PCR Standard

Completion Report

Project Number: 38456-013 MFF Number: 0021 Loan Numbers: 2438, 2439, 2727, 2972, and 3096 October 2020

Pakistan: Power Distribution Enhancement Investment Program

This document is being disclosed to the public in accordance with ADB’s Access to Information Policy.

CURRENCY EQUIVALENTS

Currency unit – Pakistan rupee(s) (PRe/PRs) Currency unit – Special drawing rights (SDR)

At Appraisal At Project Completion 05 August 2008 22 April 2019 PRe1.00 = $0.0139 $0.007058 $1.00 = PRs71.89 PRs141.675 SDR1.00 = $1.631 $1.391 $1.00 = SDR0.613 SDR0.719

ABBREVIATIONS

ADB – Asian Development Bank ADF – Asian Development Fund AGP – Auditor General of Pakistan AEFS – audited entity financial statement APFS – audited project financial statement CPS – country partnership strategy DISCO – distribution company DMF – design and monitoring framework EIRR – economic internal rate of return FESCO – Faisalabad Electric Supply Company FIRR – financial internal rate of return FMC – facility management consultant GEPCO – Gujranwala Electric Power Company HESCO – Hyderabad Electric Supply Company IESCO – Islamabad Electric Supply Company LESCO – Lahore Electric Supply Company MEPCO – Multan Electric Power Company MFF – multitranche financing facility NEPRA – National Electric Power Regulatory Authority NTDC – National Transmission and Despatch Company PEPCO – Pakistan Electric Power Company PESCO – Peshawar Electric Supply Company PMU – project management unit QESCO – Quetta Electric Supply Company STG – secondary transmission grid T&D – transmission and distribution WACC – weighted average cost of capital

WEIGHTS AND MEASURES

GWh – gigawatt-hour km – kilometer kV – kilovolt kWh – kilowatt-hour MVA – megavolt ampere

NOTES

(i) The fiscal year (FY) of the Government of the Islamic Republic of Pakistan ends on 30 June. “FY” before a calendar year denotes the year in which the fiscal year ends, e.g., FY2018 ends on 30 June 2018.

(ii) In this report, “$” refers to United States dollars.

Vice-President Shixin Chen, Operations 1 Director General Werner Liepach, Central and West Asia Department (CWRD) Director Joonho Hwang, Energy Division, CWRD Xiaohong Yang, Country Director, Pakistan Resident Mission (PRM)

Team leader Ehtesham Zafar Khattak, Senior Project Officer (Infrastructure), PRM Team members Anjum Asif, Senior Operations Assistant, PRM Khurram Shahzad, Associate Project Analyst, PRM

In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

CONTENTS

Page BASIC DATA i MAPS xii I. PROGRAM DESCRIPTION 1 II. DESIGN AND IMPLEMENTATION 2 A. Program Design and Formulation 2 B. Program Outputs 3 C. Program Costs and Financing 3 D. Disbursements 4 E. Program Schedule 5 F. Implementation Arrangements 6 G. Consultant Recruitment and Procurement 7 H. Gender Equity 9 I. Safeguards 9 J. Monitoring and Reporting 11 III. EVALUATION OF PERFORMANCE 12 A. Relevance 12 B. Effectiveness 12 C. Efficiency 13 D. Sustainability 14 E. Development Impact 15 F. Performance of the Borrower and the Executing Agency 15 G. Performance of the Asian Development Bank 16 H. Overall Assessment 16 IV. ISSUES, LESSONS, AND RECOMMENDATIONS 17 A. Issues and Lessons 17 B. Recommendations 18

APPENDIXES 1. Design and Monitoring Framework 19 2. Project Cost at Appraisal and Actual 21 3. Program Cost by Financier 22 4. Disbursement of ADB Loan and Grant Proceeds 26 5. Contract Awards of ADB Loan and Grant Proceeds 27 6. Chronology of Main Events 28 7. Status of Compliance with Loan Covenants 29 8. Re-Assessment of Economic and Financial Analysis 36 9. List of Subprojects Implemented Under the Program 45 10. Status of Compliance with Financial Covenants 70

BASIC DATA

A. Loan Identification 1. Country Islamic Republic of Pakistan 2. MFF number and financing source M0021: - 2438-PAK / ordinary capital resources (OCR) - 2439-PAK / concessionary ordinary capital resources lending (COL) / Asian Development Fund - 2727-PAK / OCR - 2972-PAK / OCR - 3096-PAK / OCR 3. Program title Power Distribution Enhancement Investment Program 4. Borrower Islamic Republic of Pakistan 5. Executing agency Pakistan Electric Power Company (PEPCO) 6. Amount of loan $810 million 7. Financing modality Multitranche financing facility

B. Loan Data 1. Appraisal – Date started 28 January 2007 – Date completed 30 June 2008 2. Loan negotiations Loan 2438/2439 – PFR1 – Date started 7 July 2008 – Date completed 9 July 2008 Loan 2727 – PFR2 – Date started 3 December 2010 – Date completed 7 December 2010 Loan 2972 – PFR3 – Date started 26 November 2012 – Date completed 28 November 2012 Loan 3096 – PFR4 – Date started 2 December 2013 – Date completed 3 December 2013 3. Date of Board approval Loan 2438/2439 – PFR1 12 September 2008 Loan 2727 – PFR2 14 December 2010 Loan 2972 – PFR3 14 December 2012 Loan 3096 – PFR4 13 December 2013 4. Date of loan agreement Loan 2438/2439 – PFR1 29 November 2008 Loan 2727 – PFR2 28 January 2011 Loan 2972 – PFR3 9 September 2013 Loan 3096 – PFR4 30 April 2014 5. Date of loan effectiveness Loan 2438 – PFR1

– In loan agreement 28 January 2009 – Actual 13 January 2009 – Number of extensions 0 Loan 2439 – PFR1 – In loan agreement 28 January 2009 – Actual 13 January 2009 – Number of extensions 0 Loan 2727 – PFR2 – In loan agreement 28 March 2011 – Actual 5 October 2011 – Number of extensions 3 Loan 2972 – PFR3 – In loan agreement 8 December 2013 – Actual 10 December 2013 – Number of extensions 1 Loan 3096 – PFR4 – In loan agreement 29 July 2014 – Actual 18 July 2014 – Number of extensions 0 6. Project completion date Loan 2438 – PFR1 – Appraisal 30 June 2012 – Actual 30 June 2012 Loan 2439 – PFR1 – Appraisal 31 December 2018 – Actual 31 December 2018 Loan 2727 – PFR2 – Appraisal 30 March 2015 – Actual 30 June 2018 Loan 2972 – PFR3 – Appraisal 30 June 2016 – Actual 30 June 2018 Loan 3096 – PFR4 – Appraisal 31 December 2016 – Actual 30 June 2018 7. Loan closing date Loan 2438 – PFR1 – In loan agreement 30 June 2012 – Actual 30 June 2012 – Number of extensions 0 Loan 2439 – PFR1 – In loan agreement 31 December 2018 – Actual 31 December 2018 – Number of extensions 0 Loan 2727 – PFR2 – In loan agreement 30 March 2015 – Actual 30 June 2018 – Number of extensions 3 Loan 2972 – PFR3 – In loan agreement 31 December 2016 – Actual 30 June 2018

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– Number of extensions 2 Loan 3096 – PFR4 – In loan agreement 30 June 2017 – Actual 30 June 2018 – Number of extensions 1 8. Financial closing date Loan 2438 – PFR1 – Actual 03 January 2014 Loan 2439 – PFR1 – Actual 22 April 2019 Loan 2727 – PFR2 – Actual 22 April 2019 Loan 2972 – PFR3 – Actual 22 April 2019 Loan 3096 – PFR4 – Actual 22 April 2019 9. Terms of loan Loan 2438 – PFR1 – Interest rate London interbank offered rate (LIBOR) plus 0.20% and 0.15% commitment charge per annum – Maturity (number of years) 20 – Grace period (number of years) 3 (for principal repayment only) Loan 2439 – PFR1 – Interest rate 1% per annum during grace period and 1.5% thereafter – Maturity (number of years) 32 – Grace period (number of years) 8 (for principal repayment only) Loan 2727 – PFR2 – Interest rate LIBOR plus 0.30% – Maturity (number of years) 20 – Grace period (number of years) 3 (for principal repayment only) Loan 2972 – PFR3 – Interest rate LIBOR plus 0.60% less 0.20% credit – Maturity (number of years) 25 – Grace period (number of years) 5 Loan 3096 – PFR4 – Interest rate LIBOR plus 0.40% plus 0.10% maturity premium and commitment charge of 0.15% – Maturity (number of years) 25 – Grace period (number of years) 5 10. Terms of relending (if any) Loan 2438 – PFR1 – Interest rate 17% – Maturity (number of years) 15 – Grace period (number of years) 2 (for principal repayment only) – Second-step borrower Distribution companies Loan 2439 – PFR1 – Interest rate 17% – Maturity (number of years) 15

– Grace period (number of years) 8 (for principal repayment only) – Second-step borrower PEPCO Loan 2727 – PFR2 – Interest rate 15% – Maturity (number of years) 17 – Grace period (number of years) 3 (for principal repayment only) – Second-step borrower Distribution companies Loan 2972 – P FR3 – Interest rate 15% – Maturity (number of years) 20 – Grace period (number of years) 2 – Second-step borrower Distribution companies Loan 3096 – PFR4 – Interest rate 15% – Maturity (number of years) 20 – Grace period (number of years) 2 – Second-step borrower Distribution companies

11. Disbursements a. Dates Initial Disbursement Final Disbursement Time Interval L2438 – PFR1 15 February 2009 3 January 2014 59 months L2439 – PFR1 14 May 2010 15 February 2019 105 months L2727 – PFR2 1 December 2011 19 February 2019 87 months L2972 – PFR3 1 June 2014 1 April 2019 58 months L3096 – PFR4 1 December 2014 22 March 2019 52 months

Effective Date Actual Closing Date Time Interval L2438 – PFR1 13 January 2009 3 January 2014 59 months L2439 – PFR1 13 January 2009 22 April 2019 123 months L2727 – PFR2 5 October 2011 22 April 2019 91 months L2972 – PFR3 10 December 2013 22 April 2019 64 months L3096 – PFR4 18 July 2014 22 April 2019 57 months

b. Amount ($) (i) Loan 2438-PAK (OCR) – PFR1 ($ ’000) Increased Canceled Last Original during during Revised Amount Undisbursed Allocation Implementation Implementation Allocation Disbursed Balance Category (1) (2) (3) (4=1+2–3) (5) (6 = 4–5) Allocated 217,030 0 45,136 171,894 171,894 0 Unallocated 24,970 0 24,970 0 0 0 Total 242,000 0 70,106 171,894 171,894 0

(ii) Loan 2439-PAK (COL) – PFR1 (SDR ’000) Increased Canceled Last Original during during Revised Amount Undisbursed Allocation Implementation Implementation Allocation Disbursed Balance Category (1) (2) (3) (4=1+2–3) (5) (6 = 4–5) Allocated 6,009 0 1,062 4,947 4,947 0 Unallocated 123 0 123 0 0 0 Total 6,132 0 1,185 4,947 4,947 0

(iii) Loan 2727-PAK (OCR) – PFR2 ($ ‘000) Increased Canceled Last Original during during Revised Amount Undisbursed Allocation Implementation Implementation Allocation Disbursed Balance Category (1) (2) (3) (4=1+2–3) (5) (6 = 4–5) Loan 242,000 69,700 172,300 156,429 15,871 Total 242,000 69,700 172,300 156,429 15,871

(iv) Loan 2972-PAK (OCR) – PFR3 ($) Increased Canceled Last Original during during Revised Amount Undisbursed Allocation Implementa- Implementation Allocation Disbursed Balance Category (1) tion (2) (3) (4=1+2–3) (5) (6 = 4–5) Turnkey & 196,230,000 0 8,079,774 188,150,226 171,289,701 16,860,525 Civil Works Equipment & 31,040,000 0 5,715,270 25,324,730 35,911,477 (10,586,747) Material Unallocated 11,120,000 0 0 11,120,000 0 11,120,000 Interest & Commitment 6,610,000 0 0 6,610,000 5,610,000 1,000,000 Charge Total 245,000,000 0 13,795,045 231,204,955 212,811,178 18,393,777

(v) Loan 3096-PAK (OCR) – PFR4 ($) Increased Canceled Last Original during during Revised Amount Undisbursed Allocation Implementation Implementation Allocation Disbursed Balance Category (1) (2) (3) (4=1+2–3) (5) (6 = 4–5) Equipment 123,850,000 8,762,590 12,315,808 120,296,782 120,296,782 0 & Material Civil Works 8,050,000 0 6,273,058 1,776,942 1,776,942 0 Turnkey 9,420,000 640,201 344,814 9,715,387 9,715,387 0 Unallocated 19,740,000 1,795,513 19,740,000 0 0 0 Interest & 6,140,000 0 2,600,000 3,540,000 3,540,000 0 Commitmen t Charge Total 167,200,000 9,402,791 41,273,680 135,329,111 135,329,111 0

C. Program Data 1. Project cost ($ million) Cost Appraisal Estimate Actual (i) Loan 2438/2439 – PFR1 Foreign exchange cost 107.9 179.1 Local currency cost 229.0 61.1 Total 326.8 240.2 (ii) Loan 2727 – PFR2 Foreign exchange cost 301.6 156.4 Local currency cost 0.0 27.0 Total 301.6 183.4 (iii) Loan 2972 – PFR3 Foreign exchange cost 245.1 212.8 Local currency cost 26.4 23.2 Total 271.5 236.0

(v) Loan 3096 – PFR4 Foreign exchange cost 167.2 135.3 Local currency cost 61.0 40.1 Total 228.2 175.4

2. Financing plan ($ million) (i) Loan 2438/2439 – PFR1 Cost Appraisal Estimate Actual Implementation cost Borrower financed 75.0 61.1 ADB financed 252.0 177.5 Other external financing 0.0 0.0 Total implementation cost 327.0 238.6 Interest during construction costs Borrower financed 0.0 0.0 ADB financed 14.0 1.6 Other external financing 0.0 0.0 Total interest during construction cost 14.0 1.6

(ii) Loan 2727 – PFR2 Cost Appraisal Estimate Actual Implementation cost Borrower financed 60.0 27.0 ADB financed 242.0 156.4 Other external financing 0.0 0.0 Total implementation cost 301.6 183.4 Interest during construction costs Borrower financed 0.0 1.0 ADB financed 12.5 6.0 Other external financing 0.0 0.0 Total interest during construction cost 12.5 7.0

(iii) Loan 2972 – PFR3 Cost Appraisal Estimate Actual Implementation cost Borrower financed 26.4 23.1 ADB financed 238.4 207.2 Other external financing 0.0 0.0 Total implementation cost 264.8 230.3 Interest during construction costs Borrower financed 0.0 0.1 ADB financed 6.7 5.6 Other external financing 0.0 0.0 Total interest during construction cost 6.7 5.7

(iv) Loan 3096 – PFR4 Cost Appraisal Estimate Actual Implementation cost Borrower financed 61.0 40.1 ADB financed 167.2 131.8 Other external financing 0.0 0.0 Total implementation cost 228.2 171.9 Interest during construction costs Borrower financed 0.0 0.0 ADB financed 6.1 3.5 Other external financing 0.0 0.0 Total interest during construction cost 6.1 3.5

vii

3. Cost breakdown by program component (i) Loan 2438 – PFR1 ($ million) Component Appraisal Estimate Actual A. Base Costs 1. Equipment and Materials 173.4 167.5 2. Civil Works 15.8 1.3 3. Installation/Turnkey Cost 6.7 1.6 4. Powerlines 1.7 0.0 5. Consulting (Engineering) 5.4 0.0 Subtotal (A) 203.0 170.3 B. Unallocated 25.0 0.0 C. Financing Charges During Implementation 14.0 1.5 Total (A+B+C) 242.0 171.9

(i) Loan 2439 – PFR1 (SDR million) Component Appraisal Estimate Actual A. Consulting Services 1. Implementation 3.6 4.9 2. Preparation 0.6 0.0 3. Monitoring 0.6 0.0 4. Capacity Building 1.2 0.0 Subtotal (A) 6.0 4.9 B. Unallocated 0.1 0.0 Total (A+B) 6.1 4.9

(ii) Loan 2727 – PFR2 ($ million) Component Appraisal Estimate Actual A. Base Costs 1. Equipment and Materials 101.5 75.6 2. Civil Works 24.6 17.0 3. Installation/Turnkey Cost 116.5 74.8 4. Engineering 4.3 1.4 5. Resettlement and Monitoring 18.4 2.0 Subtotal (A) 278.3 176.5 B. Contingencies 11.5 0.0 C. Financing Charges During Implementation 12.5 7.0 Total (A+B+C) 301.6 183.4

