3 4157 47.5 76.0 73.16 5/19S1 4.2 25.0 25.0 16137 3872 44.2 3769 43.0 66.0 tO.1

SIBTITAL 130.0 122.0 255.7AVERAE 3326 39.0 2972 33.9 42.6 14.0 U6.0 1550 22.0 18574 18.4

cAISALD 1 311975 10.3 25.0 25.0 19629 1898 21.7 4182 47.7 30.0 76.52 3/1975 10.3 25.0 25.0 15457 1495 17.1 979 11.2 17.5 71.53 6/1975 10.1 25.0 25.0 18749 1959 21.2 3966 45.3 75.0 75.64 6/l975 10.1 25.0 25.0 1410 1924 22.0 4425 50.5 71.5 64.65 9S1975 9.9 25.0 25.0 20190 2053 23.4 4091 46.7 80.0 78.26 1t0lS75 9.8 25.0 25.0 18652 1912 21.0 390 44.4 73.0 75.17 1t01975 9.8 25.0 25.0 16113 1652 18.9 3793 43.2 70.5 74.58 IIIIS75 9.7 25.0 25.0 91810 1980 21.5 4293 49.0 81.4 75.0

BuBtOTaL 200.0 200.0 559.0AvowAE 1934 20.9 3701 42.2 69.9 74.0 72.9 27.1 12273 27.9 14961 22.8 r.j

0~

TOTAL 6AS TURBINE 415.5 392.0 952.2AVERE 2257 25.8AERASE AGEIHI (Yrs.) 10.7

It Load Factr(dlring stilizatioul = 6eceratioa/(CRumniag WoursEffettive CapKity)l

-44-ANNEX 3.1

PAKISTANWATER AND POWER DEVELOPMENT AUTHORITY

POWER PLANT EFFICIENCY IMPROVEMENT PROJECT

Project Description

The proposed Project consists of the following components:

(a) Rehabilitation of the existing Steam Units and Combustion TurbineGenerators (CTG).

Power Station Unit Nos. Type of Unit

1. Sukkur 1 to 4 S2. Guddu 1 to 3 S3. Faisalabad 1 and 2 S4. Quetta 1 and 2 S5. Multan 1 to 4 S6. Guddu 5 CTG7. Kotri 2 to 4 and 6 CTG8. Faisalabad 1 to 8 CTG9. Shahdra 1, 2 and 5 CTG10. Quetta 3 and 5 CTG

The major rehabilitation works to be carried out on these units are detailedin Attachment 1 and the salient performance parameters in Attachment 2.

(b) Conversion to combined cycle operation of eight combustion turbinesgenerators of 25 MW, four each at Faisalabad and Kotri power stations.Combined cycle conversion will involve: (i) installation of four heatrecovery boilers (HRB) connected to the four CTGs; and (ii) two steamturbogenerators (STG) of appropriate capacity (around 20 MW each). The HRBswill be unfired, dual pressure steam boilers designed to accept the maximumexhaust temperature and gas flow of the connected CTG. STGs and YRBs willbe designed for sliding pressure operation over a wide range to respond toCTG load variation. The generators will be either air-cooled with an outputvoltage of about 11 kV. Associated electrical, control and instrumentation,substation, switchyard equipment, together with other associated installationwill be provided for each unit. Closed cycle cooling system using coolingtowers will be installed at each of the stationa.

(c) Consultants for design, preparation of implementation schedules,bidding documents, evaluation, project supervision and development andimplementation of computerized systems for maintenance and spares partsmanagement.

(d) Trt..ning in operation, maintenance and spares parts management.

(e) Tools, instruments and vehicles.

-45-ANNEX 3.1

PAKISTAN Attachment 1WATER AND POWER DEVELOPMENT AUTHORITY

POWER PLANT EFFICIENCY IMPROVEMENT PROJECT

Major Works Included in the Rehabilitation Program

A

(a). Turbines

A4.dition of evaporative cooling system.Repair of lube oil and air coolers.Selective turbine overhaul.Selective turbine blade replacement.

(b) Boilers

Installation of steam coil heaters.Installation of soot blowers.Repair/replacement of fan and air heaters.

(c) Balance of Plant

Replacement and upgrading of water filtering system.Addition/replacement/modification of cooling towers.Repair of boiler feed pumps.Repair of feed water heaters.Addition and upgrading of fuel treatment facilities.

(d) Instrumentation, Controls and Electrical

Replacement and upgrading of combustion control system.Addition of fuel metering stations.Replacement and upgrading of turbine supervisory control system.Addition of vibrometers to feedwater pumps.Improvement in substation and circuit breaker operation.

(e) Water Treatment

Provision of additional capacity.Provision of additional testing equipment.

(f) Fuel Treatment

Installation of fuel treatment plants, metering stations, monitorsand atomizing equipment to improve and regulate the quality ofHSD/fuel oil to combustion turbines. Replacement of pump suctionsand discharge strainers.

PAKISTANWATER AN) POWER DEVELOPMENT AUTHORITY

POWER PLANT EFFICIENCY IMPROVEMENT PROJECT

Salient Parameters

STEAM UNITS

SUKKUR GUDDU FAISALABAD QUETTA MULTAN

Unit t 2 3 4 1 2 3 1 2 1 2 1 2 3 4

Design Capacity (MW) 12.5 12.5 12.5 12.5 110 110 210 66 66 7.5 7.5 65 65 65 65

Date of UnitCommissioning 3/1965 3/1965 4/1967 4/1967 3/1974 10/1974 12/1980 6/;967 11/1967 9/1964 9/1964 6J .960 6/1960 12/1963 12/1963

Unit age (years) 21 21 19 18 12 11 5 19 18 21 21 26 26 22 22

Fuel G 6 G G FO/G FO/G FO/G FOJ. FOJG C C FO/G FO/G FO/G FO/

Derated capacity as lobserved and corrected >to ISOMNEMA (MW) 11.4 9 10.6 10 70.1 80 210 49.5 53.2 0 4.6 60 51 52 45 1

Capacity Improvement (MW) 0 3.5 1.9 1.5 26.7 26.7 0 3.6 .4 7.5 2.9 4 1.5 .5 7

Design/expected turbinegross heat rate BTU/kWh 11274 11275 11275 11275 8687 8687 8077 9146 9146 10749 10749 9068 9068 9068 9068

Observed turbine grossheat rate BTU/kWh 13840 13483 13428 13500 11596 10470 8321 10211 9505 12000 13732 9668 10244 9585 10527

Improved turbine grossheat rate BTU/kWh 10736 12467 12598 12524 9193 9193 8321 9611 9525 11500 11352 9468 10065 9385 981S

Improvement turbinegross heat rate BTU/kWh 3104 1016 830 976 3685 3685 0 600 60 500 2380 200 179 200 712

Observed hsat input eBTU/hr (10 ) 173000 168538 167850 168750 1275560 1151700 1747410 637926 632510 90000 102990 628420 665860 623025 684255

Improved hgat input *'RTUJhr (W0 ) 134200 155838 157475 156550 1011203 1011203 1747410 634326 628650 86250 85140 615420 654225 610025 637975

C = Cost o t :2PO * Furnace Oil ^ X

NSDO = High Speed Diesel Oil 9 -C. Ga5 s *0 = Fuel consumption based on 100% capacity. 0 (D;

PAKISTANWATER AND PER. DFEVELOPW ArTR0TY

PtERR PLANT EPPICUIECY INPROVEUXT PtOJECT

Co5bustionk Turbines

60792 ~ ~ ~ ~ F t IASAtO -We. -M7

Unit 2 3 4 6 . 2 3 4 s 6 7 f 1 2 s 5 s 5 6Oaigs Captaety (101) i5 25 25 25 25 25 25 25 25 25 25 25 13.25 13.25 14.75 9 7 25 35Date of Unit