(iii) Loan 2972 – PFR3 ($ million) Component Appraisal Estimate Actual A. Base Costs 1. Equipment and Materials 31.0 35.9 2. Civil works 2.9 16.2 3. Installation/Turnkey Cost 196.2 172.0 4. Engineering 0.3 0.0 5. Environmental Mitigation and Resettlement 10.1 0.0 6. Import Duties and Taxes 0.9 4.5 Subtotal (A) 241.6 229.7 B. Recurrent Costs 12.1 0.6 Total Base Cost (A+B) 253.7 230.3 C. Contingencies 11.1 0.0 D. Financing Charges During Implementation 6.7 5.7 Total (A+B+C+D) 271.5 236.0

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(iv) Loan 3096 – PFR4 ($ million) Component Appraisal Estimate Actual A. Base Costs 1. Equipment and Materials 125.1 121.5 2. Civil works 8.0 3.9 3. Installation Cost 3.4 10.1 4. Import Duties and Taxes 42.5 15.7 Subtotal (A) 179.1 151.2 B. Recurrent Costs 15.0 20.7 Total Base Cost (A+B) 194.1 171.9 C. Contingencies 27.9 0.0 D. Financing Charges During Implementation 6.1 3.5 Total (A+B+C+D) 228.2 175.4

4. Program schedule (i) Loan 2438/2439 – PFR1 Item Appraisal Estimate Actual Date of contract with first FMC firm 01 July 2009 01 March 2010 Date of contract termination with first FMC firm None 28 February 2011 Date of contract with second FMC firm None 11 June 2012 Date of contract completion with FMC firm 30 June 2017 15 February 2015 Turnkey contracts including civil works and engineering (17 packages, 22 lots) First turnkey contract 01 October 2008 25 August 2010 Last turnkey contract 30 June 2011 25 August 2010 Start of operations for the first turnkey contract 01 October 2010 24 November 2011 Start of operations for the last turnkey contract 30 June 2011 24 November 2011 Equipment and supplies (15 packages, 46 lots) Dates First procurement 01 October 2008 17 September 2009 Last procurement 01 January 2010 14 February 2012 Completion of supply 30 June 2011 13 June 2012 Additional scope against savings Equipment (09 packages, 14 lots) Date of first contract under savings None 16 May 2011 Date of last contract under savings None 02 March 2012 Completion of Supply None 13 June 2012

(ii) Loan 2727 – PFR2 Item Appraisal Estimate Actual Date of contract with consultants None None Original Scope Turnkey contracts including civil works and engineering (17 packages, 22 lots) First turnkey contract 1 January 2012 21 December 2011 Last turnkey contract 30 September 2012 10 April 2014 Start of operations for the first turnkey contract 1 January 2014 9 June 2014 Start of operations for the last turnkey contract 1 January 2015 1 July 2018 Equipment and supplies Dates First procurement 1 January 2012 28 November 2011 Last procurement 30 September 2012 31 March 2015 Completion of supply 31 December 2014 11 April 2018 Additional scope against savings Equipment (9 packages, 22 lots) First procurement 15 December 2015 4 March 2016 Last procurement 10 February 2017 25 September 2017 Completion of supply 31 March 2018 15 July 2018

(iii) Loan 2972 – PFR3 Item Appraisal Estimate Actual Turnkey contracts Date of award November 2013 March 2014 Completion of work June 2016 June 2018 Equipment and supplies First procurement November 2013 March 2014 Last procurement January 2014 June 2018 Completion of equipment installation June 2016 June 2018

(iv) Loan 3096 – PFR4 Item Appraisal Estimate Actual Completion of engineering designs January 2014 March 2014 Civil works contract Date of first contract award March 2015 September 2015 Date of last contract award March 2015 December 2017 Completion of work March 2017 September 2018 Equipment and supplies Dates First procurement December 2014 November 2014 Last procurement December 2014 June 2018 Completion of equipment installation December 2016 March 2019

5. Project performance report ratings (i) Loan 2438-PAK (OCR) and Loan 2439-PAK (COL) – PFR1 Ratings Implementation Period Development Objectives Implementation Progress From 13 January 2009 to 31 December 2009 On track On track From 01 January 2010 to 31 December 2010 On track On track Single Project Rating From 01 January 2011 to 31 December 2011 On track From 01 January 2012 to 31 December 2012 On track From 01 January 2013 to 31 December 2013 On track From 01 January 2014 to 31 December 2014 On track From 01 January 2015 to 31 December 2015 On track From 01 January 2016 to 31 December 2016 On track From 01 January 2017 to 31 December 2017 On track From 01 January 2018 to 31 December 2018 On track From 01 January 2019 to 22 April 2019 On track

(ii) Loan 2727-PAK (OCR) – PFR2 Ratings Implementation Period Single Project Rating From 5 October 2011 to 31 December 2011 Potential problem From 1 January 2012 to 31 December 2012 Potential problem From 1 January 2013 to 31 December 2013 On track From 1 January 2014 to 31 December 2014 Potential problem From 1 January 2015 to 31 December 2015 On track From 1 January 2016 to 31 December 2016 On track From 1 January 2017 to 31 December 2017 On track From 1 January 2018 to 31 December 2018 On track From 1 January 2019 to 31 January 2019 On track

(iii) Loan 2972-PAK (OCR) – PFR3 Ratings Implementation Period Single Project Ratinga From 10 December 2013 to 31 December 2013 On track From 1 January 2014 to 31 December 2014 On track From 1 January 2015 to 31 December 2015 On track From 1 January 2016 to 31 December 2016 On track From 1 January 2017 to 31 December 2017 On track From 1 January 2018 to 30 June 2018 On track a In 2011, e-Operations were introduced. Under the new rating system, performance is rated according to technical, procurement, disbursement, financial management, and safeguards indicators. A single rating applied to the project.

(iv) Loan 3096-PAK (OCR) – PFR4 Ratings Implementation Period Single Project Ratinga From 10 December 2013 to 31 December 2013 On track From 1 January 2014 to 31 December 2014 On track From 1 January 2015 to 31 December 2015 On track From 1 January 2016 to 31 December 2016 On track From 1 January 2017 to 31 December 2017 On track From 1 January 2018 to 30 June 2018 On track

D. Data on Asian Development Bank Missions (i) Loan 2438/2439 – PFR1 No. of No. of Specialization Name of Mission Date Persons Person-Days of Membersa Inception 29 January–12 February 3 15 a,b,j 2009 Review 1 05–20 October 2009 4 28 a,g,h,i Review 2 01–17 February 2011 4 28 a,b,c,d Review 3 05–09 March 2012 4 16 a,b,d,e Review 5 18–30 April 2013 2 14 a,b Review 6 06–20 June 2014 2 21 b,f Review 7 22 May–03 June 2015 6 54 a,b,c,f,g,h Review 8 22 May–03 June 2016 2 14 b,f Review 9 17–19 October 2016 2 6 b,f Special loan administration 29–30 November 2016 2 4 a, i Review 10 01–09 February 2018 2 12 a,b a a = senior project officer, b = project analyst, c = consultant (environment), d = consultant (safeguards), e = principal energy specialist, f = energy specialist, g = social safeguards specialist, h = project analyst CWEN, i = portfolio officer PRM, j = environment expert, k = development specialist, PRM.

(ii) Loan 2727 – PFR2 No. of No. of Specialization Name of Mission Date Persons Person-Days of Membersa Inception 01–22 February 2011 4 28 a, b, c, d Review 1 05–09 March 2012 4 16 a, b, d, e Midterm review 18–30 April 2013 2 14 a, b Review 2 06–20 June 2014 2 21 b, f Review 3 22 May–03 June 2015 6 54 a, b, c, f, g, h Review 4 22 May–03 June 2016 2 14 b, f Review 5 17–19 October 2016 2 6 b, f Special loan administration 29–30 November 2016 2 4 a, i Review 6 01–09 February 2018 2 12 a, b

xi a a = senior project officer, b = project analyst, c = consultant (environment), d = consultant (safeguards), e = principal energy specialist, f = energy specialist, g = social safeguards specialist, h = project analyst Energy Division, Central and West Asia Department (CWRD), i = portfolio officer, PRM.

(iii) Loan 2972 – PFR3 No. of No. of Specialization Name of Mission Dates Persons Person-Days of Membersa Loan inception 04–14 March 2014 2 10 a, b Midterm project review 22 May–03 June 2015 6 12 a, c, b, d Special loan administration 29–30 November 2016 2 2 c, b Loan review 1 22 May–03 June 2016 2 7 a, b Loan review 2 17–19 October 2016 2 3 a, b Loan review 3 01–09 February 2018 2 8 c, b a a = energy specialist; b = project analyst; c = senior project officer; d = social specialist.

(iv) Loan 3096 – PFR4 No. of No. of Specialization Name of Mission Date Persons Person-Days of Membersa Fact-finding mission 19–28 August 2013 8 56 a, f, h, i, j, k, l, m Inception mission 07–20 June 2014 4 21 b, c, d, e Review mission 17 May–03 June 2015 6 20 a, b, c, e, f, g Midterm review 01–15 December 2015 2 10 a, b Review mission 22 May–03 June 2016 4 7 a, c, e, f a a = project officer, b = analyst, c = energy specialist, d = safeguard specialist, e = consultant (environment), f = social development specialist, g = associate analyst, h = environment specialist, i = economic officer, j = procurement officer, k = operations assistant, l = young professional, m = finance specialist.

Note: A separate mission for project completion review was not needed as the last mission in February 2018, apart from reviewing the completion status of each subproject, also collected the data and information essential for the project completion review. In 2017, the progress with each DISCO was reviewed and updated as part of the three tri-partite portfolio review missions.

xii MAPS MAP o 64o 00'E 73 00'E PAKISTAN POWER DISTRIBUTION ENHANCEMENT INVESTMENT PROGRAM (as completed)

MVA Additions in DISCOs under MFF Total Addition DISCO Capacity under MFF Percentage (MVA) (MVA) ADB under MFF (17,399 MVA) FESCO 4,907 1,909 39% 41%

GEPCO 4,434 1,395 31% o o 35 00'N HESCO 2,411 1,699 70% 35 00'N

IESCO 4,787 1,985 41%

LESCO 9,849 3,799 39%

MEPCO 7,472 2,739 37% Peshawar (24,810 MVA) ISLAMABAD PESCO 5,773 2,503 43% 59% IESCO QESCO 2,576 1,370 53% PESCO Islamabad Electric Peshawar Electric Supply Company GEPCO Total 42,209 17,399 41% Supply Company Gujranwala Electric Power Company Gujranwala FESCO Faisalabad Electric Supply Company Lahore Faisalabad LESCO Lahore Electric Supply Company

Quetta Multan QESCO MEPCO Quetta Electric Multan Electric Supply Company Power Company

HESCO Hyderabad Electric Supply Company

26 o 00'N 26 o 00'N

Hyderabad N

National Capital Karachi 0 50 100 200 Provincial Capital Kilometers (km) City/Town River Boundaries are not necessarily authoritative. ADB = Asian Development Bank DISCO = Distribution Company This map was produced by the cartography unit of the Asian Development Bank. The boundaries, colors, denominations, and any other information shown on this MFF = Multitranche Financing Facility map do not imply, on the part of the Asian Development Bank, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries, MVA = megavolt-ampere colors, denominations, or information.

64o 00'E 73o 00'E

201073B 20PAK ABV xiii

MAP o 64o 00'E 73 00'E PAKISTAN POWER DISTRIBUTION ENHANCEMENT INVESTMENT PROGRAM (TRANCHE 4) (as completed)

MVA Additions in DISCOs under T4 Total Addition DISCO Capacity under T4 Percentage (MVA) (MVA) ADB under T4 (6,012 MVA) FESCO 4,907 626 13% 14%

GEPCO 4,434 471 11% o o 35 00'N HESCO 2,411 349 14% 35 00'N

IESCO 4,787 655 14%

LESCO 9,849 1562 16%

MEPCO 7,472 1217 16% Peshawar (36,197 MVA) ISLAMABAD PESCO 5,773 743 13% 86% IESCO QESCO 2,576 389 15% PESCO Islamabad Electric Peshawar Electric Supply Company GEPCO Total 42,209 6,012 14% Supply Company Gujranwala Electric Power Company Gujranwala FESCO Faisalabad Electric Supply Company Lahore Faisalabad LESCO Lahore Electric Supply Company

Quetta Multan QESCO MEPCO Quetta Electric Multan Electric Supply Company Power Company

HESCO Hyderabad Electric Supply Company

26 o 00'N 26 o 00'N

Hyderabad N

National Capital Karachi 0 50 100 200 Provincial Capital Kilometers (km) City/Town River Boundaries are not necessarily authoritative. ADB = Asian Development Bank DISCO = Distribution Company This map was produced by the cartography unit of the Asian Development Bank. The boundaries, colors, denominations, and any other information shown on this MVA = megavolt-ampere map do not imply, on the part of the Asian Development Bank, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries, T4 = Tranche 4 colors, denominations, or information.

64o 00'E 73o 00'E

201073A 20PAK ABV

I. PROGRAM DESCRIPTION

1. Power is a commodity essential to Pakistan’s economic and social development. Supplying reliable electricity to customers throughout the country raises living standards and stimulates commercial and industrial growth. In May 2005, the Government of Pakistan began implementing a series of integrated activities in line with the power sector development strategy set out in its Medium-Term Development Framework.1 That framework envisaged additional power generation, transmission, and distribution capacities to ensure sufficient electricity supply to meet the 8% annual economic growth projected for the planning period of 2005–2010. Subsequently, in coordination with the Ministry of Water and Power, the power distribution companies (DISCOs) prepared the Power Distribution Sector Road Map for 2008–2017.2 The road map recommended short- (priority), medium-, and long-term system improvement projects and detailed the investment needs. It estimated the total investment requirement for the DISCOs at $5.2 billion. The investments consisted of improvements to the secondary transmission grid (STG), power distribution, and energy loss reduction. The government sought financing from the Asian Development Bank (ADB), the World Bank, and other multilateral and bilateral funding agencies.

2. In 2008, as part of ADB’s assistance to Pakistan’s energy sector, ADB approved up to $810 million in loans under the Power Distribution Enhancement Investment Program (PDEIP) over a 10-year period through a multitranche financing facility (MFF). The loans were to finance the distribution systems in addressing capacity shortfalls, which at that time regularly produced system outages and supply interruptions.3 The objective of the PDEIP was to improve the efficiency of the overall power distribution system and provide adequate and reliable power supply to a greater number of industrial, commercial, and residential customers by funding investments required in each of the eight DISCOs. Specifically it aimed to (i) add 13,309 megavolt-amperes (MVA) of transformer capacity, (ii) improve the efficiency and reliability of the distribution and secondary transmission system, (iii) add 2,202.7 kilometers (km) of transmission lines, (iv) build more capacity in project management and implementation by establishing a dedicated project management unit (PMU), and (v) build the capacity of DISCOs through training workshops. The PDEIP comprised four projects with five loans. The four projects consisted of (i) augmenting and extending 132-kilovolt (kV) power transformers at STG substations, (ii) constructing STG substations, (iii) constructing transmission lines, (iv) reducing energy loss by replacing overloaded distribution transformers with higher-capacity ones and improving power distribution by adding distribution transformer capacity on the 11 kV feeders, and (v) establishing strategic spares (spare power transformers for emergencies).

3. The PDEIP completed all four tranches as planned. Tranche 1 comprised two loans totaling $252.0 million, one for the project ($242.0 million) and the other ($10.0 million) for the support component for the MFF.4 It was designed to cover (i) augmentation, extension, conversion, and rehabilitation of the STG; (ii) construction of STG lines; and (iii) installation of capacitors to reduce energy loss. Tranche 2 comprised one loan for $242.0 million. It was designed to cover (i) continued augmentation, extension, conversion, and rehabilitation of the STG; (ii) continued construction of STG transmission lines; and (iii) continued installation of

1 Government of Pakistan, Planning Commission. 2005. Medium Term Development Framework, 2005–2010. Islamabad. 2 Ministry of Water and Power, Government of Pakistan. 2008. Power Distribution Sector Roadmap, 2008–2017. Islamabad. 3 ADB. 2008. Report and Recommendation of the President to the Board of Directors, Multitranche Financing Facility, Islamic Republic of Pakistan, Power Distribution Enhancement Investment Program. Manila. 4 ADB. Power Distribution Enhancement Investment Program – Project 1. .

capacitors to reduce energy loss.5 Tranche 3 comprised one loan for $245.0 million. It was designed to cover (i) augmentation, extension, conversion, and installation of substations; and (ii) conversion, replacement, and extension of STG lines.6 Tranche 4 comprised one loan for $167.2 million. It was designed to cover components of the road map for the development of the distribution sector and the expansion program (para 8).7 The original MFF utilization period ran until 30 June 2018. ADB closed the loan account of the final tranche (tranche 4) on 22 April 2019 as well as the account for the MFF.

II. DESIGN AND IMPLEMENTATION

4. The MFF established the foundation for a 10-year partnership between ADB and the Government of Pakistan to improve the aging, inefficient power distribution network. The program was highly relevant at both appraisal and completion. At appraisal, it was consistent with ADB’s country strategy and Pakistan’s development priorities in the energy sector. Investment to improve energy security and efficiency was one of four main strategic areas in the Pakistan country partnership strategy (CPS), 2009–2013.8 Among other steps, the energy sector road map developed under the strategy included removing distribution system constraints to strengthen the capacity of the energy supply chain. The government’s energy sector strategy, described in the Medium-Term Development Framework, focused on ensuring the sector’s long-term viability by optimizing the energy mix. Pakistan’s National Power Policy 2013 aimed at reducing T&D losses and increasing revenue collection.9 Improving transmission and distribution (T&D) remained one of the assistance areas identified in the Pakistan CPS 2015–2019, focusing on sector reforms as well as investments in T&D infrastructure to reduce technical losses and theft.10 Energy is also one of four main items on the government’s Vision 2025 agenda.11

5. ADB’s assistance through the PDEIP focused on improving the distribution systems in eight DISCOs to enable power to be delivered effectively, reliably, and safely to satisfy the demands of existing and new customers while observing necessary environmental and social safeguard requirements. Compliance with regulatory requirements was also a key consideration.

A. Program Design and Formulation

6. The program aimed at (i) allowing for system expansion to meet load and generation growth; (ii) improving efficiency, reliability, and system security; and (iii) reducing distribution losses. As discussed in para 4 the program remained consistent with the ADB’s country partnership strategy and relevant sector framework, and Pakistan’s development objectives. The program was adequately designed and targeted toward the areas in need of immediate support.

7. Upon receipt of the government’s PFR for the program on 08 July 2008, the projects were selected and evaluated based on their (i) technical justification, (ii) financial and economic viability, and (iii) environmental and social impacts. In addition, a program support component provided for consulting services for (i) subproject preparation, (ii) subproject implementation, (iii) subproject monitoring activities, and (iv) capacity building of the DISCOs.

5 ADB. Pakistan: Power Distribution Enhancement Investment Program – Project 2. 6 ADB. Pakistan: Power Distribution Enhancement investment Program – Project 3. 7 ADB. Pakistan: Power Distribution Enhancement Investment Program – Project 4. 8 ADB. 2009. Pakistan Country Partnership Strategy, 2009–2013. Manila. 9 Government of Pakistan, Ministry of Water and Power. 2013. National Power Policy, 2013. Islamabad. 10 ADB. 2015. Pakistan Country Partnership Strategy, 2015–2019. Manila. 11 Government of Pakistan, Planning Commission. 2013. Pakistan Vision 2025. Islamabad.

8. Upon receipt of the government’s PFR on 31 October 2013 for the final project under the program, the ADB team worked with eight DISCOs to identify subprojects. The selected subprojects were integral components of the road map for the development of the distribution sector and the expansion program, based on the National Transmission and Dispatch Company (NTDC) load forecast, using least-cost planning principles, and the loading position of power transformers.12 The project scope covered the secondary transmission system, including (i) augmentation or extension of substation transformers, (ii) reduction of energy loss, (iii) addition of distribution transformers, and (iv) provision of spare transformers for emergency conditions.

B. Program Outputs

9. The program had two outputs: (i) power distribution system rehabilitated, augmented, and expanded – system bottlenecks removed; and (ii) Distribution companies (DISCOs) institutionalized and strengthened. The indicator of the first output was the commissioning of subprojects. The indicator of the second output was DISCOs achieving targets related to operational and financial autonomy, and commercial loss reduction. The program’s subprojects included the construction of grid stations and transmission lines; augmentation and addition of transformers; energy loss reduction; operations and maintenance (O&M) equipment; and provision of strategic spares. Most of the subprojects were commissioned within the respective project completion dates. Under the program, the completion of 796 subprojects resulted in a 17,399 MVA increase in throughput capacity and a 2,112 km increase in the length of transmission lines throughout Pakistan. The DISCOs were partially successful in becoming institutionally and financially independent and reducing annual commercial losses.

10. The program delivered four projects under the four tranches of the program. The last had the most profound impact on the DISCOs’ power distribution network. Its outputs included (i) the augmentation of 181 substations; (ii) the extension of 111 substations; (iii) the commissioning of 5 substations; and (iv) the conversion of 6 substations. All the targets were surpassed owing to the effective utilization of savings (refer to Appendix 1, Table A1.2). The DMF was revised in a memo dated 21 February 2016 to reflect the additional subprojects and their impact. A list of subprojects executed under each tranche is provided in Appendix 9.

C. Program Costs and Financing

11. Multitranche financing facility. The appraised program cost was $810.0 million through four tranches, consisting of $800.0 million from ordinary capital resources (OCR) and $10.0 million from the concessionary ordinary capital resources lending of the Asian Development Fund (ADF). At appraisal, the government’s share of the four tranches totaled $222.4 million. The program’s cost estimates included engineering and administrative costs, duties, and taxes to be paid by the DISCOs. At program completion, total ADB disbursements totaled $683.6 million (81.9%), and the government had contributed $151.4 million (18.1%) (Appendixes 3 and 4).

12. Tranche 1. The appraised cost was $302.3 million, with ADB to fund $252.0 million (80.1%) and the government to contribute $60.3 million (19.9%). The ADB contribution consisted of $242 million for project implementation and $10 million allocated under the support fund for the MFF from ADB’s ADF to hire a facility management consultant (FMC). The funds for tranche 1 were overestimated by $104 million because of (i) forecast high inflation of equipment costs that never materialized; (ii) a tendency to overestimate the budget at the planning (PC-1) stage; and

12 The distribution networks (excluding the Karachi area) are managed by eight independent DISCOs. Karachi is a separate integrated utility (Karachi Electricity Supply Corporation) and was not part of the investment program.

(iii) fluctuations in the currency exchange and market rates of oil and metals. ADB approved the use of $67 million from the overestimation to purchase additional STG and non-STG equipment. At project completion, ADB’s disbursements totaled $179.1 million (74.6%) and the government’s contribution was $61.1 million (25.4%).

13. Tranche 2. At appraisal, the ADB loan amount was $242.0 million and the government share was $60.3 million. ADB’s midterm review mission identified overall savings of $78.8 million (26%). The large savings mainly derived from the tendency of DISCOs to overestimate the budget at the planning (PC-1) stage, the downward slide in market rates for oil and metals after the 2008 global financial crisis, and the devaluation of the Pakistani rupee. At project completion, ADB had contributed $156.4 million (91% of the revised ADB allocation) and the government had contributed $27.0 million (56% of the revised counterpart allocation). The low use of the government allocation is attributed to overestimation at the appraisal stage. For example, the appraisal estimates of $10.5 million for transportation, letters of credit, and insurance remained unused as these services were included in the scope of the contracts awarded.

14. Tranche 3. The total cost of the project was $272.0 million, of which the share from ADB’s OCR was $245.0 million and the DISCOs’ share was $27.0 million. Disbursements were smaller because of (i) equipment costs that were lower than expected, and (ii) a few outstanding payments under turnkey contracts because operational and final acceptance of some projects was still pending. Disbursements totaled $212.8 million, 13% less than the $245.0 million principal loan amount at appraisal. The government’s share at completion was $23.2 million (9.8%).

15. Tranche 4. The total cost of the project was $228.2 million, of which the share from ADB’s OCR was $167.2 million and the share from the DISCOs was $61.0 million. At appraisal, the financing plan was based on a 73:27 ratio for ADB versus government financing. ADB’s share was 100% of all expenditures claimed (exclusive of taxes and duties imposed in the borrower’s territory). At completion ADB’s share of project costs was $135.3 million (77.2%) and the government’s was $40.1 million (22.8%). (Appendix 2)

D. Disbursements

16. A separate loan agreement was established between the government and ADB for each periodic financing request (PFR). The loan agreements described the detailed disbursement arrangements for the PFRs. All disbursements were in accordance with ADB’s Loan Disbursement Handbook (2007, as amended from time to time).13 Imprest accounts were established for all DISCOs and concerned staff were invited to ADB’s loan disbursement seminars in Pakistan. The Pakistan Electric Power Company (PEPCO) opened an imprest account for the ADF loan. Statement of expenditure procedures were used to reimburse eligible expenditures for any individual payment under $100,000 for the OCR loan and $50,000 for the ADF loan.

17. ADB disbursement for tranche 1 (L2438-PAK) totaled $171.89 million, or 100% of the total loan amount post cancelation. The first subproject-related disbursement happened one month after loan effectiveness on 15 February 2009 and the final disbursement was on 16 August 2013. Total ADB loan disbursement for the support component (L2439-PAK) of the MFF amounted to $7.17 million or 86% of the total loan amount post cancelation. The first subproject- related disbursement happened 16 months after loan effectiveness on 14 May 2010 and the final disbursement was on 15 January 2019. Disbursements remained on track and near to the baseline projections.

13 ADB. 2017. Loan Disbursement Handbook. Manila.

18. For tranche 2, ADB loan disbursements totaled $156.43 million or 91% of the post cancelation loan amount (para. 13). The first subproject-related funds were disbursed 5 months after loan effectiveness on 16 March 2012 and the last disbursement was on 19 February 2019. Most (72%) of the funds had been disbursed by the original project completion date of 30 September 2015. Some of the subprojects approved at the appraisal stage were delayed because of rebidding, litigation in local courts, and right-of-way issues. A winding-up period to close the loan account was extended by 3 months (from 31 October 2018 to 31 January 2019), enabling the disbursement of all eligible expenses. At financial closure, an undisbursed amount of $15.87 million was canceled.

19. Disbursements for tranche 3 totaled $212.8 million, 13% less than the $245.0 million principal loan amount at appraisal. Disbursements were smaller because of (i) equipment costs that were lower than expected, and (ii) a few outstanding payments under turnkey contracts because operational and final acceptance of some projects was still pending. The loan was extended to the availability period of the MFF (30 June 2018), enabling the implementing agencies to complete their pending turnkey and other projects. Disbursement projections were revised in September 2015 and August 2016 as part of the loan extensions.

20. Tranche 4 was approved on 13 December 2013 and became effective on 18 July 2014. The original loan closing date of 30 June 2017 was revised to 30 June 2018. The loan was financially closed on 22 April 2019, which enabled implementing agencies to complete their pending subprojects. Disbursements totaled $135.3 million, 19.1% less than the $167.2 million principal loan amount at appraisal. Disbursements were smaller because of (i) equipment costs that were lower than expected, and (ii) a few outstanding payments caused by delays in procurements or contract execution. Disbursement and contract award projections were revised on 29 November 2018 owing to the partial cancelation of loan proceeds. Appendixes 4 and 5 detail the annual and cumulative disbursement and contract awards of the loan proceeds.

E. Program Schedule

21. Tranche 1 was approved on 12 September 2008. It was signed on 29 November 2008 and became effective on 13 January 2009. The actual physical completion date for the project loan (L2438-PAK) was 30 June 2012 as planned at appraisal. The project was financially closed on 3 January 2014 against the appraisal date of 31 October 2012. The actual physical completion for the program support component loan (L2439-PAK) was on 31 December 2018 as planned at appraisal. The project was financially closed on 22 April 2019 against the appraisal date of 30 April 2018.

22. Tranche 2 was approved on 14 December 2010. The loan was signed on 28 January 2011 and became effective on 5 October 2011. At appraisal, physical completion was expected on 31 March 2015, with a closing date of 30 September 2015. The loan closing date was extended three times for a total of 33 months to the MFF closing date of 30 June 2018. The first two extensions were needed mainly to accommodate delays in procurement and the utilization of surplus proceeds for additional works and equipment. A final extension of 3 months was to enable three DISCOs—Gujranwala Electric Power Company (GEPCO), Hyderabad Electric Supply Company (HESCO), and Lahore Electric Supply Company (LESCO)—to complete outstanding physical works.

23. Tranche 3 was approved on 14 December 2012. It was signed on 9 September 2013 and became effective on 10 December 2013. The original loan closing date of 31 December 2016 was

extended twice, with the final closing date on 30 June 2018. The project’s financial closing scheduled for 31 October 2018 was extended to 31 January 2019. The three extensions in loan closing were approved to complete projects for utilization of savings, maximize disbursements and complete ongoing projects.

24. ADB received the PFR for tranche 4 from the executing agency on 31 October 2013. The project was approved on 12 December 2013. The loan was signed on 30 April 2014 and became effective on 18 July 2014. The original loan closing date of 30 June 2017 was extended to 30 June 2018 through a memo dated 1 December 2016, to (i) use surplus loan proceeds; (ii) make a minor change in scope; and (iii) complete delayed subprojects. The additional projects to which surplus loan proceeds were allocated included procurement of grid station and transmission line equipment, conversion of grid stations, and construction of a grid station.

25. The program faced small delays during the implementation period which led to extensions in loan closing dates for all four tranches. The delays were mainly for (i) use of savings, (ii) right- of-way issues, (iii) procurement holdups, and (iv) completion of pending works. The financial loan closing date was 22 April 2019, about 10 months after program closure. Financial closure was delayed because implementing agencies needed to finalize outstanding contractual payments, mainly related to the extension of time claims and variations in scope.

F. Implementation Arrangements

26. PEPCO, established in 1998, is the agency responsible for managing the power sector unbundling process. It was nominated by the Ministry of Water and Power to act as the executing agency, with each DISCO being the implementing agency for work in its own area. PEPCO’s role in the processing and implementation of the investment program was to coordinate activities, such as preparation of Planning Commission (PC-1) forms and PFRs and monitoring of implementation activities. The DISCOs were responsible for (i) selecting and preparing the subprojects, (ii) submitting their requirements for inclusion in PC-1 documents to PEPCO, (iii) submitting withdrawal applications to ADB, and (iv) implementing their subprojects on time. The borrower was the Islamic Republic of Pakistan and the proceeds of the loan were re-lent to PEPCO and the DISCOs through a subsidiary loan arrangement. In accordance with the project agreement, the implementation arrangements were the responsibility of each DISCO, in accordance with the details set forth in the Facility Administration Memorandum.14 As such, a PMU was established in each DISCO to be responsible for (i) project implementation, (ii) project monitoring, and (iii) capacity building of PMU staff through FMCs.

27. An implementation consultant was employed under the Investment Program to assist the DISCOs in project implementation, providing different degrees of assistance to each. It was staffed with international and local experts. The implementation consultant reported to PEPCO on administrative issues and to each DISCO on operational issues. The PMU established at each DISCO undertook project preparation, implementation, and reporting duties, and ensured compliance with ADB regulations.

28. The Investment Program followed MFF implementation procedures. Each DISCO was responsible for preparing its own subprojects, which were combined into a single PFR. Preparation of the combined PFR was the responsibility of PEPCO, which submitted the PFR to ADB through the Economic Affairs Division when (i) the PFR was prepared, in accordance with

14 ADB. 2010. Facility Administration Memorandum: Islamic Republic of Pakistan: Power Distribution Enhancement Investment Program (Multitranche Financing Facility). Manila.

MFF requirements, and (ii) PEPCO had received the required government approvals. Prior to ADB acceptance of a PFR, ADB conducted due diligence to ensure that the government complied in full with the terms and conditions of the framework financing agreement. Each DISCO prepared quarterly progress reports from the date of loan effectiveness, covering preparation and implementation of each PFR. During its tenure, the implementation consultant compiled a combined progress report, covering all participating DISCOs.

29. All procurements were conducted following ADB guidelines. Some DISCOs had difficulty implementing the turnkey contracts and faced issues relating to right-of-way in the case of transmission lines, land acquisition for a new substation site and some environmental related safeguard issues. In those cases, ADB extended loan closing dates to ensure completion and compliance. Physical work on the awarded turnkey contracts was mostly completed before the loan closing date. DISCOs’ own resources are being used to complete remaining works. In September 2018, ADB approved a minor change memo for changes in project implementation arrangements. ADB was asked to consider disbursements for goods contracts where the factory acceptance test had been witnessed and accepted by an implementing agency’s representatives before the loan closing date. The proposed changes in disbursement arrangements enabled (i) all implementing agencies to maximize use of the loan proceeds effectively, and (ii) disbursement of the remaining payments in accordance with the amended contracts.

G. Consultant Recruitment and Procurement

30. Each DISCO procured the goods and services for its subprojects. PEPCO recruited the implementation consultant. Procurement of goods and services to be financed under the program was implemented in accordance with ADB’s Procurement Guidelines (2007, as amended from time to time).15 International competitive bidding (ICB) was used for the supply of goods and works being funded under the program. ICB was used for goods contracts estimated to cost the equivalent of $1 million or more, and for works contracts estimated to cost the equivalent of $5 million or more.