Co_i* o.tgei 2/1970 12/1978 1211970 s/ISS1 3/197S 3/197S 6/1975 6/1976 9(1975 10(1975 10/1979 1t1/97S 6/1966 6t/6" to1/969t 6/1975 5/t972 V1/975 11/1964unitabe (years) is 7 7 5 Is 11 ti II to *o 10 to 20 20 16 II 13 ilFuel HSOI/G HSOOI/ 1450G tS0o0 HSOOIG nSOOf/ 11SO0/G 1S5O0/a 0Soofo 4SOIG ttSOOtC 1SDC00/ "S500/ HSttOIG 1S50/0 0 "StC0 1405 ¢tSOherated Capacity a.oSeervad an correctedtO I50/1l0 (KW) 12 21 21.2 23.3 21.9 24.6 24.9 20.4 24.8 19.7 20.3 20.3 11 10.6 11.1 0 4 9 29.2capacity mproaent (-) 6 2.6 2.6 0.8 0.1 0.2 0.2 2.0 0.2 2.0 1.8 2.0 2 2.6 2 9 1.4 0 00.Siun/eapect.d tuerb illgrass htet rate artrU/kh 14819 1t336 13764 12961 13251 13251 13261 13251 13251 13251 13251 13251 414 14014 13403 15000 13656 13000 12845Observed turbinea goss.host rate 6S7t*/h ° 18475 15627 13008 146O 14600 14600 14522 14s22 14600 14937 14311 1sss7 14600 14812 14202 17000 6S699 15o0o 12371Znpioved turbIne grosshalt rat. 8Iitkh *7475 14827 1499? 13008 14600 14600 14600 13122 14400 l3737 14311 16357 13900 13612 13502 17000 559ss 15000 12371Inprv, It turbine*sess heat rate 8T11/h 1000 tOOO 1000 0 0 a 0 1400 0 M200 0 200 700 1000 700 0 1000 0 0observed hatInput 55TRthhr C0 I 277128 30067S 399925 325200 365000 36501100 366000 3306 366000 373425 367775 3"6925 18450 193S09 209460 S53000 1S5t93 37SOOO 432966

Lpvd at input 05ttrhi (Io)Xb 26212S 365675 474926 325200 36S000 36O600 366000 323o05 366000 34342S 35777S 369"26 14765 180359 199166 1S3000 109193 375OO 432965

PO F ur"*" Oil Olc 10 O"oh So"oe i

Fe * out bt*5 at ueopl 6ne_tia based cn 1 capcty.

-48-

PAKISTAN ANNEX 3.2WATER AND POWER DEVEOP UkIIT ALYrTIORITY Page 1 of 3

POWER PLANT EFFICIENCY IMPROVEMENT PROJECT

Project Cost Summary

(Pak Rs Aillion) (USS million) Z TotalX~~~~~~~~~~ Foreign P3se

Let.al Foreign Total Local Ffreign Total E.change Costss::r_: zzz:2::_ =_:ss=: :=:-= CZ!:: =_sss =__::z=s

'A. SUISK1R

1. SU0KUR ( STEAM ) 14.0 43.2 57.1 9.8 2.6 3.4 76 3

Sub-Total SUKKUR 14.0 43,2 57V1 0.8 2.6 3.4 76 38. 6DDU

1. WDDU (STEAM) 30.1 92.6 122.7 1,8 5,5 7s3 75 62, GUDDU ( 6AS TURBINES) 18,8 313 50.1 1.1 1.' 3.0 62 3

Sub-Total 6UDDU 49.0 123.' 172.8 2.9 7.3 10.2 72 9C. NULTAN

1. HULTAN ( STEAM) 21.8 61.3 83.1 1.3 3.6 4.9 74 4_ -- ------ --- -- _____ ._ _ -___ ---- -- -- -__--__ -__ _ -_

Sub-Total MULTAN 21.8 61.3 83.1 1.3 3.6 4.9 74 4D. 0UETTA

1, QUETTA ( STEM I 17.8 56.5 74.2 1.1 3.3 4.4 76 42. QUETTA ( GAS TURBINES ) 21.6 37.2 58.8 1.3 2.2 3.5 63 3

Sub-Total GUETTA 3n.3 93.7 133.1 2.3 5.6 7.9 70 7E FAISALABAD

1. FAISALABAD ( STEAM ) 10.6 28.0 38.6 0.6 1.7 2.3 73 22. FAISALABAD ( GAS TURBINES ) 56.7 140.0 196.7 3.4 8.3 11.7 71 103. FAISALABAD ( COMBINED CYCLE CONVERSION ) 191.9 300.9 492.9 11.4 17.8 29.2 61 26

Sub-Total FAISALADAD 259,1 468.9 728.1 15.4 27,8 43.2 64 38F. KOTRI

1 KOTRI ( 6AS TURBINES ) 8.0 19.9 27.9 0.5 1.2 1.7 71 12. KOTRI 4 COMBINED CYCLE CONVERSION ) 189.0 301.2 490.2 11.2 17.9 29.1 61 26

Sub-Total KOTRI 196.9 321.1 518.0 11.7 19.0 30.7 62 27G. SHAHDRA ( 6AS TURBINES ) 4.6 14.7 19.3 0.3 0.9 1.1 76 1H. EN6INEERIN6 ND CONSULTANCY 9.5 85.5 95.0 0.6 5.1 5.6 90 5I. ADMINISTRATION 60.5 - 60.5 3.6 - 3.6 - 3J. TRAINING 2.9 16.6 19.5 0.2 1.0 1.2 85 1K. V£HICLES 6.8 - 6.8 0.4 - 0,4 0

Total BASELINE COSTS 664.5 1.228.9 1,893#3 39.4 72.8 112.2 65 100Phisical Contingencies 79.7 147,5 227.2 4.7 8.7 13.5 65 12Price Continsencies 136.2 220.3 356.5 8.1 13.1 21.1 62 19

Total PROJECT COSTS 8eo.3 16596.7 2,477.0 52.2 94.6 146.8 64 131March 2a17s1 =05=== 3=====3 ==== === ==_

March 2i 1987 10:539

PAKISTANWATER AND POWER DEVELOPMENT AUTHORITY

POWER PLANT EFFICIENCY IMPROVEMENT PROJECT

Breakdown of Summary Accounts(Us Million)

Base Costs Physical Contingencies Price Contingrecies Total Iadl. Cant. PhFsical Casts +Cont. Plus Price

Local Local Local Local Price Cont. Cant. an

For. (ExcI. Duties I For. (Excl. Duties t For. (Excl. Duties I For. (Excl. bUties I an Phsical kwse

Exch. Tas) Taxes Total Exch. Taxes) Taxes Total Exch. Txes) Taxes Totl Exch. Taxes) Taxes Total Cont. Costs= ~== _r= == rrr = ==== rrrwr r:r=r = =ar rrrw e === rer rarr- rr=sar

I.ZDETETCUITSitIIUESTmf o

A. C1VIL URKS 0.5 7.0 0.2 7.7 0.t 0,8 0.0 0.9 01 1.7 0.0 1.8 0.7 9.5 0.2 10.4 1.1 9.3

9. EmITu AN SHME PARTS 24.9 0,9 9.1 34.0 3.0 0.1 1.0 4.1 4.3 0.2 1.4 5.8 32.2 1.2 10.5 43.9 4.7 39.2

C. EBClUm 4.7 2.1 0,0 6.8 0.6 0.3 0.0 0.8 0.9 0.5 0.0 1.4 6.1 2.9 0.0 9.0 1.0 8.0

D. U5I1U 4.4 0.2 1.6 6.2 0.5 0.0 0.2 0.7 0.7 0.0 0.2 1.0 5.7 0.3 2.0 8.0 0.9 7.1

E. C IOVE NIlK TO CNDIED CYCLE ( f,LTY AID ERECTRE l ) 27.0 3.1 8.1 38.2 3.2 0.4 1.0 4.6 5.1 0.7 1.6 7.3 35.3 4.2 10.6 50.1 5.4 44.7

F. FUEL IULIN15 YS1EI 0.9 0.2 0.3 1.3 0.1 0.0 0.0 0.2 0.1 0.0 0.0 0.2 1.1 0.3 0.3 1.7 0.2 1.5

6. SUSTATIJU 4.4 0.6 1.3 6.3 0.5 0.1 0.2 0.8 0.8 0.1 0.2 1.2 5.7 0.9 1.7 9.2 0.9 7.3

H. lTlliP - 0.9 -0.9 - 0.1 - 0.1 - 0.2 - 0.2 - 1.2 - 1.2 0.1 1.1

1. NIURINS #A CUSiLTANC 5.1 0.6 - 5.6 0.6 0.1 - 0.7 1.0 0.1 - 1.1 6.6 0.8 - 7.4 0.8 6.6

J. AJINIIST3ATIO ( IIICL. VEIIICLES ) - 3.* - 3,6 - 0.4 - 0.4 - 0,9 - 0.9 - 4.9 - 4.9 0,5 4.4

KI. 13111 1.0 0.2 - 1.2 0.1 0.0 - 0.1 0.2 0.0 - 0.2 1.3 0.2 - 1.5 0.2 1.4

L. WOMIBES - 0.4 -0.4 - 0.0 - 00 - 0*1 -01 - 0.5 -0.5 0.1 0.5

Total INUESIIEN COSTS 72.8 19.8 19.6 112.2 8.7 2.4 2.3 13.5 13.1 4,6 3.5 21.1 94.6 26.8 25.4 146.8 15I7 131.1 a