31. At the program approval stage in September 2008, the support component loan was designed with the objective to provide both resources and capacity, enabling the DISCOs to improve and expand their capabilities to prepare, implement, and monitor projects and to address the capacity-building issues. However, in March 2010 the hiring of the FMC was delayed by about 18 months and in February 2011 the contract with the first firm was terminated after 11 months for non-performance. A second firm hired in June 2012 remained engaged until project closure. It carried out consulting services for all four tranches of the program. In both cases, the firm was selected through the quality- and cost-based selection method in accordance with ADB’s Guidelines on the Use of Consultants (2006).16

32. The consulting services contract included a total of 1,139 person-months, comprising 146 person-months of international experts, 419 person-months of national experts, and 576 person- months of technical/support national staff. At completion, 142 person-months of international experts, 392 person-months of national experts and 712 person-months of national support staff had been utilized. The person-months of national technical/support staff were increased in lieu of reducing the person-months of international and national experts to meet DISCOs’ requirements through six contract variations during project implementation; all were fully utilized. In total, 1,246 person-months of inputs were required. The consumption record of person-months indicates that

15 ADB. 2007. Procurement Guidelines. Manila. 16 ADB. 2006. Guidelines on the Use of Consultants. Manila.

at appraisal estimates of consulting services inputs, especially of national technical/support staff requirements, were low. Despite the delay in the award of the contract, the consultant provided adequate services to complete the subprojects of the program as planned. The contract period was 73 months.

33. The DISCOs also engaged additional external consultants when required for (i) tender design, (ii) preparation and evaluation of bidding documents, and (iii) design review and construction supervision of the subprojects. The process for hiring these consultants was also done in line with ADB’s guidelines and procedures. Some DISCOs also acquired the assistance of NTDC as consultants, using their own resources to help in tender evaluation, review of technical data, and preshipment inspection of material.

34. In project 1, all the procurements for works and goods were carried out using the ICB procurement method and single-stage, two-envelope procedure, in accordance with ADB’s Procurement Guidelines (2006).17 At appraisal, 53 procurement packages were planned, comprising 4 turnkey packages for major substation builds, 41 packages for goods and 8 packages for works. At project closure, 95 procurement packages with 228 lots had been executed. Of the contracts executed, 13 were for civil works, 214 for equipment and vehicles, and 1 for a turnkey contract. The additional packages were added to use the loan savings.

35. In project 2, 32 procurement packages were planned at appraisal: 17 turnkey packages for works and 15 packages for goods. During implementation, the 17 turnkey packages for works were divided into 22 lots and the 15 packages for goods were divided into 46 lots. The cancelation of $69.7 million from the original loan amount in May 2013 was largely attributable to savings incurred in the procurement of goods in the turnkey projects (para. 13). During implementation, ADB approved the use of the savings in August 2015 and June 2016. As a result of the savings, 9 new packages were added for the supply of goods (making 14 lots in all). In total, 41 contract packages consisting of 82 lots were executed under this loan. All the procurement for works and goods was carried out using ICB and the single-stage, single-envelope procedure in accordance with ADB’s Procurement Guidelines (2006)—except for 12 lots related to goods supply, which used national competitive bidding for 4 lots, the shopping method for 7 lots, and a repeat order for 1 lot.

36. At appraisal, project 3 included 106 subprojects identified. A total of 36 subprojects improved the transmission system by adding 791 km of secondary transmission lines and upgrading 399 km of 66 kV secondary transmission lines to 132 kV. These subprojects extended the network, cut system losses, and improved reliability. After granting two extensions and approval for utilizing savings, the number of subprojects rose to 128. After revision of the scope, 72 subprojects augmented 26 and 40 MVA transformers, 13 extended the network by adding 26 MVA transformers, 6 rehabilitated equipment, and five procured transmission line equipment. A total of 68 subprojects were identified as turnkey projects, including 14 for adding grid stations, 23 for converting grid stations from 66 kV to 132 kV, and 31 for adding transmission lines.

37. Project 4 at appraisal consisted of 50 packages for goods and eight packages for works. All the packages followed the single-stage, single-envelope bidding procedure. The packages for goods were procured through ICB while those for works were procured through national competitive bidding. At completion, the number of procurement packages had been increased to 64 to use savings incurred during execution. The additional subprojects included (i) conversion of 2 grid stations and associated transmission lines; (ii) construction of four grid stations; (iii)

17 ADB. 2006. Procurement Guidelines. Manila.

9 augmentation and addition of power transformers; (iv) installation of switchgear; and (v) installation of transmission line equipment. Some procurement delays were faced in a few packages for HESCO, Islamabad Electric Supply Company (IESCO), and LESCO, mainly because of delays in board of director approvals and rebidding triggered by noncompliance of bidders with technical requirements. The other five DISCOs remained on track with major procurements.

H. Gender Equity

38. All projects under the program were categorized as having no gender elements in accordance with the Guidelines for Gender Mainstreaming Categories of ADB Projects (2012), so the program did not include gender mainstreaming activities.18 It improved the living standards of households (and women) through increased access to and better quality of energy services. Furthermore, all subproject activities directly and indirectly contributed to the improvement of women’s livelihoods in the subproject areas, including access to better health and education facilities as well as better employment opportunities for household members.

I. Safeguards

39. Involuntary resettlement. Project 4 was initially categorized as C for involuntary resettlement as project activities do not ? entail land acquisition or resettlement. Eight due diligence reports confirming the absence of involuntary resettlement impacts were prepared and disclosed. In 2015, to use the loan savings, an additional 26 subprojects were proposed, including 10 turnkey subprojects by the Faisalabad Electric Supply Company (FESCO), LESCO and Multan Electric Power Company (MEPCO). One subproject of FESCO and three subprojects of MEPCO were assessed to have involuntary resettlement impacts, particularly for the transmission line component. The project category was changed from C to B for involuntary resettlement, and land acquisition and resettlement plans (LARPs) were prepared.

40. Throughout the program, compensation payments were made at three stages of work— foundation setting, tower erection, and stringing.19 Impacts were temporary and mainly limited to crops and tree losses. Each DISCO monitored the implementation of LARPs internally through their environmental and social impact cells, while the FMC undertook external monitoring. Both internal and external resettlement monitoring reports were submitted to ADB biannually for review and disclosed on the ADB website. Issues noted in the earlier tranches with compensation delays caused by the delayed assessment and processing of vouchers and checks, and the unavailability of some displaced persons also affected implementation. FESCO completed all compensation payments, including payment for additional trees that were ordered to be cut toward the end of the project 4. GEPCO did not complete tower erection and stringing for one subproject prior to loan closing, and those subprojects had to be removed from the project scope. The remaining activities, including LARP activities, for this subproject had to be done using the executing agencies funds. Except for these delays, ADB’s Safeguard Policy Statement (2009) and national requirements have generally been met throughout the program. Workshops and coaching sessions were also undertaken to improve monitoring and grievance redress. Most participating DISCOs have adopted the standard operating procedures (SOPs) for safeguards, which include measures prescribed in the land acquisition and resettlement framework for the MFF and mainstreamed the role of the environmental and social safeguards unit in the DISCO.

18 ADB. 2012. Guidelines for Gender Mainstreaming Categories of ADB Projects 2012. Manila. 19 Stringing is the process of installing the conducting and grounding wires on transmission line towers.

41. Indigenous peoples. All projects under the program were categorized C for indigenous peoples at appraisal. Following ADB’s Safeguard Policy Statement 2009, no indigenous peoples were identified during project implementation.

42. Environment: ADB’s Environment Policy (2002) and Environmental Assessment Guidelines were applicable when the PDEIP MFF became effective. Environmental assessments for all the tranche 1 subprojects were conducted in accordance with these documents. Tranches 2, 3 and 4 were governed by ADB’s Safeguard Policy Statement 2009, which came into effect in 2010. There were no environmental category A projects under any of the tranches. Environment and social units (ESUs) with qualified environmental staff were established in all DISCOs during the implementation of tranche 1 and continued to function throughout the MFF for tranches 2, 3 and 4. A grievance redress mechanism (GRM) established under tranche 1 addressed only land and resettlement issues as tranche 1 was governed by ADB’s Environment Policy (2002), which did not include the establishment of GRM. The Safety Policy Statement 2009 applied to tranches 2, 3 and 4, though, so the GRM was expanded to include complaints related to environmental safeguards as well. The GRM continued to function effectively for environmental complaints until the end of the MFF.

43. Initially the DISCOs had limited awareness of and significant capacity constraints in implementing ADB’s environmental safeguards requirements. Capacity enhancement sessions were organized for the ESUs as well as DISCOs’ management from tranche 2 onward. An FMC was also appointed and included environmental staff to prepare environmental safeguards documents and support the ESUs in monitoring subprojects. The contractors of environmental category B subprojects were required to hire environment staff for environmental management plan (EMP) implementation and submit monthly EMP monitoring reports to the client. After the Safeguard Policy Statement became effective in January 2010, biannual environmental monitoring reports for environmental category B subprojects were submitted regularly and disclosed on ADB’s website.

44. A significant achievement under tranche 3 was the preparation of standard operating procedures (SOPs) for the environmental and social management of projects in each of the DISCOs. The SOPs were prepared with ADB’s assistance and input from all the DISCOs, based on their experiences and lessons learned during the implementation of tranches 1 and 2. The SOPs were approved by the board of directors of the DISCOs. They ensure that environmental and social aspects of project management are integrated in the institutional hierarchy. Moreover, the ESUs, which were established only for donor-funded projects have now been regularized and are an institutional component of all DISCOs. They are now responsible for the environmental and social monitoring of not only donor-funded projects but also government-funded projects. Thus, environmental, and social management of projects has been mainstreamed in the DISCOs’ institutional hierarchy and project management cycle. ADB’s support greatly enhanced the institutional capacity of the DISCOs’ social and environmental departments.

45. Management of environmental safeguards progressively improved through the successive tranches. The DISCOs used lessons learned to improve the implementation of environmental safeguards. The environmental monitoring costs were included in the bills of quantity at the bidding and contract preparation stages. Consequently, contractors considered the costing of EMP mitigation measures up front, and monetary resources did not prove to be a hurdle during the implementation stage. Site-specific EMPs were also prepared for the turnkey subprojects. The relatively simple construction activities in the subprojects had no significant environmental impacts, and no major issues were encountered. Minor noncompliance’s, mostly related to worker health and safety, and housekeeping were addressed satisfactorily.

J. Monitoring and Reporting

46. All covenants were relevant and remained applicable during program implementation. Appendix 7 shows the status of compliance with loan covenants at the completion of tranche 4. For all four projects, the loan covenants were adequately complied with (Appendix 10), except for partial compliance with financial covenants relating to (i) unmet targets of the debt-service coverage ratio and self-financing ratio—indicating less than adequate financial health and sustainability of the DISCOs; and (ii) a few pending submissions of audit reports.

47. For all four projects, a performance and monitoring system was established within PEPCO to monitor and report progress toward output targets, through monthly and quarterly progress reports issued by the FMC. These reports provided details on the status of activities performed with respect to the procurement of materials, the physical execution of subprojects, contract awards and disbursements, and the monitoring and evaluation of social and environmental covenants. Each DISCO also submitted quarterly progress reports to ADB throughout implementation, complying with the reporting requirement of the project agreement.

48. Under the loan agreements for all tranches, the DISCOs were required to maintain a project account separate from their main operations accounts and submit audited project financial statements (APFSs) during implementation. The APFSs were prepared by the Auditor General of Pakistan, which is the authority responsible for issuing opinions on all foreign-aided projects in Pakistan. For the four projects, 202 APFS were required to be submitted, of which 31 were deferred, citing nil expenditure, while the remaining 171 were submitted. Of the 40 APFSs required for project 4, the DISCOs have submitted 33, all with unqualified opinions. Of the seven reports deferred, two were from Quetta Electric Supply Company (QESCO) and the other five from FESCO, GEPCO, IESCO, LESCO and MEPCO. Appendix 10 provides detailed statistics on the APFS submissions for project 4 and the program.

49. All DISCOs and PEPCO were also required to submitted audited entity financial statements (AEFSs) annually. For the program, 90 AEFS were required to be submitted, 10 each for the eight DISCOs and PEPCO. At the time of preparation of this report, 85 AEFSs had been received. For the 5 AEFSs that are pending the audits were still in process, three from LESCO and the other two from GEPCO and HESCO (Table A10.3, Appendix 10).

50. For project 4, each of the eight DISCOs had to submit 5 AEFSs. Of the total of 40 AEFSs, 35 had been received at the time of preparation of this report. One each is pending from GEPCO and HESCO; and 3 are pending from LESCO as their audit was still ongoing. Of the 34 submitted AEFS, 7 were issued with a qualified opinion and 27 with an unqualified opinion. These results were mainly driven by regulatory challenges since the restructuring of the Water and Power Development Authority, such as the transfer of property ownership and disputes about the recording of payables and receivables with other industry players, such as the Central Power Purchasing Agency. The average delay in the submission of AEFSs was 1.8 months, excluding the delay of more than 13 months in submission of 3 reports. The non-submission of a few AEFSs and delayed submission in some instances leads to the conclusion that the AEFS covenant is only partially complied with.

51. The financial management capability of DISCOs during the program implementation period was found to be adequate and commensurate with the needs of the project. The DISCOs had to comply with financial covenants for a debt-service coverage ratio of at least 1.2 and a self- financing ratio of at least 20% starting in FY2011, under the project agreements. ADB reiterated

the importance of compliance with loan financial covenants to the DISCOs in review and consultation missions, stressing the importance of independent audit opinion on these ratios. Historically, DISCOs have generally complied with at least one of the two ratios, usually the self- financing ratio. A summary is presented in Appendix 10, Table A10.5, based on either auditor opinion or ADB’s own calculation, except where AEFSs were not submitted.

III. EVALUATION OF PERFORMANCE

A. Relevance

52. The program is rated highly relevant. It aligned with sector programs from ADB, the government, and major development partners. It resulted in the addition of distribution and transmission throughput capacity, a reduction in losses, and an increase in the reliability and security of the power system, which was the most feasible option considering the severe shortage of T&D capacity. It remained in line with ADB’s CPSs for 2009–2013 (footnote 8) and 2015–2019 (footnote 10). It also aligned with the government’s Medium-Term Development Framework (footnote 1) and the Vision 2025 agenda (para. 4). Investments by ADB, the government, and key development partners in the power sector of Pakistan demonstrate their commitment to improving the national power system to drive sustainable economic growth in the country. The addition of some projects because of savings incurred during the execution of others maximized the benefits that could be reaped from all four projects under the program. The equipment installed under this program was interchangeable, reliable, and robust, and has a long designed operational life, which is the primary goal of the global electric power industry. To ensure satisfactory performance, the technologically latest equipment that met applicable local and international standards was installed, wherever feasible.

53. The DMFs for all four projects under the investment program were revised due to cancelations and the addition of projects. The resulting outcome (mainly additional MVA capacity) and the outputs of all projects increased due to the addition of many subprojects to use savings. The program resulted in a significant increase in power supply for customers, evident in the increase in units of electricity sold (Appendix 1). The DMF revisions aligned the projects with the program’s DMF and quantified performance targets against baselines. Like the three earlier projects under the program, project 4 is also rated as highly relevant.

B. Effectiveness

54. The program is rated effective. The program increased the capacity of the power distribution system of 8 DISCOs all over Pakistan. Service coverage was also expanded with the construction of substations, the installation of transmission lines, the extension of substations, and the augmentation of transformer bays. Electricity sales increased by 29,550 GWh against the targeted 25,000 GWh. As the installed equipment is loaded even more over time, it will contribute to future gains in electricity sales as well. Another important achievement of the program was the reduction in losses from 21.2% in 2009 to 17.95% in FY2017, demonstrating the effectiveness of the energy loss reduction subprojects. Nevertheless, DISCOs continue to violate parts of their license requirements and are fined by the National Electric Power Regulatory Authority (NEPRA) accordingly.

55. The program resulted in enhanced capacity at 636 substations through augmentation, extension, or conversion of existing systems. The length of transmission lines in the DISCOs’ systems increased by 2,112 km and 35 new substations were added. These additions increased the total customers and sales of the DISCOs. The DISCOs’ restructuring was completed, and

13 they now operate as independent entities after their unbundling from the Water and Power Development Authority. The DISCOs and PEPCO also established dedicated PMUs which were responsible for implementing projects under the program (Table A1.1, Appendix 1). Multiple training sessions were held for male and female staff for project planning and programming.

56. Project 4 is rated as highly effective. The project over-achieved on all fronts with the addition of 6,012 MVA of distribution capacity added to the 132 kV system and transmission losses reduced to 17.95%. Moreover, the 11 kV distribution system was expanded to 39,982,110 kVA in 2017 and 41,758,795 kVA in 2018. The project also exceeded all output targets with (i) augmentation at 181 substations, (ii) extension of 111 substations, (iii) construction of five grid stations along with associated transmission lines, and (iv) conversion of six grid stations from 66kV to 132kV (Table A1.2, Appendix 1).

C. Efficiency

57. Appendix 8 provides a detailed reassessment of the economic and financial analysis along with all assumptions and methodologies. The economic analysis of all four tranches was undertaken, and the results were near to the baseline projections at the time of project appraisal. A reevaluation of the economic and financial analysis was conducted for the program and project 4 (Appendix 8). The benefits were analyzed based on streams of costs and benefits resulting from augmentation, extension, conversion, and rehabilitation of substations, transmission lines, and transformers, and reductions in energy loss. The costs and benefits were estimated by comparing with- and without-project scenarios, assuming that without the project (i) DISCOs would not be able to supply electricity to new consumers; (ii) system losses would not be reduced; and (iv) transformers’ capacity would not be increased.

58. The program is rated as efficient. The actual economic internal rate of return (EIRR) was calculated at 19.9% against the appraisal estimate of 23.0%. The sensitivity analysis showed that even with inflated costs and reduced benefits, the project would have been economically beneficial. The deviation in economic and financial values is attributed to price distortions and non-marketed outputs. A detailed analysis is in Appendix 8 and a summary provided in Table 1.

Table 1: Summary of Economic and Financial Analysis of Program

EIRR FIRR Sensitivity Appraisal Actual (%) Appraisal Actual (%) Analysis Loan/MFF (%) (%) (%)a Project 1 (L2438/2439-PAK) 23.0 16.4 19.0 20.3 12.3 Project 2 (L2727-PAK) 33.0 26.5 20.0 30.3 21.4 Project 3 (L2972-PAK) 19.9 17.7 9.9 22.3 13.2 Project 4 (L3096-PAK) 24.7 21.0 19.0 26.6 13.9 Program (MFF-0021) 23.0 19.9 - 24.0 15.4 MFF = multitranche financing facility; EIRR = economic internal rate of return, FIRR = financial internal rate of return. a Calculated after reduction in estimated benefits by 10% and increase in cost by 10%.

59. Project 4 is rated as highly efficient. The assumptions used for the calculations of tranche 4 remained the same as those for the program as discussed in para. 53. The results show an EIRR of 21.01% against the appraisal analysis of 24.70%. It is important to highlight that at appraisal, only distribution costs were considered in the calculation of EIRR, which is the main reason for the difference between the EIRR at completion and at appraisal. If the methodology at appraisal had been adopted, the EIRR would be considerably higher. Moreover, the project resulted in an increase of 6,012 MVA of transformer capacity, which was 20% more than the

estimate at appraisal due to the use of savings. The economic reevaluation of projects 1, 2 and 3 is provided in their project completion reports.20 21

D. Sustainability

60. The program and all its projects consisted of installation of equipment and facilities throughout Pakistan, all of which are integral components of the national grid. All the DISCOs have dedicated O&M departments that are responsible for ensuring the smooth running of the equipment. The program also involved providing spares, maintaining, and testing equipment, and acquiring vehicles to equip the operations crews appropriately for uninterrupted operation. The DISCOs also conduct training and capacity-building sessions for their staff to keep them up to date. The DISCOs divide their area of jurisdiction into circles with each circle having fully equipped and dedicated O&M crews. The equipment installed is similar in technology, specification, and standards to the equipment that is already part of the DISCOs’ system which leads to easier and more efficient maintenance.

61. The program’s financial analysis resulted in a financial internal rate of return (FIRR) of 24.0% and a weighted average cost of capital (WACC) of 9.6%. The financial analysis of tranche 4 resulted in an FIRR of 26.6% and a WACC of 10.2%. The financial analyses indicate strong financial sustainability of the program and tranche 4 (Appendix 8). The financial sustainability reported by all DISCOs and PEPCO (para. 51) remain ongoing concerns (as confirmed by auditors). Management does not intend to liquidate or cease operations, and there is no alternative to an electricity distribution network. Power Sector Distribution Companies operates in a regulated environment and the only cost available to operate is the distribution margin that includes the regulatory return on rate base. Entire power purchase is the pass-through item and its recovery depends upon the timely determination of tariff by NEPRA (the regulator) and notification of tariff by government. Since notification of first independent tariff in February 2007 by GOP, there has been litigations and delays in tariff that are now being settled and the unrecovered cost (backlogs) are expected to be reflected in DISCOs financial statements. Therefore, considering the given circumstances, to link the financial sustainability with accounting profit / (loss) is not prudent. The accounting loss that can be seen in the audited AEFSs is not a true indicator of their performance as delay in tariff notifications is its primary cause. Now that the government has notified all delayed tariff notifications and it is expected that unrecovered costs will be recovered gradually starting in FY2020. The DISCOs’ ability to fund O&M costs is backed by historical audited results and financial projections. Moreover, as state-owned enterprises, DISCOs and PEPCO have sovereign backing. The ongoing tariff reforms aim to rectify the financial situation of the power sector, leading to the conclusion that the project and the program are likely sustainable.

62. The executing and implementing agencies are stable institutions with adequate numbers of qualified staff and a governance structure supported by organizational arrangements. All the organizational functions are within the jurisdiction of dedicated departments for development, planning, finance, and O&M. Electricity is an essential commodity with a steady increase in annual demand over the years. Pakistan’s national grid is expanding rapidly to meet the demand, and the DISCOs should ensure that they equip and expand their O&M crews and equipment adequately. The DISCOs’ maintenance support arrangements could be improved; for example,

20 ADB. 2019. Completion Report: Power Distribution Enhancement Investment Program – Tranche 2 in Pakistan. Manila. 21 ADB. 2019. Completion Report: Power Distribution Enhancement Investment Program – Tranche 3 in Pakistan. Manila.

15 by having experts readily available to advise station managers of the appropriate response to equipment failures that require a nonroutine maintenance intervention. Effective and timely technical support for grid station managers would often avoid the need to replace equipment, enhancing the sustainability of the project and DISCO operations.

E. Development Impact

63. The project has had a profound impact on the power distribution system in Pakistan. As a result of the four projects, the total transmission throughput capacity of the DISCOs improved significantly, which resulted in a more reliable and efficient power distribution network. The sales of electricity of the DISCOs also increased significantly which greatly benefitted commercial and residential customers, as well as villages, schools and hospitals. The program’s indirect impacts were an increase in income-earning opportunities, generated by greater access to electricity, and job opportunities during construction. The growth in real gross domestic product (GDP) during 2007–2015 averaged 3.6% and during 2016–2018 averaged 5.3%. The GDP growth rate remained below the DMF target of 6–7% annually because of the global financial crisis of 2008 and the energy crisis in the country. The village electrification program was implemented successfully, with 85.2% of villages being electrified by 2018. The program’s development impact is rated satisfactory.

64. The four projects were also successful in achieving most of the targets of the DMF. The details of the achievement of impacts appear in the project completion reports of projects 1, 2 and 3. Project 4’s development impact is rated satisfactory as it was successful in achieving the target of village electrification and increase in electricity sales. The project achieved an increase of 26,522 GWh from 2013 to 2018 against the target of 16,000 GWh. The increase in electricity sales can be attributed to the increase in the total number of consumers, from 21,875,600 to 25,808,836, surpassing the DMF target by a significant margin (Appendix 1). This also resulted in increased revenues for the DISCOs but financial returns largely remained unaffected as commercial losses continued to be high. The program primarily enhanced the 132kV network making however the unplanned outages in the distribution system at the lower voltage levels of 11kV & 0.4kV almost doubled over the project implementation period. The increase was caused by the aging distribution system, overloading of feeders and transformers at the 11kV voltage level, and inadequate generation facilities.

F. Performance of the Borrower and the Executing Agency

65. Overall, the performance of the borrower and the executing agency are rated satisfactory. Both demonstrated their commitment to the program’s success despite delays, right-of-way issues, addition of subprojects, design changes, repeat biddings, and slow construction progress. The government, the Economic Affairs Division (EAD), the line ministry, and the executing agency demonstrated their strong ownership during project implementation. The borrower monitored the facility’s progress, including all the individual projects regularly as part of the Resident Mission’s meetings for the annual country portfolio review and biannual quarterly portfolio review. The Ministry of Water and Power actively monitored program implementation and regularly interacted with the implementing agencies. The executing agency’s role consisted of coordinating reporting, monitoring loan disbursements, and other administrative duties. The FMC provided support for the monitoring, coordination, and evaluation function of the executing agency. During the transitional stage when the contract with the first FMC was terminated, PEPCO provided sufficient support to the project to ensure smooth execution until the second firm was hired.

66. The performance of the implementing agencies, the eight DISCOs. was satisfactory. Most of the subprojects under the program were executed on time and well within budget. A few delays that occurred can be attributed to (i) procurement lags; (ii) the implementing agency’s unfamiliarity with ADB, procurement, environmental, and social protection requirements; (iii) the large number of procurement packages and lots; and (iv) delays in hiring the FMC. When savings were identified, the implementing agencies were quick to identify new subprojects and very effective in executing them in a timely fashion. The implementing agencies also ensured that adequate O&M equipment was bought as part of the projects to ensure the sustainability of the program outputs. They did not use available funds under the support facility to strengthen areas of institutional weaknesses for meeting their license requirements, hence achieving partially true commercial entities as envisaged in the program. Further they were not able to fully strategize improvements in technical and commercial aspects for better implementation oversight.

G. Performance of the Asian Development Bank

67. ADB’s performance is rated satisfactory. ADB provided timely and efficient support to the program, which implemented 796 subprojects spread all over Pakistan. Monitoring and evaluation of subprojects was conducted regularly and efficiently, without which the program’s success would not have been possible. ADB’s procurement review and support to numerous procurement packages was key to ensuring smooth implementation of the program. ADB fielded numerous review missions apart from the regular annual and country quarterly portfolio review missions. Delegation of the four projects under the program to the resident mission helped in more effective implementation, with detail monitoring of progress at the contract and subprojects level. It also helped in timely identification of subprojects when savings materialized.

68. The project records show that ADB’s review and approval of procurement documentation was completed in a timely manner throughout the program. ADB’s review missions resulted in early identification of problems. DISCOs’ management of procurement resulted in early intervention and support from ADB, especially since effective management was vital for all four MFF tranches to be completed within the 10-year facility time limit. However, ADB did not avail itself of the opportunity for a more active engagement with DISCOs to develop capacity and improve institutions.

H. Overall Assessment

69. The project (tranche 4) is rated as highly successful as it surpassed the targets set in all the performance indicators except the outages at 11kV voltage level. As already discussed in para 64, this was not an appropriate indicator as the project primarily expanded the network at 132kV voltage level. Overall, the program is rated as successful. The installation of equipment, construction of facilities and energy loss reduction projects were done to meet the increasing demand for electricity in Pakistan, making the program highly relevant. The program successfully achieved its outputs and achieved the targeted outcomes. As a result of the program, the power system’s losses were reduced, village electrification increased, capacity was enhanced, and outages were reduced. The economic analysis shows the efficiency of the program. The projects were executed within the budgeted costs, and in all the tranches savings were realized that were used effectively. The reasons for differences in budgeted and actual costs were overestimation of the budget at appraisal, the declining price of oil and metals after the 2008 global financial crisis, and the devaluation of the local currency. The design, implementation and construction of subprojects was good. Had the program not been implemented, the DISCOs would not have been able to handle the supply from new generation projects and meet the increasing demand of

17 consumers. Moreover, the higher losses would have caused significant financial loss to the government.

70. Overall, the DISCOs delivered the program successfully. Transforming of DISCOs into an independent operational and financial entities did not fully materialize as envisaged in the program primarily because of slow pace of reforms within the energy sector and were beyond the ambit of this program. Nonetheless, absence of assertive leadership by DISCOs management and lack of interest at PEPCO/line ministry level resulted in missing the opportunity provided through the support facility of the program for contributing towards improvements in the structural framework for turning DISCOs into fully independent commercial entities. Partial achievements of some of project outcomes impedes an otherwise higher rating of the program.

Overall Ratings Rating Criteria Tranche 1 Tranche 2 Tranche 3 Tranche 4 MFF Relevance Highly Highly Highly Highly relevant Highly relevant relevant relevant relevant Effectiveness Effective Highly Effective Highly effective Effective effective Efficiency Efficient Efficient Efficient Highly Efficient Efficient Sustainability Likely Likely Likely Likely Likely sustainable sustainable sustainable sustainable sustainable Overall Assessment Successful Successful Successful Highly Successful Successful Development impact Satisfactory Satisfactory Satisfactory Satisfactory Satisfactory Borrower and executing agency Satisfactory Satisfactory Satisfactory Satisfactory Satisfactory Performance of ADB Satisfactory Satisfactory Satisfactory Satisfactory Satisfactory ADB = Asian Development Bank, MFF = multitranche financing facility. Source: Asian Development Bank.

IV. ISSUES, LESSONS, AND RECOMMENDATIONS

A. Issues and Lessons

71. The project team noted that the new equipment installed, especially transformers, was heavily loaded within a year of commissioning. To meet the ever-growing consumer demand and keep losses to a minimum, the DISCOs will need to ensure timely and adequate upgrades to their power systems. The assets installed under the program required regular maintenance and overhauls to ensure their reliable and efficient operation. Although the program included supply of some O&M equipment and trainings, the DISCOs must ensure that adequate staff and equipment are available and used in a timely manner. DISCOs’ maintenance support arrangements could also be improved as explained in para. 62.

72. A major challenge leading to the delay of subprojects was that the DISCOs lacked a basic understanding of ADB guidelines. Other reasons for delays in implementation included (i) weak contract management, (ii) delay in opening of letter of credit, (iii) delays in nomination of inspection team members for witnessing type tests and preshipment inspections, (iv) delays in approval of drawings and data from the NTDC design department, (v) weak decision making, and (vi) a second FMC firm had to be hired due to nonperformance by the first firm. In cases where the executing agency is unfamiliar with the project delivery approach planned at appraisal, it would be helpful to conduct a capacity assessment exercise that would give a better picture of the challenges at hand. This way, appropriate actions and capacity-building exercises can be planned

to fill the gaps identified. Most covenants have been complied with except some financial covenants relating to the determination of tariff, which caused the noncompliance with the covenants of debt-service coverage ratio and self-financing ratio. Since the regulator, NEPRA, is responsible for tariff determination, the non-compliance cannot only be attributed to the DISCOs directly.

73. The MFF modality is considered suitable and resulted in an effective implementation of the projects. The transfer of canceled loan amounts to subsequent tranches allowed new subprojects to be identified and added to the program. This allowed for greater flexibility and higher utilization of the allocated funds for the program. Delays caused by technical challenges were remedied by transferring a subproject to subsequent tranches. Equally important, MFF implementation must be focused on both the physical investment and institutional development components.

B. Recommendations

74. Future monitoring. Each DISCO has a grid system operation unit that supervises day- to-day operation and general maintenance as well as monitor the performance of assets installed by the project on a long-term basis.

75. Covenants. To address the financial covenants that were not complied with (para. 72), the subsidy structure must be retargeted and NEPRA should determine tariffs with greater diligence in the future. Curtailing the energy sector’s burden on the annual state budget is a core issue being addressed under the government’s recent agreement with the International Monetary Fund, under the extended fund facility approved in July 2019. Inefficient distribution (technical losses, theft, and non-collection)—part of the broader issue of circular debt in Pakistan’s power sector— remains one main reason towards the financial independence of DISCOs. It is pertinent to note that ADB is the only multilateral donor engaged with the distribution companies since inception of this program. ADB is also providing programmatic, policy-based support to the government under its “Energy Sector Reforms and Financial Sustainability Program” structured in three sub programs with targeted sector actions to be completed between 2019-2022.

76. Further action or follow-up. Historically, DISCOs have been able to maintain and operate their system despite the financial challenges. The O&M costs are built in the tariff and is approved by the regulator. The DISCOs’ financial sustainability is however critical for adequate operation and maintenance of operational assets, including assets installed under the project. ADB is financing a second MFF with a focus on financial viability of the distribution sector by the introduction of modern metering technologies to decrease losses and increase revenues.22 Programmatic, policy-based support to the energy sector was planned in the country operations business plan 2020–2022, with a focus on sector reforms to address financial sustainability. The Energy Sector Reforms and Financial Sustainability Program (Subprogram 1) was approved on 6 Dec 2019, and loan was signed on 9 Dec 2019 and declared effective on the same day.

77. Timing of the project performance evaluation report. This report is not considered necessary soon as the ongoing assessment of the DISCOs’ performance associated with the implementation of current projects, and the appraisal of planned new loans should suffice.

22 ADB. Pakistan: Second Power Distribution Enhancement Investment Program ($990 million).

Appendix 1 19

DESIGN AND MONITORING FRAMEWORK

Table A1.1: Design and Monitoring Framework – Multitranche financing Facility

Design Summary Performance Indicators and Targets Program Achievements Impact Sustained economic growth GDP grows by 6–7% annually in Average real GDP growth from the year and social development 2007–2015 2007 – 2015 was 3.6%.1

Village and rural electrification Implemented successfully. program are implemented by 2012 Outcome Reliable and quality power Electricity sales increased by 25,000 Total energy sales were increased by supplied, and service GWh by 2018 (baseline: 67,480 in 29,550GWh to 97,030GWh in 2018.2 coverage expanded 2007).

T&D losses reduced from 21.2% in Transmission and distribution losses reduced 2009 to 19.0% in 2018. to 17.95% in FY2017.3

DISCOs full compliance with license Partial compliance achieved by DISCOs. requirements by 2009. Outputs Power distribution systems Capacity of at least 350 substations Capacity of 636 substations was increased rehabilitated, augmented, increased through augmentation, through augmentation, extension, or and expanded. extension, or conversion of existing conversion of existing system by 2018. system (117 by 2012, another 133 by Distribution companies 2015 and remaining 100 by 2018. (DISCOs) institutionalized and strengthened. At least 500km of A total of 2112km of transmission lines distribution/transmission lines added to added to the system by 2018. the system by 2018.