Total 72. 19.8 19.6 112.2 6.7 2.4 2.3 13.5 13.1 4.6 3.5 21.1 94.6 26.8 25.4 146.8 15.7 131.1

h 2 1015________-- - --- -

Nareft 2. 1997 10t53

-50-

PAKISTAN ANltK 3.2WATIR AND POWE D8VELOPHENT ATIORn ia8t 3 of 3

POWFR I=I ElICIzEC YOV PRJUJCT

Proiect CompOneats by Year

ToSl InW" olds InClI Cl e fIPa b H ie HUl) (( 31111.)

mm 17/113NM 39/909 vim2 T.u am W7AR Om 3/9017M 91/M T

A. 3 3

Is 3U 1 STM) * 9.0 2.7 13.3 18.6 7 77.7 - 0.5 1.t 0.3 1.1 0.5 4,6- -- --- - - - -- - - -

Totl 3 - t.0 2a.7 13.3 13.6 7.5 77.7 - O.S 1t 0.8 1.1 0*. 4.63. _N

1. s1 STEM) 6.2 56.2 53.1 31.4 10.5 - 157.4 0,4 3.3 3.1 1.9 0.6 - 9.32. _ U BAB lES) - 21.1 42.4 - - - 3.6 - 13 2.5 - - - LS

SToal m 6.2 77.3 955 31.4 1O.S - 0.? 0.4 4.6 57 1. 0.6 - 13.1C. IILTS

1. SLTS l TM) - 24.5 o.1 32.9 15.3 - 109.3 - 1.5 2.2 2.0 0.9 - 6.5

Si-Totl IELTS - 24.5 o.1 32.9 15.3 - 10.t - 1.5 .22 2.0 0.9 - 65.--, NlETTA

1. 5 * 1 (NM) - 17.4 26.4 2.2 13.3 10.3 100.5 - 1.0 1- 1.7 1.1 0.6 6.02.IUET 3 li6 1MRN1) - 2815 30. 16.4 - - 75.4 - 1.7 1.8 1.0 - - 4.5

W-total 5Th - 45.9 56.9 44.5 18.3 10.3 176.0 - 2.7 3,4 2.6 1.1 0.6 10*4E. FAISMAI

1. FAIA I SEM) 1.1 14.5 1*33 15*9 - - 49.9 0.1 0.9 11 0.9 - - 3.02. FAIUI (S1 TUNINES) 22.9 13.4 43.1 40.5 - - 244 1,4 3.2 26 2.4 - -14.53. F lAAU I COIMM3CltUICOMMON) - 1St 280.1 1646 50.1 - 649.7 - 9.2 U16 9a3 3.0 33.S

S-b-Tot.l FAISIN 24*0 30W8 341.4 221*1 50.1 - 944.5 1.4 1832 20h2 I13I 3,0 36*0

it 1mm I( tIEIS}) - 16.0 17.6 106 - - 352 - 1,0 1.0 0.1 - - 2.12, M1M ( IUIIN CTtE ClM11) - 154.9 276.0 165.1 50.1 - 6461 - 9*2 16.4 9.3 3.0 - 38F3

Sib-Tta OM - 1709 m.*6 166.6 50.1 - 631.2 to0. 17.4 9.9 3,0 - 40*4B. U b(T 110 _ ) 2.3 5S8 3.5 6.0 2.4 - 25.0 0.1 043 0.5$ 04 0.1 I 1.5H. US I *1 El_tIE 11.5 30.3 32*4 20,3 22*2 73 125.0 07 1.3 1.9 1*2 1.3 0,5 7-4is AI SMTIS 9.3 17.6 21.6 17*4 16*3 - 52*3 0,6 1.0 1#3 1.0 1.0 - 4*9J. tAI00M - 6.1 9*1 5. 5.2 - 25.9 - 0,4 0.5 0.3 0O3 - 1.5Ks. WENROA - s,s - - - - s.s - 0.5 -- - - 0.5

…---- --------Totl F2T 10h 53.4 703.3 929 510.2 23.9 2S.9 24770 3.2 41.7 54. 33,2 12.4 1.51

Heidi 2. 1937 10)53

PAKISTANWATER AND POWER DEVELOPMENT AUTHORITY

POWER PLANT EFFICIENCY IMPROVEMENT PROJECT

Organization Chart and Staffing Plan -_Plant Improvenent Group

(Cone CYCI (Comb hft( CMcsh) (l C C7+In 1 1

Director De"u DhO

pDeson OCr (Mntlo)

.~~~~~~~~~~~~~~~~~~~~~~~Ac, C C .s CcrC an DV Dtr DyDh DV NO Dy W IojcDietoO CCRojet Dre'w C. (Mainteac x lComL otnl P-lrr)

l ~~~~~~~~~ ~ ~ ~~~~~~~~~~DwDevorenpm D-e t

Senijor Eng' Senior Eng Sernor EntI Sord Eng' Admnin' Acct- Seno Eng- Senlor Ernt Sonlor Eng SR EN6' A4nin- ACstP R.E. 200 M\^ - E. -. -' R -E. Sf' tFD t.-I PE. Sukikurs tE. Sueohd.E 9 RI, VtWVRbC) (Mwh) Ol&C) (CM)3 ¢ElC) pAch) A4C) fCihU) STP54PS SltDll

seniorEr SenrEn SonlorEErg Senio rEEnq Seniorog WwErv Seio Eft E

JR'ENS JR ENS JR ENG° JR ENG' JRNENS JR-ENS JR ENG JR ENG' SR ENG' SR ENG' J E J E JR ENG6 JR ENGS JRKENS JRfN JR:ENG JR'ENG(EbCel oMech) 9kCI [Ch/il [Elnc) [Mechl PSC) (CMa) Eloe Megch 04c) (Mc)

I IJQENG JR:ENG

Schedule tor SW Placment GM-Gene6oi Manager'Exstinglln Position CE-Chist ErnerJonuary 34. 1987 JE-Junjor Eniner

'Febunor 28. 1987 CC-Combined Cycle'March 31. 1987 Elec-Ekechtcd'May 30. 4987 Mech-Mechonied'Jne 30. 1987 l&cC-instrumentalon and Contol

Wodd Si* -34078 !-

PAKISTANWATER AND POWER DEVELOPMENT AUTHORITY

POWER PLANT EFFICIENCY IMPROVEMENT PROJECT

Implementation Schedule

4985 1986 4967 .966 1969 990

2 2 3 4 1 2 3 4 1 2 3 3 4 1 2 3 4 4 2 3 4

i COtNIJLTAM S VICES _

Lo? Recruyiment

Design, Pocueme of Equipment & Moterias _ L R

Rehabwtation

3. MIUTAN

Design, Pocurement of Equipet & Materials - - - - _Rehaboktlon

4. SH4AHDRADesign. Procurneret ot Equment & Materials - - -_RehobMkian

.IJIETI -I

A_Design, Procuremen of Equipment & Materas - -_ -_

IRehobwkdaton l_ _I6 KOTRI

Design. Procurement of Equient & Mcterils - -Rehdbrnawin

7 FAISALADA

Design. Procurement of Equirment & Mc tl _

RehablUtation

SUJKKURDesign, Procurement of Equipment & Materials-- -RehBatbian

9 CONVERS?CN' TO COIASJNDCYCtE OPERATION

>Repwarion of dding Documents

rAsBidding Evaiuation and Aword

OI utn Waer Systen Modftionm - - - -and C4 Works

Equiment Manuctre & Supply - m - _ntllCation & Comission - _

*---n-...nOCuIOe Period World n-30694

-53-

Annex 3.5

PAKISTANWATER AND POWER DEVELOPMENT AUTHORITY

POWER PLANT EFFICIENCY IMPROVEMENT. PROJECT

Estimated Schedule of Disbursements

Bank Fiscal Year --Disbursements, US$ Million--and Semester In Semester Cumulative Cumulative Z

1988

December 31, 1987 5 5 7.14June 30, 1988 1 6 8.57

1989

December 31, 1988 10 16 22.86June 30, 1989 14 30 42.86

1990

December 31, 1989 15 45 64.29June 30, 1990 12 57 81.43

1991

December 31, 1990 7 64 91.43June 30, 1991 5 69 98.57

1992

December 31, 1991 1 70 100.00

PAKISTANWATER AND POWER DEVELOPMENT AUTHORITY

POWER PLANT EFFIENCY IMPROVEMENT PROJECT(RUPEES MILLION)

......................................................................