At least 15 new substations added to 35 new substations added to the system by the system by 2018. 2018.

DISCOs restructured with operational DISCOs have been restructured and are now and financial autonomy transferred independent operational and financial from WAPDA to DISCOs by 2008. entities from WAPDA.

DISCOs capacity in project DISCOs established Project Management management and implementation Units and assigned dedicated project improved. management staff.

At least 50 staff (M/F) from Completed. DISCOs/PEPCO are trained and engaged in system/project planning and programming. Source: Asian Development Bank.

1 Islamabad. Ministry of Finance. Fiscal Policy Statement 2018-19. Table 1. 2 Islamabad. National electric Power regulatory Authority. State of Industry Report 2018. Table 24. 3 Islamabad. National electric Power regulatory Authority. State of Industry Report 2018. Table 67.

20 Appendix 1

Table A1.2: Design and Monitoring Framework – Tranche 4

Design Summary Performance Indicators and Targets Project Achievements Impact Electricity sales increased by 4,000 Total energy sales were 97,030GWh in Reliable and quality power GWh annually starting 2019 (baseline: 2018.1 supplied, and service 70,508 GWh in FY2013). coverage expanded. Village electrification increased from Village electrification increased from 80.9%2 85.5% in 2012 to 87% in 2019. in 2012 to 85.2% in 2018.3

Unplanned outages at 11-kV grid Unplanned outages at 11kV in 2018 totaled reduced from 212,652 in FY2013 to 424,407.4 160,000 in 2019.

Number of customers increased from 21,875,600 in 2013 to 22,625,600 in Total customers in 2018 totaled 25,808,836.5 2019. Outcome 5,673 MVA of distribution capacity 6,012 MVA of distribution capacity added to Capacity of the power added to the 132-kV grid stations by the 132kV grid stations by 2018. distribution systems 2017 (baseline: 30,833 MVA in 2013). increased. Transmission and distribution system Transmission and distribution losses reduced losses reduced from 20.1% in 2013 to to 17.7%in FY2019 and was 17.95% in 19.5% in 2017. FY2017.6

82,500 kVA of capacity added at the 11-kV distribution system by 2017 The total capacity of 11kV distribution (baseline: 3,255,750 kVA in 2013). system increase to 39,982,110 kVA in 2017 and 41,758,795 in 2018.7 Outputs Augmentation at 165 substations of Augmentation at 181 substations of STG Subprojects commissioned. STG network completed by 2016. network completed by 2018.

Extension at 109 substations of STG Extension at 111 substations of STG network network completed by 2016. completed by 2018.

4 new grid stations together with 5 new grid stations together with associated associated transmission line transmission lines completed by 2018. completed by 2016.

Conversion of 2 grid stations with Conversion of 6 grid stations from 66kV to associated transmission lines from 66 132kV along with associated transmission kV to 132 kV completed by 2016. lines completed by 2018. Source: Asian Development Bank. 1 Islamabad. National electric Power regulatory Authority. State of Industry Report 2018. Table 24. 2 Islamabad. National electric Power regulatory Authority. State of Industry Report 2015. Table 74. 3 Islamabad. National electric Power regulatory Authority. State of Industry Report 2018. Table 67. 4 Islamabad. National electric Power regulatory Authority. State of Industry Report 2018. Table 64. 5 Islamabad. National electric Power regulatory Authority. State of Industry Report 2018. Table 37-I. 6 Islamabad. National electric Power regulatory Authority. State of Industry Report 2017. Table 57. 7 Islamabad. National electric Power regulatory Authority. State of Industry Report 2018. Table 66. 8 Islamabad. National electric Power regulatory Authority. State of Industry Report 2018. Table 37-I.

Appendix 2 21

PROJECT COST AT APPRAISAL AND ACTUAL ($ million) Appraisal Estimatea Actual Foreign Local Foreign Local Item Exchange Currency Total Cost Exchange Currency Total Cost A. Investment Costs 1. Equipment Cost 125.059 0.000 125.059 120.297 1.210 121.507 2. Civil Works 8.047 0.000 8.047 1.777 2.079 3.856 3. Installation/Turnkey Cost 0.000 3.449 3.449 9.715 0.026 9.741 4. Import Duties and Taxes 0.000 42.541 42.541 0.000 15.670 15.670 Subtotal (A) 133.105 45.990 179.095 131.789 18.985 150.774 B. Recurrent Costsb 0.000 15.015 15.015 0.000 17.232 17.232 C. Contingencies 27.930 0.000 27.930 0.00 0.00 0.00 D. Financing Charges During Implementationc 6.132 0.000 6.132 3.540 0.000 3.540 Total (A+B+C+D) 167.167 61.006 228.173 135.329 40.077 175.406 a In mid-2013 prices. b Includes project administration, audit and inspection, inland land transportation and handling, insurance, and letter of credit/banking charges. c Includes interest and commitment charges. Note: 1. Numbers may not sum precisely because of rounding. Sources: Asian Development Bank estimates and audited project financial statements of DISCOs.

22 Appendix 3

PROGRAM COST BY FINANCIER

Table A3.1: Program Cost at Appraisal by Financier ($ million) ADB GOP Total Costa % of Cost % of Cost Amount Category Amount Category Amount Item A. Investment Costs 1. Turnkey Contract 320.120 98.39% 5.249 1.61% 325.369 2. Equipment and Material 452.429 90.28% 48.700 9.72% 501.129 3. Civil Works and Erection 26.247 45.05% 32.010 54.95% 58.257 4. Engineering 6.100 49.96% 6.110 50.04% 12.210 5. Power Lines 1.900 79.17% 0.500 20.82% 2.400 6. Environmental Mitigation and Resettlement 0.000 0.00% 18.090 100.00% 18.090 Subtotal (A) 806.596 87.93% 110.759 12.07% 917.355 B. Recurrent Costsb 0.000 0.00% 111.626 100.00% 111.626 Total Base Cost (A+B) 806.596 78.39% 222.385 21.61% 1028.981 C. Contingenciesc 50.550 100.00% 0.000 0.00% 50.550 D. Project Management and Support 9.800 100.00% 0.000 0.00% 9.800 E. Financial Charges During Implementationd 39.472 100.00% 0.000 0.00% 39.472 Total Project Cost (A+B+C+D+E) 906.418 80.30% 222.385 19.70% 1128.803 % Total Project Cost 80.30% i.e., 19.70% i.e., ADB’s share in GOP’s project cost share in project cost a In mid-2013 prices. b Includes project administration, audit and inspection, inland land transportation and handling, insurance, and letter of credit/banking charges. c Physical contingencies computed at 10% of total base cost. Price contingencies computed for both foreign exchange costs and local currency costs based on the ADB price escalation factors which include provision for potential exchange rate fluctuation under the assumption of a purchasing power parity exchange rate. d Includes interest and commitment charges. Note: 1. Numbers may not sum precisely because of rounding. Source: Asian Development Bank estimates.

Appendix 3 23

Table A3.2: Program Cost at Completion by Financier ($ million) ADB GOP Total Costa % of Cost % of Cost Amount Category Amount Category Amount Item A. Investment Costs 1. Turnkey Contract 257.365 99.32% 1.756 0.68% 259.121 2. Equipment and Material 399.367 95.15% 20.374 4.85% 419.741 3. Civil Works and Erection 3.057 7.81% 36.079 92.19% 39.136 4. Engineering 0.000 0.00% 19.640 100.00% 19.640 5. Power Lines 0.000 0.00% 0.000 0.00% 0.000 6. Environmental Mitigation and Resettlement 0.000 0.00% 0.440 100.00% 0.440 Subtotal (A) 659.789 89.39% 78.289 10.61% 738.078 B. Recurrent Costsb 0.000 0.00% 71.948 100.00% 71.948 Total Base Cost (A+B) 659.789 81.45% 150.237 18.55% 810.026 C. Contingenciesc 0.000 0.00% 0.000 0.00% 0.000 D. Project Management and Support 7.170 100.00% 0.000 0.00% 7.170 E. Financial Charges During Implementationd 16.680 93.71% 1.120 6.29% 17.800 Total Project Cost (A+B+C+D+E) 683.639 81.87% 151.357 18.13% 834.996 % Total Project Cost 81.87% i.e., 18.13% i.e., ADB’s share in GOP’s share program cost in program cost a Actual incurred expenses. b Includes project administration, audit and inspection, inland land transportation and handling, insurance, and letter of credit/banking charges. c Physical contingencies computed at 10% of total base cost. Price contingencies computed for both foreign exchange costs and local currency costs based on the ADB price escalation factors which include provision for potential exchange rate fluctuation under the assumption of a purchasing power parity exchange rate. d Includes interest and commitment charges. Note: 1. Numbers may not sum precisely because of rounding. Source: Asian Development Bank estimates.

24 Appendix 3

Table A3.3: Tranche 4 (PFR-4) Cost at Appraisal by Financier ($ million) ADB GOP Total Costa % of Cost % of Cost Amount Category Amount Category Amount Item A. Investment Costs 1. Equipment Cost 125.059 100.00% 0.000 0.00% 125.059 2. Civil works 8.047 100.00% 0.000 0.00% 8.047 3. Installation/Turnkey Cost 0.000 0.00% 3.449 100.00% 3.449 4. Import Duties and Taxesb 0.000 0.00% 42.541 100.00% 42.541 Subtotal (A) 133.105 74.32% 45.990 25.68% 179.095 B. Recurrent Costsc 0.000 0.00% 15.015 100.00% 15.015 Total Base Cost (A+B) 133.105 68.57% 61.006 31.43% 194.111 C. Contingenciesd 27.930 100.00% 0.000 0.00% 27.930 D. Financial Charges During Implementatione 6.132 100.00% 0.000 0.00% 6.132 Total Project Cost (A+B+C+D) 167.167 73.26% 61.006 26.74% 228.173 % Total Project Cost 73.26% i.e., 26.74% i.e., ADB’s share in GOP’s project cost share in project cost a In mid-2013 prices. b Includes GST at 17% on all finished goods and import duties of 20% on imported goods to be financed by the DISCOs. c Includes project administration, audit and inspection, inland land transportation and handling, insurance, and letter of credit/banking charges. d Physical contingencies computed at 10% of total base cost. Price contingencies computed for both foreign exchange costs and local currency costs based on the ADB price escalation factors which include provision for potential exchange rate fluctuation under the assumption of a purchasing power parity exchange rate. e Includes interest and commitment charges. Note: 1. Numbers may not sum precisely because of rounding. Source: Asian Development Bank estimates.

Appendix 3 25

Table A3.4: Tranche 4 (PFR-4) Cost at Completion by Financier ($ million) ADB GOP Total Cost % of Cost % of Cost Amount Category Amount Category Amount Item A. Investment Costs 1. Equipment Cost 120.297 99.00% 1.214 1.00% 121.511 2. Civil works 1.777 46.08% 2.079 53.92% 3.856 3. Installation/Turnkey Cost 9.715 99.74% 0.026 0.26% 9.741 4. Import Duties and Taxes 0.000 0.00% 15.670 100.00% 15.670 Subtotal (A) 131.789 87.68% 19.319 12.32% 150.309 B. Recurrent Costsa 0.000 0.00% 20.758 100.00% 20.758 Total Base Cost (A+B) 131.789 76.68% 40.077 23.32% 171.866 C. Contingencies 0.000 0.00% 0.000 0.00% 0.000 D. Financial Charges During Implementationb 3.540 100.00% 0.000 0.00% 3.540 Total Project Cost (A+B+C+D) 135.329 77.15% 40.077 22.85% 175.406 % Total Project Cost 77.15% i.e., 22.85% i.e., ADB’s share in GOP’s project cost share in project cost a Includes project administration, audit and inspection, inland land transportation and handling, insurance, and letter of credit/banking charges. b Includes interest and commitment charges. Note: 1. Numbers may not sum precisely because of rounding. Sources: Asian Development Bank estimates and audited project financial statements of DISCOs.

26 Appendix 4

DISBURSEMENT OF ADB LOAN AND GRANT PROCEEDS

Table 4.1: Annual and Cumulative Disbursement of ADB Loan Proceeds ($ million) Annual Disbursement Cumulative Disbursement Amount Amount Year ($ million) % of Total ($ million) % of Total 2014 0.106 0.08% 0.106 0.08% 2015 12.180 9.00% 12.286 9.08% 2016 56.149 41.49% 68.435 50.57% 2017 33.223 24.55% 101.658 75.12% 2018 29.265 21.63% 130.923 96.74% 2019 4.406 3.26% 135.329 100.00% Total 135.329 100.0% ADB = Asian Development Bank. Source: Asian Development Bank.

Figure 4.1: Projection and Cumulative Disbursement of ADB Loan Proceeds ($ million)

180

160

140

120

100

80 $ millions 60

0 2014 2015 2016 2017 2018 2019 Calendar Year

Projected Annual Disbursement Actual Annual Disbursement Projected Cummulative Disbursements Actual Cummulative Disbursements

Appendix 5 27

CONTRACT AWARDS OF ADB LOAN AND GRANT PROCEEDS

Table 5.1: Annual and Cumulative Contract Awards of ADB Loan Proceeds ($ million) Annual Contract Awards Cumulative Contract Awards Amount Amount Year ($ million) % of Total ($ million) % of Total 2014 1.806 1.37% 1.806 1.37% 2015 56.550 42.91% 58.356 44.28% 2016 37.287 28.29% 95.643 72.57% 2017 26.784 20.32% 122.427 92.90% 2018 9.362 7.10% 131.789 100.00% Total 131.789 100.00% ADB = Asian Development Bank. Source: Asian Development Bank.

Figure 5.1: Projection and Cumulative Contract Awards of ADB Loan Proceeds ($ million)

180

160

140

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80 $ million

0 2014 2015 2016 2017 2018 Calendar Year

Projected Annual Contract Awards Actual Annual Contract Awards Projected Cummulative Contract Awards Actual Cummulative Contract Awards

28 Appendix 6

CHRONOLOGY OF MAIN EVENTS

Date Event 31 October 2013 Issuance of Periodic Financing Request (PFR) from executing agency PEPCO. 12 December 2013 Approval of PFRR by ADB management. 13 December 2013 Loan approval 30 April 2014 Loan signing 6-20 June 2014 Loan Inception Mission. 18 July 2014 Loan effectiveness 6 November 2014 First contract award 1 December 2014 First disbursement 1-15 December 2015 Midterm review mission 22 June 2018 Last contract award 22 October 2018 First partial cancellation 22 March 2019 Last financial transaction 22 April 2019 Second partial cancellation 22 April 2019 Project closing 22 April 2019 Loan account closure Source: Asian Development Bank.

Appendix 7 29

STATUS OF COMPLIANCE WITH LOAN COVENANTS

A detailed assessment of compliance of Loans 2438/2439 (PFR-1),1 2727 (PFR-2)2 and 2972 (PFR-3)3 is covered in their respective completion reports. The following table provides update on compliance of the tranche 4 (PFR-4) covenants.

Reference in Loan Covenant Agreement Status of Compliance The Borrower shall relend the proceeds of the Loan to each Section 3.01. Complied with. DISCO under a Relending Agreement upon terms and (a) conditions satisfactory to ADB. The Borrower shall cause each DISCO to apply the Section 3.01. Complied with. proceeds of the Loan to the financing of expenditures on the (b) Project in accordance with the provisions of this Loan Agreement and the Project Agreement. The proceeds of the Loan hall be allocated and withdrawn in Section 3.02. Complied with. accordance with the provisions of Schedule 3 to this Loan Agreement, as such Schedule may be amended from time to time by agreement between the Borrower and ADB. Except as ADB may otherwise agree, the Borrower shall Section 3.03. Complied with. procure, or cause to be procured, the items of expenditure to be financed out of the proceeds of the Loan in accordance with the provisions of Schedule 4 to this Loan Agreement. ADB may refuse to finance a contract where any such item has not been procured under procedures substantially in accordance with those agreed between the Borrower and ADB or where the terms and conditions of the contract are not satisfactory to ADB. Except as ADB may otherwise agree, the Borrower shall Section 3.04. Complied with. cause all the items of expenditure financed out of the proceeds of the loan to be used exclusively in the carrying out of the project. The Loan Closing Date for the purpose of Section 9.02 of the Section 3.05. Complied with. Loan Regulations shall be 30 June 2017 or such other date as may from time to time be agreed between the Borrower and the ADB. The Borrower shall cause each DISCO to carry out the Section 4.01. Complied with. Project with due diligence and efficiency and in conformity (a) with sound applicable technical, financial, business, and development practices. In carrying out the Project and operation of the Project Section 4.01. Complied with. facilities, the Borrower shall perform, or cause to be (b) performed, all obligations set forth in Schedule 5 of this Loan Agreement and the Project Agreement. The Borrower shall make available, or cause to be made Section 4.02. Complied with. available, promptly as needed, the funds, facilities, services, land and other resources, as required, in addition to the proceeds of the Loan, for the carrying out of the Project. The Borrower shall ensure that the activities of its Section 4.03. Complied with. departments and agencies with respect to the carrying out of the Project and operation of the Project facilities are conducted and coordinated in accordance with sound administrative policies and procedures.

1 2019. ADB. Completion Report: Pakistan: Power Distribution Enhancement Investment Program – Tranche 1. Manila. 2 2019. ADB. Completion Report: Pakistan: Power Distribution Enhancement Investment Program – Tranche 2. Manila. 3 2019. ADB. Completion Report: Pakistan: Power Distribution Enhancement Investment Program – Tranche 3. Manila.

30 Appendix 7

Reference in Loan Covenant Agreement Status of Compliance The Borrower shall enable ADB’s representatives to inspect Section 4.04. Complied with. the Project, the Goods and Works, and any relevant records and documents. ADB shall disclose the annual audited financial statements Section 4.05. Complied with. for the Project and the opinion of the auditors on the financial statements within 30 days of the date of their receipt by posting the on ADB’s website. The Borrower shall take all actions which shall be necessary Section 4.06. Complied with. on its part to enable each DISCO to perform its obligations under the Project Agreement, including the establishment and maintenance of tariffs as stipulated in paragraph 10 of Schedule 5 to this Loan Agreement, and shall not take or permit any action which would interfere with the performance of such obligations. The Borrower shall exercise its rights under the Relending Section 4.07. Complied with. Agreement in such a manner as to protect the interests of (a) the Borrower and ADB to accomplish the purposes of the Loan. No rights or obligations under the Relending Agreement Section 4.07. Complied with. shall be assigned, amended, abrogated, or waived without (b) the prior concurrence of ADB. Policy Dialogue Schedule 5, Complied with. The Borrower shall ensure that ADB is kept informed about para. 1. the Borrower’s policies and programs related to the power sector that will materially affect the financial viability of the DISCO and the Project and, in particular, the power generation and transmission policies and program, as well as the power distribution policies and program. Implementation Arrangements Schedule 5, Complied with. The Borrower shall ensure, and shall cause the DISCO to para. 2. ensure, that the Project is implemented in accordance with the detailed arrangements set forth in the FAM. Any subsequent change to the FAM shall become effective only after approval of such change by the Borrower and ADB. In the event of any discrepancy between the FAM and this Loan Agreement or the Project Agreement, the provisions of this Loan Agreement or the Project Agreement shall prevail. The Borrower shall ensure that the DISCO will engage a Schedule 5, Complied with. private auditor, whose qualifications, experience and terms para. 3. of reference are acceptable to ADB, to conduct the audit on all financial statements to be submitted to ADB under this Loan Agreement notwithstanding anything in this Loan Agreement to the contrary, and that in general the DISCO will comply with all of the requirements of ADB regarding the auditing of financial statements. The Borrower shall ensure, and shall cause the DISCO to ensure, that proper accounts and records are maintained in a timely manner to adequately identify the use of the proceeds of the Loan in such a manner and with such details as may be specified in this Loan Agreement and in the Project Agreement. The Borrower shall ensure, and shall cause the DISCO to ensure, that their internal controls are in accordance with international standards for auditing or the national equivalent acceptable to ADB and that independent and autonomous internal audit departments are set up within the DISCO. Safeguards Schedule 5, Complied with. The Borrower shall ensure, and shall cause the DISCO to para. 4. ensure, that the Project does not have any environmental, indigenous peoples or involuntary resettlement impacts all

Appendix 7 31

Reference in Loan Covenant Agreement Status of Compliance within the meaning of the Safeguard Policy Statement. In the event that the Project does have any such impact, the Borrower shall take, and shall cause the DISCO to take, all steps required to ensure that the Project complies with the applicable laws and regulations of the Borrower; the Safeguard Policy Statement; the EARF, RF and/or IPPF as applicable. Prohibited List of Investments Schedule 5, Complied with. The Borrower shall ensure, and shall cause the DISCO to para. 5. ensure, that no proceeds of the Loan are used to finance any activity included in the list of prohibited investment activities provided in Appendix 5 of the SPS. Labor Standards Schedule 5, Complied with. The Borrower shall ensure, and shall cause the DISCOs to para. 6. ensure, that the core labor standards and the Borrower’s applicable laws and regulations, including workplace occupational safety norms, are complied with during Project implementation. The DISCO shall include specific provisions in the bidding documents and contracts financed by ADB under the Project requiring that the contractors, other provider of goods and services and their subcontractors: (a) comply with the Borrower’s applicable labor law and regulations. (b) do not use child labor, within the meaning provided in Appendix 5 of the SPS. (c) provide equal opportunity and eliminate discrimination in relation to recruitment, compensation, working conditions and terms of employment for workers (including prohibiting any form of discrimination against women during hiring and providing equal pay for men and women for work of equal value; and to the extent possible, employing women and local people, including disadvantaged people, living in the Project Area, provided that the requirements for efficiency are adequately met); (d) do not used forced labor, within the meaning provided in Appendix 5 of the SPS. (e) allow freedom of association and effectively recognize the right to collective bargaining; and (f) disseminate, or engage appropriate service providers to disseminate, information on the risks of sexually transmitted diseases, including HIV?AIDS, to the employees of contractors engaged under the Project and to members of the local communities surrounding the Project Area, particularly females. The Borrower shall strictly monitor, and shall cause the Schedule 5, Complied with. DISCO to strictly monitor, compliance with the labor para. 7. standards and provide ADB with regular reports. Gender and Development Schedule 5, Complied with. The Borrower shall ensure, and shall cause the DISCO to Para. 8. ensure that the principles of gender equity consistent with ADB’s Policy on Gender and Development are followed during implementation of the Project, including (a) equal pay to men and women for work of equal value; (b) enabling working conditions for women workers; and (c) taking necessary actions to encourage women living in the Project Area to participate in the design and implementation of

32 Appendix 7

Reference in Loan Covenant Agreement Status of Compliance Project activities. The Borrower, in coordination with the appropriate agencies, shall ensure, and shall cause the DISCO to ensure, the effective implementation of measures aimed at increasing Project benefits and impacts on women in and around the Project Area. Counterpart Support Schedule 5, Complied with. The Borrower shall cause the DISCO to ensure the Para. 9. availability and timely release of counterpart funding for the timely implementations of the Subprojects, Tariff and Financial Covenants Schedule 5, Partially Complied. Please refer to The Borrower shall ensure that the annual tariffs formulated para. 10. Appendix 10. for the DISCO are adequate (a) to cover operating costs, maintenance, depreciation, and financing costs and to allow an acceptable return on the equity of the DISCO; and (b) to maintain the debt-service coverage ratio of at least 1.2 times, and self-financing ratio of at least 20%, for fiscal year 2015 (i.e. from 1 July 2014 to 30 June 2015) onward. For the purpose for this paragraph, debt service coverage ratio means the division of free cash flow over annual debt service, as defined in ADB’s Financial Management and Analysis of Projects Guidelines (2006). Self-financing ratio means the division of cash from internal sources over average annual capital expenditure, expressed as a percentage, as defined in ADB’s Financial Management and Analysis of Project Guidelines (2006). Following a tariff determination by NEPRA, the Borrower shall promptly issue a gazette notification of the said tariff determination. The Borrower shall ensure that the DISCO will submit annual petitions for tariff revision as required to maintain their financial viability. The Borrower shall ensure that the DISCO will bill all Schedule 5, Complied with. customer directly and in a timely manner for power para. 11. distribution services rendered. The Borrower shall ensure that all government paying authorities provide promptly payment to the DISCO and, in case of any shortfall from the paring authority, the Borrower shall finance such shortfall in a timely manner. Governance and Anticorruption Schedule 5, Complied with. The Borrower and the DISCO shall (a) comply with ADB’s para. 12. Anticorruption Policy (1998, as amended to date) and acknowledge that ADB reserves the right to investigate directly, or through its agents, any alleged corrupt, fraudulent, collusive or coercive practice relating to the Project; and (b) cooperate with any such investigation and extend all necessary assistance for satisfactory completion of such investigation. The Borrower shall ensure, and cause the DISCO to ensure, Schedule 5. Complied with. that the anticorruption provisions acceptable to ADB are para. 13. included in all bidding documents and contracts, including provisions specifying the right of ADB to audit and examine the records and accounts of the executing and implementing agencies and all contractors, suppliers, consultants, and other service providers as they relate to the Project. The Borrower shall ensure that the DISCO will provide Schedule 5, Complied with. updated information of the Project on the DISCO’s website, para. 14. including information on the performance of the Project, business opportunities, bidding process and guidelines, outcome of biddings and summary progress reports.

Appendix 7 33

Reference in Project Covenant Agreement Status of Compliance Each DISCO shall carry out the Project with due diligence Section 2.01. Complied with. and efficiency, and in conformity with sound applicable (a) technical, financial, business, and development practices.

In carrying out of the Project and operation of the Project Section 2.01. Complied with. facilities, each DISCO shall perform all obligations set forth (b) in the Loan Agreement to the extent that they are applicable to such DISCO, and all obligations set forth in the Schedule to this Project Agreement. Each DISCO shall make available, promptly as needed, the Section 2.02. Complied with. funds facilities, services, land, and other resources as required, in addition to the proceeds of the Loan, for the carrying out of the Project. In carrying out of the Project, each DISCO shall employ Section 2.03. Complied with. competent and qualified consultants, contractors, (a) acceptable to ADB, to an extent and upon terms and conditions satisfactory to ADB. Except as ADB may otherwise agree, each DISCO shall Section 2.03. Complied with. procure all items of expenditures to be financed out of the (b) proceeds of the Loan in accordance with the provisions of Schedule 4 to the Loan Agreement. ADB may refuse to finance a contract where any such item has not been procured under procedures substantially in accordance with those agreed between the Borrower and ADB or where the terms and conditions of the contract are not satisfactory to ADB. Each DISCO shall carry out the Project in accordance with Section 2.04. Complied with. plans, design standards, specifications, work scheduled and construction methods acceptable to ADB. Each DISCO shall furnish or cause to be furnished, to ADB, promptly after their preparation, such plans, design standards, specifications and work schedules and any material modifications subsequently made therein, in such detail as ADB shall reasonably request. Each DISCO shall take out and maintain with responsible Section 2.05. Complied with. insurers, or make other arrangements satisfactory to ADB (a) for, insurance against such risks and in such amounts as shall be consistent with sound practice. Without limiting the generality of the foregoing each DISCO Section 2.05. Complied with. undertakes to insure, or cause to the insured, the Goods to (b) be imported for the Project against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable to replace or repair such goods. Each DISCO shall maintain, or cause to be maintained, Section 2.06. Complied with. records and accounts adequate to identify the items of expenditure financed out of the proceeds of the Loan, to disclose the use thereof in the Project, to record the progress of the Project (including the cost thereof) and to reflect, in accordance with consistently maintained sound accounting principles, its operations and financial condition. ADB and each DISCO shall cooperate fully to ensure that Section 2.07. Complied with. the purposed of the Loan will be accomplished. (a) Each DISCO, through PEPCO shall promptly inform ADB of Section 2.07. Complied with. any condition which interferes with, or threatens to interfere (b) with, the progress of the Project, the performance of its

34 Appendix 7

Reference in Project Covenant Agreement Status of Compliance obligations under this Project Agreement or its Relending Agreement, or the accomplishment of the purposes of the Loan. ADB and each DISCO shall from time to time, at the request Section 2.07. Complied with. of either party, exchange views through their representatives (c) with regards to any matters relating to the Project, the DISCO, and the Loan. Each DISCO, through PEPCO, shall furnish to ADB all such Section 2.08. Complied with. reports and information as ADB shall reasonably request (a) concerning (i) the Loan and the expenditure of the proceeds thereof; (ii) the items of expenditure financed out of such proceeds; (iii) the Project; (iv) the administration, operations and financial condition of the DISCO; and (v) any other matters relating to the purposes of the Loan. Without limiting the generality of the foregoing, each DISC, Section 2.08. Complied with. through PEPCO, shall furnish to ADB periodic reports on the (b) execution of the Project and on the operation and management of Project facilities. Such reports shall be submitted in such form and in such detail and within such a period as ADB shall reasonable request, and shall indicate, among other things, progress made and problems encountered during the period under review,, steps taken or proposed to be taken to remedy these problems, and proposed program of activities and expected progress during the following period. Promptly after physical completion of the Project, but in any Section 2.08. Complied with. event not later than 3 months thereafter or such later date as (c) ADB may agree for this purpose, each DISCO shall prepare and furnish, though PEPCO, to ADB a report, in such form and in such detail as ADB shall reasonably request, on the execution and initial operation of the Project, including its cost, the performance by the DISCO of its obligations under this Project Agreement and the accomplishment of the purposes of the Loan. Each DISCO shall (i) maintain separate accounts and Section 2.09. Complied with. records for the Project; (ii) prepare annual financial (a) statements for the Project in accordance with accounting principles applicable to ADB; (iii) have such financial statements for the Project audited annually by independent auditors whose qualifications, experience and terms of reference are acceptable to ADB, in accordance with international standards for auditing or the national equivalent acceptable to ADB; (iv) as part of each such audit, have the auditors prepare a report (which includes the auditors’ opinion on the financial statements, use of the Loan proceeds and compliance with the financial covenants of the Loan Agreement) and a management letter (which sets out the deficiencies in the internal control of the project that were identified in the course of the audit, if any); and (v) furnish, through the Borrower, to ADB, no later than 6 months after the close of the fiscal year to which they relate, copies of such audited financial statements, audit report and management letter, all in English language, and such other information concerning these documents and the audit thereof as ADB shall from time to time reasonable request. ADB shall disclose the annual audited financial statements Section 2.09. Complied with. for the Project and the opinion of the auditors on the financial (b) statements within 30 days of the date of their receipt by posting them on ADB’s website.

Appendix 7 35

Reference in Project Covenant Agreement Status of Compliance In addition to annual audited financial statements referred to Section 2.09. Complied with. in subsection (a) hereinabove each DISCO shall (i) provide (c) its annual financial statements prepared in accordance with national accrual-based financing reporting standards acceptable to ADB; (ii) have its financial statements audited annually by independent auditors whose qualifications, experience and terms of reference are acceptable to ADB, in accordance with international standards for auditing or national equivalent acceptable to ADB; and (iii) furnish to ADB, no later than 1 month after approval by relevant authority, copies of such audited financial statements in the English language and such other information concerning these documents and the audit thereof as ADB shall from time to time reasonable request. Each DISCO shall, promptly as required, take all action Section 2.11. Complied with. within its powers to maintain its corporate existence, to carry (a) on its operations, and to acquire, maintain and renew all rights, properties, powers, privileges and franchises which are necessary in the carrying out of the Project or in the conduct of its operations. Each DISCO shall at all times operate and maintain its Section 2.11. Complied with. plants, equipment and other property, and from time to time, (c) promptly as needed, make all necessary repairs and renewals thereof, all in accordance with sound applicable technical, financial, business, development, operational and maintenance practices.

36 Appendix 8

RE-ASSESSMENT OF ECONOMIC AND FINANCIAL ANALYSIS

A. Introduction

1. This appendix contains the economic and financial reevaluation of the program and project 4 of the program in accordance with ADB guidelines for the Economic Analysis of the Projects and the Financial Management and Analysis of Projects. The DISCOs networks were expanded and losses reduced by installation of transformers, construction and conversion of grid stations, construction of transmission lines at 132 kV level and installation of capacitors as part of the project improving security of supply to customers, moving towards compliance with regulatory security standards for governing, planning and operation of the distribution system and reliability improvements on the lower voltages.

2. The methodology and assumptions adopted for reassessing the evaluation of the program and project 4 generally follow those carried out at appraisal. The analysis quantifies the benefits and costs of the investment in economic terms and measures the net worth of the project to the country.

B. Methods and Assumptions

3. The analysis – including determining the revised economic internal rate of return (EIRR), financial internal rate of return (FIRR), and weighted average cost of capital (WACC) – are based on the streams of costs and benefits resulting from augmentation, extension, conversion and rehabilitation of grids, STG transmission lines; and energy loss reduction. The streams of costs and benefits for the program are set up as annual cash flows over the project life of 34 years and are then discounted to their net present values. For project 4, the project life is assumed to be 26 years with benefits starting from the sixth year upon project completion.

4. The costs and benefits were estimated by comparing with and without program scenarios. The without program case assumes that DISCOs are not able to supply electricity to customers in the designated areas due to losses, system constraints and poor distribution and transmission network. Under the with and without program scenario, it is assumed that without the program, (i) system losses will not be reduced, (ii) DISCOs will not be able to provide electricity to the new consumers, and (iii) transformer’s capacity will not be improved as a result of expansion and augmentation of distribution facilities. The same assumptions are also used for evaluation of project 4.