ACTUAL AND FORECAST BALANCE SHEETS.... .......... .............................

(AS OF JUNE 30th). ......... ACTUAL............. (Unaud.) ........ .........FORECAST.---------------------ASSETS FY81 FY82 FY83 FY84 FY85 FY86 FY87 FY88 FY89 FY90 FM91 FY92 FY93FIXED ASSETS............

FIXED ASSETS IN OPERATION 19265 20966 26100 29333 34288 43531 51708 62004 75175 91782 111625 134366 158375LESS:DEPRECIATION RESERVE 4133 4841 5650 6697 7817 9171 10804 12794 15195 18116 21676 25981 31104NET FIXED ASSETS IN OPERATION 15132 16125 20450 22636 26471 34360 40904 49210 59981 73666 89949 108385 127271WORK IN PROGRESS 5027 7500 6475 8095 10181 10062 12783 16090 20593 25954 30963 35441 37320TOTAL FIXED ASSETS 20159 23625 26925 30731 36652 44422 53687 65300 80574 99619 120912 143826 164591CURRENT ASSETS..............

CASH 315 429 611 501 433 504 819 856 1161 1500 1185 2198 2653;NVEATORIES 1239 1550 1649 1779 1895 2092 2585 3100 3759 4589 5581 6718 7919ACCOUNTS RECEJVABLE 93R ItR7 AsI 17SW 1770 2270 2505 2981 4335 5365 6311 7335 8521WATER WING ACCOUNTS 191 242 251 212 304 311 327 343 360 378 397 417 438OTHER CURRENT ASSETS 531 565 865 955 1459 847 940 1044 1158 1286 1427 1584 1759TOTAL CURRENT ASSETS 3204 3968 4811 5199 5861 6024 7176 8323 10173 13117 15501 18252 21289TOTAL ASSETS 23363 27593 31736 35930 42513 50446 60863 73623 91346 112737 136413 162079 185880CAPITAL AND LIABILITIES.......................

IEQUITY

GOVERNMENT INVESTMENT 2147 2218 2318 2409 2437 2437 2437 2437 2437 2437 2437 2437 2437GOVERNNENT EQUITY CONTRIBUTION 2766 277 277 2777 2901 3301 3301 3301 3301 3301 3301 3301 3301CAPITAL CONTRIBUTION 151 650 1035 1578 2027 2750 3500 4324 5227 6217 7303 8494 9799RETAINED EARNINGS 4660 6500 8664 10543 11632 13761 16238 19220 25390 32646 40813 48928 56737TOTAL EQUITY 9724 12145 14794 17307 18997 22249 2547? 29282 36354 44601 53854 63159 72274

LONG TERM DEBT 11965 13295 14475 15979 20349 24740 32046 40580 49937 61833 74998 89766 102595CONSUMER DEPOSITS 189 211 236 275 299 299 344 395 455 523 601 692 795INTEREST ACCRUED ... 784 867 951 1034 1119 1202 1285 1368 1451 1534 1617 1700CURRENT LIABILITIES 1485 1158 1364 1418 1834 2039 1794 2081 3232 4329 5425 6845 8515TOTAL CAPITAL AND LIABILITIES 23363 27593 31736 35930 42513 50446 60863 73623 91346 112737 136413 162079 185879

_ ====== -_=====Z= ====_==== 3333333 333=333-- =3=3=3333==3=

DEBT AS X OF DEBT+EQUITY 55 52 49 48 52 53 56 58 58 58 58 59 59EQUITY AS X OF DEBT+EQUITY 45 48 51 52 48 47 44 42 42 42 42 41 41

PAKISTANWATER AND POWER DEVELOMENT AUTHORITY

POWER PLANT EFFIENCY IMPROVEMEN PROJECT(RUPEES MILLION)

ACTUAL AND FORECAST INCOME STATEMENTS

(YEAR ENDING JUNE 30th)......... ACTUAL ....... cLugm.) .......... FORECAST.-----------

FY81 FY82 FY83 FY84 FY85 FY86 FY87' FY88 FY89 FY90 FY91 rf92 FY93

KWh GENERATED (MILLIONS) 13206 14768 16477 ¶8052 18780 21055 24329 25891 28403 31398 34672 37976 41614KWh SOLD (MILLIONS) 9068 1028 11593 12762 13756 15504 18247 19936 21870 24176 2669 29242 32043KWh SOLD/Kdh GENERATEDMZ 69 70 710 71 73 74 75 77 77 77 77 717 77AVE. REVENUE/KWh SOLW(PAISA) 50.84 56.75 61.93 62.74 63.83 74.40 74.60 81.39 108.44 121.62 129.66 137.70 146.07

OPERATING REVENUE (PR MILLION)

SALES OF ELECTRICITY 4245 5322 6146 6785 7280 892 10565 13049 18953 22941 26991 30721 35196FUEL SURCHARGE 365 516 1034 1222 1500 2609 3048 3177 4764 6461 7626 9546 11609OTHER OPERATING REVENUES 167 173 181 207 212 226 302 332 365 402 442 486 535

... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .TOTAL OPERATING REVENUES 4777 6011 73AI $P14 R997 11761 13915 16559 24082 29804 35059 40753 47340OPERATING EXPENSES(PR MILLION)

PURCHASE OF POWER .... .. .. . .. 491 388FUEL COST 494 1132 1541 1892 2406 3200 4096 4413 6616 8974 10591 13258 16123MAINTENANCE 336 514 545 641 708 769 982 1302 1579 1927 2344 282 3326OPERATION & ADMINISTRATION 767 952 1178 1546 175 2096 2370 2844 3413 4095 4914 5897 7077DEPRECIATION 621 708 819 990 1110 1363 1633 1990 2401 2922 3560 4305 5123 L

TOTAL OPERATING EXPENSES 2218 3306 4083 5069 6473 7816 9081 10549 14008 17919 21409 26282 31649NET OPERATING INCOME 2559 270 3278 3145 2519 3945 4834 6010 10074 11886 13650 14471 15691OTHER INCOME 109 97 127 235 210 206 165 182 200 220 242 266 292

.... ... . z; -------------- ~;;..............i~ 14-- ---NET INCOME AVAILABLE FOR FIXED 2668 2802 345 3380 2729 4151 499 6191 10273 12105 139 1737 15983CHARGES

FIXED CHARGS

INTEREST 985 1071 1264 1481 1897 2391 3009 3832 4899 5864 6969 8078 9772LESS:INTEREST CHARGED CONSTN. 207 124 93 98 273 3819 508 642 815 1035 1265 1476 1617

.~~~~~1..........i;......... ... ... ... ... ...INTEREST CHARGED OPERATIONS 778 947 117 1383 1624 202 2501 3190 4083 4829 !5704 6602 8154INCOME 189 1855 2234 1997' 1105 2149 2498 3002 6190 7276 8187 8134 782LESS:PAYMENT TO GOVERNMENT 20 20 20 20 20 20 20 20 20 20 20 20 20

NET PROFIT 1870 1835 2214 1977 1085... 212'9 2478.. 2982 "6'1'70 .. 72-5,6.. 816'7'. 8,114, "7'8'09

RATE OF RETURN ON AVERACE NETFIXED ASSETS IN OPERASiON

HISTORICALLY VALUED 18.30 17.31 17.92 14.60 10.26 12.97 12.85 13.34 18.45 17.79 16.69 14.59 13.32REVALUED (PROFORMA) 10.40 9.50 10.00 8.20 4.00 5.30 5.22 6.13 8.96 8.79 9.42 8.99 8.75

PAKISTANWATER AID POER DEVELOPMENT AUTHORITY

POWER PLAT EFFIENCY IMPROVEMENT PROJECT(RUPEES MILLION)

...............................FORECAST SOURCES AID APPLICXTION OF FUNDS STATEENITS................................................................

(YEAR ENDING JUNE 30th)ACTUAL (Unaud.) .................. FORECAST ......................SSRCES OF FUlIDS FY85 FY86 FY87 fY88 FY89 FY0 FY91 FY92 3

INTEM L CASN GENERATION........................

NET INCOh FOR FIXED CUARGES 2729 4151 4999 6191 10273 12105 13891 14737 1S3DEPRECIATION 1110 1363 1633 1990 2401 2922 3560 4305 5123....... ........... ....... .......... ....... ........... ....... ........... ....... ...... .......... .. ...............TOTAL INTERNAL CASH GENERATION 3839 5514 6632 8181 12674 15027 17451 19041 21106CAPITAL CONTRIBUTIONS 449 723 750 823 903 990 1086 1191 1305SECURITY DEPOSITS 24 0 45 52 59 68 78 90 104BORROWINS..........

RUPEE LOANS 2115 2689 3046 4984 3645 4663 5250 8399 4416FOREIGN LOANS 2854 2765 5100 4458 6347 7965 9052 7926 10307PROPOSED IBRD LORN 101 405 455 202 17TOTAL BOROWINOGS 4969 5454 8146 9543 10397 13088 14504 16342 14723.... ............ .*.................... ....... ........... ....... ....... ........... ....... ........... .......TOTAL SOURCES OF FUNDS. 9281 11691 15573 18599 24033 29174 33119 36665 37238

APPLICATIONS OF FUNDS.....................

>CONSTRUCTION PROGRAM....................PROPOSED PROJECT 53 704 925 560 209 26OtHER CONSTRUCTION 6768 8739 10337 12257 15934 20373 23378 25717 24270....... ........ ..... ......... ..... ......... ...... ..... .... ....... ......... ..... ......... ............ ............ ...TOTAL CONSTRUCTION PROtAN 6768 8739 10390 12961 16859 20933 23587 25743 24270DEBT SERVICE............

INTEREST 1897 2391 3009 3832 4899 5864 6969 8078 9772LESS:INTEREST ACCRUED 83 85 83 83 83 83 83 83 83AMORTIZATION 599 668 840 1009 1040 1192 1339 1574 1894,.......... ....... ........... ....... ........... ....... ........... ....... ........... ... .................. ... ....... ...TOTAL DEBT SERVICE 2413 2974 3766 4758 5856 6973 a225 9569 11582PAYMENT TO GOVERNMENT 20 20 20 20 20 20 20 20 20VARIATION IN WORKING CAPITAL............................

CASH INCREASE -68 71 315 37 305 339 285 413 455OTHER THAN CASH INCREASE 149 -113 1082 824 994 909 1002 919 910.......................... .............. ........... .... .... ....... ....... ....... ......... ..... ........... .......MET INCREASE 81 -42 1397 860 1298 1248 1287 1332 1365......ii ......;. ....... ....... ....... ....... ....... ....... ..... .. wTOTAL APPLICATIONS OF FUNDS 9282 11691 15573 18599 24033 29174 33119 36665 37238TIMES DEBT SERVICE COVERED BY

4INTERNAL CASH GENERATION 1.59 1.85 1.76 1.72 2.16 2.16 2.12 1.99 1.82SELF FINANCING RATIO-3 Yr. AVE. 37 48 42 40 40 40 40 40 40

ANNEX 4.4-57- Page 1 of 3

PAKISTAN

WATER AND POWER DEVELOPMENT AUTHORITY

POWER PLANT EFFICIENCY IMPROVEMENT PROJECT

Notes and Assumptions for Financial Forecasts

INCOME STATEMENT

Sale of Electricity

The forecast sale of electricity is based on projected plantexpansion and takes into account a reduction in system losses. Increase insales is forecast at an average annual rate of about 10% through FY95.

Average Revenue per kWh Sold

The average revenue per kWh sold reflects the fuel adjustmentsurcharge, as well as tariff increases necessary to meet the 40% InternalCash Generation Covenant.

Other Operating Revenue

Other operating revenue consists principally of miscellaneousservices such as transfer/replacement of meters, application fees,reconnection of service, etc. These revenues are shown to increase by 10%per year based on the increase in the number of consumers.

.Fuel Cost

The increase in fuel rates has been assumed as under:

(a) Raw gas commodity charges - 10% per annum(b) Purified gas commodity charges - 10% per annum(c) High Speed Diesel - constant up to 1988, and 5% increase afterwards(d) Furnace Oil - 5%(e) Coal (Quetta) - 5%(f) Coal (Lakhra) - 7%

Maintenance Expense

Maintenance expense is related to plant in service and is forecast at1.9% of gross fixed assets in operation in PY87 and 2.1% thereafter, takinginto account past experience and the increasing proportion of thermal plantin the system.

-58-

ANNEX 4.4Page 2 of 3

Operation and Administration Expense

Except for FY88, operation and administration expense is forecast toincrease by 20Z annually, taking into account system expansion, inflation andalso past experience. An increase of 25X is taken for FY88 to reflect anexpected general wage increase.

Depreciation

WAPDA is applying a composite rate of depreciation of 3.5%. Thisrate is realistic and has been used in the forecasts.

Other Income

Other income includes interest, sale of scrap and rental of officespace, and is shown to increase by 10Z annually.

Payment to Government

WAPDA has been remitting Rs 20 million annually to Government forassets earlier transferred to WAPDA. Forecasts show this payment continuing.

BALANCE SHEET

Cash

Cash balances are projected on the basis of about six weeks' cashoperating expense.

Inventories

Inventories are forecast at 5Z of gross fixed assets in operation.

Accounts Receivables

WAPDA's accounts receivables are forecast to be equivalent of twomonths' billings.

Othe Current Assets

Other current assets include miscellaneous receivables, advances andclearing accounts. Forecasts assume a 5% annual increase.

-59-

ANNEX 4.4Page 3 of 3

Current Liabilities

Current liabilities include accounts payable, deposits for works tobe carried out for other agencies, contractor deposits, duties payable andaccrued salaries. Based on past experience, current liabilities are forecastat between 25% and 40% of current assets.

Security Deposits

Security deposits are forecast to increase at 15% per annum.

Capital Contributions

Consumers' capital contribution assumed to increased by 10% annually.

PAKISTANlATER AND POWlER DEVELOPNENT AUTHORITY

POWlER PLANT EFFICIENCY INPROVENEMT PROJECTINVESTMET PROGAM - FY86 TO FY95 1/

(RUPEES MILLION)Estimated Expernditures

Date Totat Project Costs Upto July 1985 FY86 FY87 FY88 FY89 FY90 FY91 FY92 FY93 FY94 FY95Of -- - - - - - - - - -- - - - - - - - - -- - - - -- - - - -- - - - -- - - - -- - - -

Project ~Commissfion LOCAL FOREIGN TOTAL LOCAL FOREIGN TOTAL TOTAL TOTAL TOTAL TOTAL TOTAL TOTAL TOTAL TOTAL TOTAL TOTAL

Generation

manglauni Ts T& a(200NWi) ... ... --- ... 8 ...- ....-Quetta Ga Turine (35 NW) .. . . .- .. .*1 . . . .Tarbeta Units 9 &10(350NWi) ... ---- . 74 28 ---- -Guddu Unit 4 (210 W) 1324 716 2040 468 620 1088 170D 72 ..Kot Addu Units 1 to 4 (400 NW) Jan. 1987 1305 1410 2715 71 162 233 1531 633 300 18 ... ...Guddu Coumbined Cycle (450 NW) Jan. 1988 2116 2343 4459 302 899 1201 774 1273 700 511 -- *. .Jamshoro Uonit 1 (250 NW) Oct. 1989 1870 1660 3530 22 0 22 47 270 1200 1500 491 - ... . .. Qmmf$ Pvydets (3/10 OW) Jun~. 1989 42 11 53 --- .. --- --- 0 . .- .

Dfeset Sets at Gitgit (3NWi) Jun.m1990 21 9 30 - - 1 14 _ 5 6 4 .--- -..

Gudcb Comb. Turb. 7 & 8 (200 NW) Dec. 1990 850 1000 1850 ----.. . --- 50 200 1200 400 ."to lUnfts 9 &10(2000Wi) Dec. 1989 664 72 1390 - - * 10 145 335 400 400 100 -Kot Addua Units 5 to 8 (400 NW) Feb. 1989 1700 1900 3600 --- -- .. ... 250 800 1100 1000 450 -... . ..

Kot AdduE Coam. Cycle (200 NW) Mar. 1990 1392 1408 2800 -- ...... 295 700 950 700 155 .--- . ..

Jomshoro Units 2 8 3 (420 NW) Nov. 1990 3500 2500 6000 -- - - -* 182 550 750 1750 2000 768 5 Tarbeta unftall - 14 (I72NW1) Jan. 1992 6035 4922 10957 188 33 221 402 1089 1500 1650 2000 2250 1200 645Nuttan units I to 3 (630 NW) Oct. 1991 4697 3871 8568 25 0 25 76 140 200 500 2000 3000 2000 627 --- --- Chashma Low Head Nydet (256 NW) Dec. 1990 278 1680 4463 --. - - --.. 5 15 50 200 1200 2500 593 ---Jamshoro Unit 4(210MNW) Dec. 1991 1750 1250 3000 -- - .50 400 800 1500 250Lakhra Cost (300 NW)PCIX1 48 93 141 8 0 8 6 9 28 40 50 --- .. : Jimeh Low feadNydetL(122NWi) Dec. 1991 2440 1200 3640 -- ~--- --- 50 100 300 500 800 1400 490 --Lakh~ra Coal Unit 1 (250 Wi) Nar. 1994 3500 3000 6500 . .. ... --- .. --.- ..-. 50 250 500 2000 3000Lakhre Coot Unit 2 (250 NW) Dec. 1994 2700 2300 500 ... - . - ... --- ... --- 50 200 400 1300 2400lIported Coal Unit 1(400 NW) Ofec 1993 4600 3400 8000.- . 18 50 100 400 600 1500 2000 2500 832Jamsaror Unft 5 (300 MW) Jut. 1992 2500 2000 4500 - . -- ... ... -. 250 500 1500 1750 500 --Jismhoro Units 6 7(2*300NWi) Dec. 1992 5500 4500 10000 - . --- --- ... .. 100 400 800 2000 2500 3200 1000Tarbeta Units 15 -17 (1200 NW) Dec. 1994 5000 4000 9000 --- --- --- ~. .... --- -- ¶1) 1000 1500 '100 3500Low Read Nydet III (11OMNW) Dec. 1992 4600 2400 7000 ... -* ~ ~ 50 150 300 1800 3600 1100 --Ioported Coal Unit 2 (400 NW) De.19-00 350 80 . . .. . .. .. . 100 1000 1500 2100 3000P & tof Malor "Lad 307 109 416 55 10 65 10 13 28 50 70 8 0

&of Low NeeadHydels -PC 11 51 34 85 .--- .. --- 10.25 50o --Imported Coot unit 3 (400 NW) Mar. 1996 5300 3700 9000 --- . . . . . ... ... ... ... 100 500 1500 2500Iqiorted Coat Units 4 & 5 (2*400 NWJ)Har. 1997 11300 7900 19200 ... .--- . .- ... ... - --- ---. 500 1250 1700 2300Chitrat Phase if 15 3 18 10 0 10 2 2 4 ... .....~.Thermat Rehabilitation Dec. 1989 0 -- -- --- 280 800 1600 177 --- - - - :Duki Coot PC 1I 3 13 16 ... ... 16 ... .. ... ... ... ... -- .. -

Sub~totat Generation 8293 63558 146471 1149 1724 2873 3150 4760 7370 9879 12952 14760 16861 18422 18490 18532 I'

0.

PAKISTANWATER AND POWER DEVELOPMENT AUTHORITY

POWER PLANT EFFICIENCY IMPROVEMENT PROJECTINESTMENT PROGRAM - FY86 TO FY95

Estimated ExpendituresDate Total Project Costs Upto July 1985 FY86 FY87 FY88 FY89 FY90 FY91 FY92 FY93 FY94 FY95Of -------- -- --- -- .... .... -- --- --- --- --- ....

Project Camission LOCAL FOREIGN TOTAL LOCAL FOREIGN TOTAL TOTAL TOTAL TOTAL TOTAL TOTAL TOTAL TOTAL TOTAL TOTAL TOTAL...... . . ...... ----- . ........... ................................... ........................---..Transmission............

2nd Tarbeta-Faisatabad (500 kV) 689 379 1068 581 325 906 169 57 - --- --- - --Falsalabed-Iultan-Karachi (500-kV) 1986-87 2224 1809 4033 1122 742 1864 1242 731 196 ---Hardan-Peshawar (220-kV) 1987-88 188 123 311 1 0 1 4 259 47 --- ... .. ... .Faisalabad-Sahiwal (220-kV) 1987-88 216 154 370 42 0 42 18 16 50 20 44 -- -- --Dadu-Khuzdar (220-kV) 1987-88 399 217 616 3 - 0 3 0 221 300 92 0 --- ..-.- - - -. 2nd Guddu-Sibi-Ouetta (220-kV) 1989/90 630 410 1040 -.- --- --- *.- --- 1OO 300 500 140 *--3rd 500-kV Tarbela 815 585 1400 -- -- -- --- 79 150 400 600 171 --- ... ..Load Despetch Center-Nodemization 399 347 746 11 5 16 12 58 175 400 85 0 -.-.tudwele-Daudkhel (220/500-kV) 1990-91 575 465 1040 --- -- -..- -.-.- I1 Inn 1%f 250 350 139 --- -- -Lahore-Jamhoro (500SkV) 1990-91 2857 2118 4975 --- -. -. 12 597 750 900 1050 1200 466 -.- ..- . -Transmission Li,es - Low HNad Hydels 1991-93 150 100 250 ..- --- -- - - -- *- - 25 75 125 25Kot Addu-Lorala (220-kV) 1994-95 400 300 700 - -- -- - - - - -- --- 100 200 300 1003rd Multan-Guddu (500-kV) 1994-95 1000 700 1700 --- - - --- - -- --- -- --- 50 250 500 7502nd Ludwela-Gatti (500-kV) 1994-95 260 170 430 --- - - -- - - --- --- --- - --- 25 100 250Kalabagh-Ch_sma-ultan (500-kV) 1280 770 2050 - - - - -- -- --. -.-- --- 100 300 600 800 2502nd Tarbela-Lahore (500-kY) 1995-96 1000 700 1700 - - ..- -- -- -.- --- -- --- - --- 50 250 500StOKlalabagh-Daudkhel (500-kV) 1994-95 15 10 25 - -- - - --- -- --- - - --- - --- - . 5 .20 Transmission Lines - Inp. Coal (500- 1993-94 850 650 1500 -.- -- --- --- --- .- --- --- 100 250 400 600 150Kalbegh-Kohat (220-kV) 1994-95 120 80 200 - - -- - - - -.. .. .. .. - - ... . ... 60 130Kalabegh-DaudkheL (220-kV) 45 30 75 --- 25 50Subtotal Transmission 14112 10117 24229 1760 1072 2832 1457 2069 1868 2442 2529 2086 1380 1650 2665 2200

Su-Transmission and Grid Stations 16495 8688 25183 515 768 1283 1371 1574 1655 2000 2200 2600 2800 3000 3200 35W

Distribution 14642 1813 16455 0 0 0 617 988 1150 1350 1550 1750 1950 2150 2350 2600

Rural Electrification 14220 1730 15950 739 218 957 674 1264 1350 1925 2580 3380 3820 0 0 0

Loss Reduction & Load anagement 1760 440 200 0 0 0 0 0 100 150 200 250 300 350 400 450

Kalabegh Dam Project - PCII 193 64 257 0 0 0 100 157 0 0 0 0 0 0 0 0

Diesel Sets 55 0 55 0 0 0 20 35 0 0 0 0 0 0 0 0

Total Investments with I.D.C 144390 86410 230800 4163 3782 7945 7389 10847 13493 17746 22011 24826 27111 25572 27105 27282

Less: Interest During Construction 358 572 682 887 1078 1239 1368 1302 1328 1364

Total Investments without ID.C 144390 86410 230800 4163 3782 7945 6i99 10275 12811 16859 20933 23537 25743 24270 25777 25918 m t

0 .

-62-Annex 4.6Page I of 5

PAKIT1?AN

WATER AND POWER DEVELOPMENT AUTHORITY

POWER PLANT EFFICIENCY IMPROVEMENT PROJECT

Summary of Status and Plans for Strengthening Financial and CommercialOperations under the WAPDA/Financial and Commercial Operations under the

WAPDAiUSAID Power Distribution Project

FINANCE AND ACCOUNTING

1. In carrying out financial institutional improvements under the PowerDistribution Project, the improvement objectives have been grouped into sevenbroad areas:

(a) Confirmation of assets and liabilities to determine actual currentvalues, and correct, as required, any recorded amounts in theaccounting records and financial statements.

(b) Revaluation of capital (fixed) assets to determine present value anddevelopment of functional depreciation rates for the major classes ofassets.

(c) Determination of cost of service for the various classes of customersand design of rates and tariffs based on these costs.

(d) Modernization of present manual systems and procedures for near termimprovements in the accuracy, timeliness and efficiency of financialoperations and subsequent conversions to computer based systems.

(e) Reorganization of financial operations to improve overall efficiency,management control and responsiveness to financial informationrequirements.

(f) Upgrade the qualifications and capabilities of financial personnel atall levels.

(g) Upgrade and expand WAPDA's internal audit organization, policies,procedures and staff capabilities.

-63-Annex 4.6Page 2 of 5

Work Accomplished as of October 1986

2. The confirmation of inventory valuations has been completed anddocumented in a final report.

3. The appraisal of WAPDA's current assets has been completed anddocumented. The Authority has appointed a high level committee to takefollow up action. The appraisal of WAPDA's current liabilities has beencompleted, with the report currently undergoing final editing.

4. A Fixed Asset Accounting Manual that will provide the basis forfuture fixed assets accounting procedures has been developed and documented.

5. WAPDA's fixed distribution assets in the Samanabad Pilot TestDivision have been verified and documented in a draft report. The work planfor verification of fixed assets in all AEBs (Area Electricity Board) hasbeen developed, documented and is currently under review.

6. A preliminary revaluation of WAPDA's fixed assets has been completedand documented.

7. WAPDA's management information requirements have been determined anddocumented. Improved financial and managerial reports have been developedarii designed. Computerized accounting and reporting systems for divisionsand ABBs have been designed and are being programmed.

8. A cost of service and rate study has been completed. Its results andrecommendations have been utilized in developing WAPDA's tariff proposals toGOP.

9. A study of WAPDA's cash management procedures and operations has beencompleted and final report issued. The Director Banking has receivedtraining at American Electric Power Co. under the Sister Utility ExchangeProgram.

10. A proposal for reorganization of h;APDA's financial operations hasbeen developed, documented and has been presented to the Authority. A jointPTAT/IAPDA implementation team has been created to plan and carry out adivisional reorganization pilot operation in two selected divisions.Staffing requirements have been determined and procedure development anddocumentation is well underway.

11. WAPDAs internal auditing capabilities have been assessed. The termsof reference for a consultancy to upgrade and expand the internal auditcapabilities have been developed and approved. Two Senior Audit Officershave been trained at American Electric Power Co. under the Sister UtilityBxcange Program.

-64-Annex 4.6Page 3 of 5

12. Project financial personnel consisting of WAPDA assigned personneland implementation staff are being trained via the Sister utility ExchangeProgram (SUE). Nine (9) WAPDA officers have been received training atAmerican Electric Power (AEP) in the USA, plus another five (5) WAPDAfinancial officers have been selected for this scheduled training.

13. Twenty four (24) WAPDA financial officers have completed a UtilityFinancial Management Course at Georgetown University, followed by on-the-jobtraining at TVA.

Future Programs of Work

14. The following major programs will be completed during future periodsto achieve the financial objectives of the project:

(a) confirm current liabilities;

(b) verify and revalue capital (fixed) assets;

(c) develop depreciation rates;

(d) upgrade manual financial accounting systems and assist in developmentof computer-based systems;

(e) upgrade construction accounting;

(f) revise financial organization and improve staff capabilities;

(g) develop cost of service, determine rate of return and design rates;

(h) upgrade and expand internal auditing capabilities; and

(i) assist in the development of training programs for financial officersand clerical staff.

Recommendation

15. That WAPDA establish a Rates and Tariffs Directorate staffed withwell-qualified accountants and engineers to perform load research, carry outcost of service studies and design rates utilizing modern methods andtechniques.

-65- Annex 4.6Page 4 of 5

CUSTOMER SERVICES

16. Customer Services (Commercial) activities are divided into six majorgroups with the combined objectives of increasing operating efficiency andimproving customer relations:

(a) enhancing WAPDA's Commercial Procedures utilizing a high level ofcomputerization;

(b) improving WAPDA's Energy Surveillance Program;

(c) revising Security Deposit policies;

(d) design of a Customer Service Center;

(e) development of a Customer Energy Conservation/Load Managementinformation program; and

(f) development of a Customer Service function at Division, AEB, andHeadquarters level.

Work Accomplished as of October 1986 and Present Activities

17. The overall concept of the enhanced commercial procedures has beenprepared. A manual of specific tasks is currently under preparation. Theproposed customer master record and customer applications sections areundergoing final revisions in preparation for submission to WAPDA's ComputerCenter for programming.

18. A sample computer program was developed in conjunction with WAPDA'sComputer Center to monitor customer billing relating to theft of energy(Energy Surveillance). Energy Surveillance monitoring, investigativetechniques, and revenue recovery now being practiced in Headquarters and allAEBs has been studied. A review of division practice is underway.

19. A security deposit proposal designed to secure customer accounts fortwo months' revenues has been prepared and sent to Authority for approval.

20. The conceptual design of both a division and a subdivision CustomerService Center has been completed. Coordination with an architect to produceconstruction drawings has commenced. Discussions have been held with WAPDAofficials concerning their commitment to construct a division and asubdivision Customer Service Center in both Sheikhupura and Muridke.

21. A proposal to implement Energy Conservation and Load Management Cellsin VAPDA's AEBs has been submitted. Five WAPDA Engineers have been selectedand are in training. They will staff the headquarters component of the Cell.

-66- Annex 4.6

Page 5 of 5

22. The plans for the model division Customer Service Section wereformulated in concert with the development of the enhanced commercialprocedures and the conceptual design of the Customer Service Centers.Organization charts, staffing recommendations and position descriptions havebeen prepared. Meetings have been held with personnel from the divisionthrough headquarters to plan for implementation.

Future Program of Work

23. Install PC Computers in the two model divisions. Complete thecommercial procedures task manuals and begin the pilot test in theSheikhupura and Muridke Divisions. Develop training modules in preparationfor VAPDA-wide implementation.

24. Advise in the preparation of comprehensive Energy Surveillanceprogram, including computer exception reports.

25. Implementation of revised security deposit proposal.

26. Assist in coordinating the acquisition of land, the final design, andthe start of construction for the model Customer Service Centers.

27. Provide additional training for the selected Energy Conservation/LoadManagement Engineers. Following placement of the engineers in theirpositions in WAPDA headquarters begin a pilot implementation in one AEB.Assist in WAPDA-wide implementation.

28. Assist in the planning, training and implementation of a CustomerService function in the Divisions, AEBs, and Headquarters.

PAKISTANWATER AND POWER DEVELOPMENT AUTHORITY

POWER PLANT EFFICIENCY IMPROVEMENT PROJECT

Actual and Projected Power Demand and Energy Sales(WAPDA System)

inmstaled capacity (15) 2,685 3,254 3,254 3.954, 3,954 4,339 4.612 5,412 5.412 6,178 8.266 8.266 9.416 9.416

peak Demnad (NV) 2,076 2.473 2.846 3,163 3.437 3,791 4,121 4.517 4.955 5.436 5.963 6.541 7,176 7,672

Energy Generated (Gcub)

flydel 8.718 9.046 9,526 11,367 11.028 13.475 15,106 15,290 15,855 16.187 16,836 18.336 19,136 19,M

Thermal C. import) 3,406 4.160 5,242 5,110 6,224 5.305 6.121 8,220 10.319 IL2.58 A3L22j 14&h19 16.591 1L2Z.

TOTAL CUMATION (Glib) 12,124 13.206 14,768 16.477 IS,052 18.700 21,227 23,510 26.174 28,769 30.628 33.329 35.727 37.171

Energy sales (Glib)

Doestic 1,564 1,858 2.394 2.866 3.470 3,687 4.438 4.970 5.567 6,235 6.983 7.821 8,760 9.811

Coaneecial 389 445 574 634 739 796 868 946 1,031 1,124 1.225 1.335 1.455 1.581

Industrial 3.154 3.482 3.974 4.417 4.708 5,061 5.516 6.013 6,554 7.144 7.787 8.488 9.252 10.086

Agricultural 2,057 2,125 2.357 2.546 2.663 2.783 2.950 3.127 3.314 3,513 3.724 3,968 4.165 4.436

Peblici Lighting so 58 75 76 a8 93 102 119 130 136 147 173 167 218

Bulk Supply 900 1.056 872 1,002 1,050 1,092 1.206 1,332 1.470 1,624 1.793 1.980 2,187 2.415

Tract ion 6 42 44~ .. 4 48i 54.. 7 .. 2 62 65AI 69I .. LTOM~n Sams 8$160 9.068 10.288 11,593 12,762 13.756 15.708 17,973 20,154 22,152 28,584 25.663 2V.510 28.622

ANNEX 5.2

-68- Page 1 of 3

PAKISTANWATER AND POWER DEVELOPMENT AUTHORITY

POWER PLANT EFFICIENCY IMPROVEMENT PROJECT

Assumptions for Rate of Return on Project

Costs

1. Capital Cost: Investment costs for the project, amounting to aboutUS$147 million, are incurred as follows:

Year Base Cost 1/ Base Cost (Constant 1986 Prices) 1/

(Rs million) Total Local Foreign

FY87 45.9 44.6 12.7 31.9FY88 575.8 519.7 120.4 399.3FY89 765.6 634.9 121.1 513.8FY90 467.2 356.4 53.7 302.7FY91 172.0 121.3 5.3 116.0FY92 21.7 14.5 1.7 12.8

2,048.2 1,691.7 314.9 1,376.5

2. Local Costs were expressed in their equivalent border pricing usingthe following conversion factors: Material - 1.1; Skilled Labor - 1.06; andUnskilled labor - 0.63.

3. Annual Operating and Maintenance Costs were estimated at 5% ofcapital costs and were expressed in equivalent border prices using thestandard conversion factors.

4. Increment4l Fuel Cost associated with qdditional generating capacitymade available through rehabilitation was computed on the basis of:

(a) August 1986 Border Prices

US$/Toe Rupees/Toe

Fuel Oil ,51 867Diesel 131 2,210Coal 66 1,122Natural Gas 51 867

1/ Net of taxes and duties.

-69-

ANNEX 5.2Page 2 of 3

assuming an exchange rate of Rs 16.87/US$1. The economic cost of natural gaswas set at parity with the border price of fuel oil.

(b) The projected incremental consumption, by type of fuel after takinginto account the fuel savings due to improved heat rate, is shown below:

'000 toe

Diesel 42Coal 7Natural Gas 77

Benefits

1. Additional Generation attributable to the proposed Project wascalculated on the basis of a 60% load factor, allowing for system losseswhich are assumed at about 231 of gross generation.

2. Revenues were calculated on incremental sales attributable to theproposed Project valued on the basis of WAPDA's average revenue ofRs 0.75/kWh. Revenues were converted to their equivalent border prices usinga standard conversion factor of 0.9.

PAKISTANWATER AND POUER DEVELOPMENT AUTH4RITY

POUER PLANT EFFICIENCY IMPROVEMENT PROJECTINTERNAL ECONOMIC RATE OF RETURN

................ '9'...........................

FY86 FY87 FY88 FY89 FY90 FY91 FY92 FY93 FY94 FY95 FY96 FY97 F 8FYS9 - FYIS...... ...... .. ...... ........... ...... .. ... .. ..... .... ...... .... ...... .... ...... .... ...... .... ...... .........INFLATION RATE-LOCAL(M) 10.0 8.0 7.8 7.5 7.3 5.5 4.0 4.0 4.0 4.0 4.0 4.0 4.0INFLATION RATE-FOREIGN(%) 3.2 4.2 7.0 6.8 7.1 5.5 4.0 4.0 4.0 4.0 4.0 4.0 4.0

CONSTANT (1966) PRICES(PRS MILN.).................................

INVESTMENT COSTS 45 520 635 356 121 1S. ----- ..... - ---- ----- .....LOCAL COSTS 13 121 121 54 5 2 ..... ----- ----- *---- *----WATP*TAI 11 100 101 45 4 1..... ----- ..... ..... ..... ..SKILLED LASOUR I 7 7 3 0 0. ..... '' ' ' ' '' .....UNSKILLED LASOUR I 13 13 6 1 0. ----- .--- ----- - ---- -----.FOREIGN COSTS 32 399 514 303 116 13 ---. ----- ----- ----- ----- .....IN BODER (1986) PRICES(PRs NNIL.)...............................

LOCAL COSTS 13 126 127 56 6 2 ..... ----- ......... ..... .....MATERIAL 12 110 111 49 5 2 ----- ----- ..... .. ..... .. .....SKILLED LABOUR 1 8 8 3 0 0 ----- ---- ----- . .---- .. ....UNSKILLED LABOUR 1 8 8 4 0 0 ----- ----- - .--- ..- . .....FUEL COSTS 0 0 0 0 0 176 176 176 176 176 176 176 176ECN#MIlC COSTS (PRO MILLION)............................

INWESTMENT COSTS 45 525 640 359 122 15 ---- ----- ..... ..... .....OPERATION & NAINTENANCE COSTS 1 16 20 11 4 5 5 6 6 6 7 7 7FUEL COSTS 0 0 0 0 0 III 107 103 99 95 91 88 88TOTAL COSTS 47 542 660 370 125 130 112 108 105 101 98 95 95

INCEENTAL SALES (NILLION KWh) 0 0 0 0 0 782 782 782 782 78 782 78 782BENEFITS (PRS MILLION) 0 0 0 0 0 499 499 499 499 499 499 499 499NET BEFITS (PR8 MILLION) -47 542 -660 -370 -125 369 387 390 394 398 401 404 404INTERNAL ECNOMIC RATE OF RETURN = 16.0%

o0.

ANNEX 6.1-71-

PAKISTAN

WATER AND POWER DEVELOPMENT AUTHORITY

POWER PLANT EFFICIENCY IMPROVEMENT PROJECT

Documents and Information in the Project File

1. Program Design for Efficiency Improvement of Thermal Power Plants inPakistan, Volumes I to III (Nov. 1985) and Addendum (March 1986),Stone & Webster.

2. Proforma PC-I - Efficiency Improvement of Thermal Power Plants byRehabilitation of Existing Plant and Addition of Combined Cycle Plants,Planning Department, Power Wing, WAPDA, June 1986.

3. Proforma PC-I - Efficiency Improvement of Thermal Power Plants byRehabilitation of Existing Plant and Addition of Combined Cycle Plants,Planning Department, Power Wing, WAPDA, November 1986.

4. Financial Projection for WAPDA, 1986-92 - Cost Accounting Cell - WAPDA.

5. Power System Statistics, Tenth Issue, November 1986.

6. Project Detailed Estimates - Compass, February 3, 1987.

7. Investment Alternatives for Financing WAPDA Power Program, PlanningDepartment, Power Wing, WAPDA, April 1986.

8. IERR Calculations separately for Combined Cycle Conversion Componentand Rehabilitation Component

9. Performance of Faisalabad Units - Operational Data

NOTES

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FAISALABAD RING

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lz D ~ ~ ~ ~ ~ ~ ~ ~ ~

66~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~4

MULTAN NEW I~O AK*PAT

30' 30

/ 4 3

J - MUL$~N~~7 - \ k,i

p-o- Fts - - -0- /

I~~~~~~~~~~~~~~~~~~~~~~~~~~~ A T AD-- N ] \ \ .J ~~~~~~~~~ PAKISTAN

KIIUZDAR ( > XK"POWER PLANT EFFICIENCY.2 H *IMPROVEMENT PROJECT

° ,z'' \ pt'/ yUKKUR 4b-, j * Main Power Stations and Transmission Lines

4th. 5th,UNDER KOT ADDU

CONSTRUCTION COMBINED PROPOSEDOR CYCLE POWER POWER

EXISTING PLANNED PROJECTS PROJECTTRANSMISSION LINES5

DADU ---- - 500 kV

220 kV------ ~~~~~66/132 W

-26' GRID STATIONS 26tNEW 500 kV

() ~~~EXTENSIONS Of EXISTING 500 IW

(%. \>t \ \tt0 0 500 kV

\ LAKHRA \0#tt 0 tw __ * O O 13220 kV0 0 ~~~~~~~132 kV

JAMSHO ~~~~~~~~~~~~~~~~~~~~~~66 kVPOWER STATIONS:

KAIIA m H:3 HYDROELECTRIC

M'LE 3 ~ ~ ~ ~ ~ ~ ~ AA A~ THERMALNUCLEAR

KARACHI NUCLEARPOWER PLANT-

- ,INTERNATIONAL BOUNDARIES

X ^ 0~-- J 0 too00 200 300 KILOMETERS

m._-J O, 100 200 MILES

66 70 74-