C. Economic and Financial Benefits

a. Investment Program

5. Economic analysis uses the economic prices that are called as the shadow prices and it focuses on the economic values of the program’s cost and benefit. The actual EIRR comes out to be 19.9% as against the projected EIRR of 23.0% at appraisal. Deviation of the financial values from the economic values of project cost and benefits arises from two major sources: i) Price Distortions that are often created by government interventions such as taxes, subsidies, and price control or by imperfect competition (monopoly). ii) Non-Marketed outputs.

b. Tranche-4 of the Investment Program

Appendix 8 37

6. Project 4 of the investment program was to most beneficial to the power distribution network by contributing more than a third of the program’s addition in capacity of the power distribution network of Pakistan. At appraisal, the EIRR was estimated to be 24.7% while at completion 21.0% was realized.

7. Costs: The financial cost is converted to economic values by deducting the taxes and duties, financing charges, and all price contingencies. Most of the subprojects are completed on turnkey basis and the cost of labor component comprising skilled and local labor (semi and unskilled and non-tradable) is included in all project costs under the program as fairly reflecting the economic opportunity cost. Labor in O&M costs was assumed to be skilled and non-tradable, with wages fairly reflecting economic opportunity costs. The economic value of land used by the program was assumed to be zero because this land was unlikely to be used for other purposes over the life of program. Operation and maintenance cost are assumed to be 1.44% of the capital cost over the period of program. The economic cost of program is arrived at by following the system approach and the cost of generating power is added. As there is excess generation capacity, therefore, only the cost of generating power is added rather than adding the investment and O&M cost of additional generation component. Average cost of fuel (variable cost) is considered while calculating the cost of generating power as the capacity charges are fixed in nature and must be paid irrespective of generating power.

8. Benefits: All the benefits incurred because of projects under this program are incremental benefits as it provides additional transformer capacity resulting in the provision of electricity to the new consumers and are easily quantifiable. Non-incremental benefits were not included as accurate data related to impact on account of substitution of fuel and transmission and distribution (T&D) loss reduction was not available. Further because of savings in the losses, the operations / running of expensive plants that are required to meet the electricity requirements can be avoided. The program has (i) removed the constraints in distribution system of electricity, (ii) improved the quality, (iii) reduced the losses and (iv) increase the supply of electricity by expansion in the distribution system / network.

9. Economic prices reflect the economic value of goods and services and provide important guidance on the choice of the public sector projects. Conceptually, economic prices can be defined as the gain (or loss) in social welfare associated with consuming an additional unit of a commodity. Social welfare can be measured by the consumption of commodities or services available to the society whether these are sold or not in a market. Thus, economic benefits of the program’s outputs are their contribution to increasing the consumption available to society. Economic costs of the program inputs reflect consumption sacrificed elsewhere by diverting the resources to the program from other use. The value of the total net change in the consumption available to the society represents the net economic impact of the program.

10. Benefit Valuation: Economic Analysis is carried from the perspective of entire economy and it assesses the impact of the program on the welfare of all the citizens of the country concerned. Power Sector Tariff is determined by independent regulator, National Electric Power Regulatory Authority (NEPRA) and is notified by the government keeping in view the socio- economic aspects of country. Incremental outputs are valued at the average of the current NEPRA determined tariff and the cost of alternative energy source and is used as an approximate value for willingness-to-pay (WTP). This approximation is applied to value benefits throughout the operating years without expected increases in tariff to avoid overestimation of benefits.

38 Appendix 8

11. WACC: To estimate the weighted average cost of capital (WACC), it is assumed in Periodic Financing Request that ADB will finance 80% of the program costs whereas the actual expenditure shows ADB contribution of 82% of the total cost incurred. While calculating WACC, the same parameters as were used at the time of appraisal are followed. The Government relent the funds rupees to PEPCO/DISCOs at 17% for Tranche 1 and 15% for the other 3 tranches. In this regard, the foreign exchange risk was not to be borne by PEPCO/DISCO. The balance was financed through self-generated funds (equity). Fifteen percent was assumed for nominal cost under equity contribution, consistent with rate of return allowed for IPPs. The revised WACC for the program is worked out at 9.56% and that for Tranche 4 is 10.24%. The WACC is calculated based on actual financing mix, current inflation rate and other parameters. DISCOs are still not subjected to application of corporate tax rates, as financial statements for the latest FY shows accumulated losses due to non-recovery of full cost of tariff.

12. Standard Conversion Factor: Individual project items can be valued at their individual economic process. However, for ease of calculation, economic values of project outputs and input can also be derived from the financial values using conversion factors. The financial cost is converted to economic values by deducting the taxes and duties, financing charges and price contingencies.

D. Economic Analysis

a. Investment Program

13. Economic analysis is simplified for analysis purpose by evaluating the impact of reduction in T&D losses (132kV & 11 kV) of DISCOs during the period FY 2009 to FY 2018. It is also assumed that one-third of the benefits accrued because of reduction in the T&D losses of Discos are attributed to this program. The economic analysis of each individual tranche is done separately, and the results are combined to calculate the program’s EIRR. The details of assumptions and calculations for each of the tranches are provided in their respective PCRs. The assumptions and calculations for Tranche 4 are provided in the next subsection.

a. Tranche-4 of the Investment Program

14. The energy received by Discos at 132 kV in 2015, the first year after incurrence of major project expenditures is 89,385 GWh, whereas the energy received by DISCOs at 132 KV in 2018 is 106,139 GWh. The energy transferred from 132 KV to 11 KV is 74,761 GWh in 2015 and 104,094 GWh in 2018. Therefore, this indicates that the net T&D loss reduced from 2.11% to 1.93% with an annual average reduction of 0.03%. It is assumed that the project will not only continue with 0.03% reduction throughout the remaining period but will also help in controlling the increase in T&D losses due to the projected increase in sales to the extent of 6.5% per annum. Para 176 of ADB Economic Analysis Guidelines have prescribed a period of 20-30 years for evaluation purposes. As per para 3 of Appendix 7 of Periodic Financing Request (PFR), It is assumed that the investment will have a 21-year economic life and no residual value at the end of that life.

15. Since there have been significant supply constraints in the system, most of the increased supply due to the reduction in losses is assumed to be incremental and valued at average of the current NEPRA determined tariff and the cost of alternative energy source. As the project concept envisage the construction period of five years, therefore, it is assumed that the project benefits started accruing from sixth year (July 2019). The benefits have been actualized at the average

Appendix 8 39 electricity tariff of Rs 15.53 / kWh, based on NEPRA tariff determination of Discos for FY 2017 - 20181.

16. Average of current NEPRA determined tariff for DISCOs and the cost of alternate energy source is used as a proxy to WTP. NEPRA determined tariff is kept same despite the fact that tariff may increase significantly in future due to the changes in operating cost, inflationary impact, rate of return and increase in power purchase price; the impact of which will be pass on to the consumer through NEPRA tariff determination under the NEPRA Tarff Methodology2. It is also assumed that the sales will grow by 6.5% per annum since the project will help in improving the available units for sales and the generation capacity is enhanced by the government. The NTDC analysis3 for power demand forecast a peak demand to a level of 145,304 MW by 2030 indicating a growth rate of around 9.3%.

17. The Economic Analysis at appraisal was worked out at 24.7% with the assumption of oil prices at willingness-to-pay scenario of $30/bbl. At the time of appraisal, the tariff methodology did not allow to pass the impact of changes in oil price to consumer on monthly basis. However, under the current methodology, any changes in fuel prices are passed on to the consumers on monthly basis and NEPRA is authorized to notify such changes. Based on this, the consumer’s willingness to pay is set at the NEPRA determined tariff and notified by the government accordingly.

18. The Project will help customers receive reliable and quality power supply. The project reduced line losses; expanded network capacity and extended access to electricity. Incremental benefits are associated with increased electricity consumption by both new and existing customers.

19. Analysis of the increase in new customer connections reveals that during the period FY 2014 to FY 2018, 5,383,825 numbers of new consumers were added with compound average growth rate (CAGR) of 15%, whereas during the period FY 2009 to FY 2012, 2,563,591 new connections were provided, indicating a CAGR of around 13%4.

20. Actual progress of project also shows that total 6,012 MVA were added to the power distribution system that resulted in evacuation of addition electricity generation. While calculating / evaluating the economic benefits because of addition of new MVA’s, a load factor of 50% and power factor of 80% is assumed.

21. Other Non-Quantifiable Benefits: NEPRA framed NEPRA performance standards distribution rules, 2005 (PSDR) back in 2005 with a grace period of four years to DISCOs to improve their network and ensure compliance with these rules. The program has contributed significantly to improvement of distribution system and enables DISCOs to comply with the PSDR. According to NEPRA report for FY 2017-18, most of the DISCOs met their targets for the year. Few of the technical indicators are SAIFI, SAIDI, time frame for new connections and safety etc.

1 Government of Pakistan, NEPRA. 2019. Tariff Determination for DISCOs for FY 2017-2018. Islamabad. 2 Government of Pakistan, NEPRA. 2015. Guidelines for Determination of Consumer End (Methodology and Process). Islamabad. 3 Government of Pakistan, NTDC. 2008. Electricity Demand Forecast based on regression analysis (2008-2030). Lahore. 4 Government of Pakistan, NEPRA. State of Industry Reports. Islamabad (8 years: 2010 – 2017).

40 Appendix 8

22. Reduction in Distribution Losses due to ELR program: As project also includes implementation of energy loss reduction schemes. The impact of these in terms of reduction in distribution losses in not included in the cash flow benefits for economic evaluation

23. Economic Internal Rate of Return for Program: An analysis based on the cost and benefits assumptions as given above results in an economic internal rate of return (EIRR) of 19.61%, below the economic appraisal analysis of 23.00% (Table A8.1) for the program. It is pertinent to mention here that at appraisal; system approach was not followed as is being done at the time of program completion analysis. If economic rate of return is worked out based on appraisal methodology, then it would be much higher.

Table A8.1: Summary of EIRR Calculations for Program

O&M Cost Generation Net Benefits Outflows (PRs million) Cost (PRs Benefits (PRs million) Year (PRs million) million) (PRs million) 2009 2.39 - - - (2.39) 2010 3,256.98 - - - (3,256.98) 2011 7,860.29 - - - (7,860.29) 2012 7,803.23 - - - (7,803.23) 2013 7,449.41 - - - (7,449.41) 2014 3,487.13 - - - (3,487.13) 2015 5,664.01 297.84 2,378.13 8,438.62 98.64 2016 13,153.98 297.84 2,384.20 11,302.18 (4,533.84) 2017 13,728.11 297.84 2,393.33 11,483.19 (4,936.09) 2018 11,662.69 297.84 2,413.26 14,080.54 (293.26) 2019 5,806.33 546.90 7,024.26 19,364.55 5,987.06 2020 - 1,175.46 14,526.81 38,724.47 23,022.20 2021 - 1,175.46 14,596.80 38,922.68 23,150.42 2022 - 1,175.46 14,673.28 39,139.14 23,290.40 2023 - 1,175.46 14,756.88 39,375.58 23,443.24 2024 - 1,175.46 14,848.26 39,633.88 23,610.16 2025 - 1,175.46 14,948.15 39,916.09 23,792.47 2026 - 1,175.46 15,057.38 40,224.46 23,991.62 2027 - 1,175.46 15,176.82 40,561.47 24,209.19 2028 - 1,175.46 15,307.43 40,929.82 24,446.92 2029 - 1,175.46 15,450.30 41,332.47 24,706.71 2030 - 1,175.46 15,606.57 41,772.67 24,990.64 2031 - 1,175.46 15,777.52 42,253.98 25,301.00 2032 - 1,175.46 15,964.55 42,780.30 25,640.29 2033 - 1,175.46 16,169.21 43,355.91 26,011.24 2034 - 1,175.46 16,393.16 43,985.48 26,416.85 2035 - 1,175.46 16,638.25 44,674.15 26,860.43 2036 - 1,175.46 16,906.51 45,427.54 27,345.57 2037 - 1,175.46 17,200.14 46,251.83 27,876.23 2038 - 1,175.46 17,521.57 47,153.77 28,456.73 2039 - 1,175.46 17,873.48 48,140.78 29,091.83 2040 - 1,175.46 18,258.78 49,220.98 29,786.73 2041 - 618.57 10,648.40 29,451.70 18,184.73 2042 - 618.57 10,924.55 30,215.18 18,672.06 2043 - 369.51 5,045.47 14,018.40 8,603.41 Economic Net Present Value (Rs Million) 32,669 Economic Internal Rate of Return 19.92%

Appendix 8 41

24. Economic Internal Rate of Tranche 4: An analysis based on the cost and benefits assumptions as given above results in an economic internal rate of return (EIRR) of 21.01%, below the economic appraisal analysis of 24.70% (Table A8.2) for the Tranche 4. It is pertinent to mention here that at appraisal; system approach was not followed as is being done at the time of project completion analysis. If economic rate of return is worked out based on appraisal methodology, then it would be much higher.

Table A8.2: Summary of EIRR Calculations for Tranche 4

O&M Cost Generation Net Benefits Outflows (PRs million) Cost (PRs Benefits (PRs million) Year (PRs million) million) (PRs million) 2015 109.21 - - - (109.21) 2016 4,438.67 - - - (4,438.67) 2017 5,972.96 - - - (5,972.96) 2018 4,214.09 - - - (4,214.09) 2019 2,535.42 - - - (2,535.42) 2020 - 259.06 3,849.62 9,207.35 5,098.67 2021 - 259.06 3,860.72 9,242.93 5,123.16 2022 - 259.06 3,872.53 9,280.81 5,149.22 2023 - 259.06 3,885.10 9,321.13 5,176.98 2024 - 259.06 3,898.49 9,364.07 5,206.52 2025 - 259.06 3,912.74 9,409.77 5,237.98 2026 - 259.06 3,927.91 9,458.43 5,271.47 2027 - 259.06 3,944.06 9,510.24 5,307.12 2028 - 259.06 3,961.26 9,565.39 5,345.07 2029 - 259.06 3,979.57 9,624.10 5,385.48 2030 - 259.06 3,999.06 9,686.61 5,428.50 2031 - 259.06 4,019.81 9,753.16 5,474.30 2032 - 259.06 4,041.90 9,824.01 5,523.06 2033 - 259.06 4,065.42 9,899.44 5,574.97 2034 - 259.06 4,090.46 9,979.74 5,630.23 2035 - 259.06 4,117.11 10,065.23 5,689.06 2036 - 259.06 4,145.49 10,156.24 5,751.70 2037 - 259.06 4,175.70 10,253.13 5,818.38 2038 - 259.06 4,207.87 10,356.29 5,889.37 2039 - 259.06 4,242.11 10,466.11 5,964.95 2040 - 259.06 4,278.56 10,583.03 6,045.41 Economic Net Present Value (Rs Million) 10,792 Economic Internal Rate of Return 21.01%

25. Sensitivity analysis: Table A8.3 shows strong economic viability where benefits are reduced by 10%, and costs are increased by 10%. In either case, strong economic viability is maintained. Some downward movements in benefits or increase in cost would not significantly impact the economic viability of the program or Tranche 4. Para 16 of ADB Economic Analysis guidelines 2017 have revised the economic opportunity cost of capital to 9%. Even if the cost is increased by 10% and the benefits are reduced by 10%, the EIRR still remains above the economic opportunity cost and appraisal estimates.

Table A8.3: Sensitivity Analysis

Item EIRR (%) ENPV (PRs million) Program Base Case 19.92 32,669

42 Appendix 8

Benefits Reduced by 10% 17.53 21,408 Cost increased by 10% 17.76 24,675 Benefits reduced by 10% and cost increased by 10% 15.35 13,414

Tranche 4 Base Case 21.01 10,792 Benefits Reduced by 10% 17.94 6,707 Cost increased by 10% 18.23 7,787 Benefits reduced by 10% and cost increased by 10% 15.15 3,702

E. Financial Analysis

a. Investment Program

26. The purpose of the financial evaluation is to assess the ability of the program to generate adequate incremental cash flows to recover the financial cost (capital and recurrent cost) without external support. Financial Analysis of the program is based on the incremental financial cash flows and cost. Financial evaluation of the program shows that actual FIRR at completion comes out to be 24.0% indicating the financial sustainability of the program (Table A8.4).

Table A8.4: Summary of FIRR Calculations for Program

Net Benefits (PRs Year Cost (PRs million) Benefits (PRs million) million) 2009 4 - (4) 2010 3,289 - (3,289) 2011 7,903 - (7,903) 2012 8,165 - (8,165) 2013 7,639 - (7,639) 2014 3,605 - (3,605) 2015 6,077 7,559 1,482 2016 14,099 10,205 (3,894) 2017 15,165 10,370 (4,795) 2018 12,859 12,738 (122) 2019 6,397 17,347 10,950 2020 1,228 34,579 33,351 2021 1,228 34,754 33,525 2022 1,228 34,944 33,716 2023 1,228 35,152 33,924 2024 1,228 35,380 34,152 2025 1,228 35,629 34,401 2026 1,228 35,901 34,673 2027 1,228 36,198 34,970 2028 1,228 36,523 35,295 2029 1,228 36,879 35,651 2030 1,228 37,268 36,039 2031 1,228 37,693 36,465 2032 1,228 38,158 36,930 2033 1,228 38,667 37,438 2034 1,228 39,223 37,995 2035 1,228 39,832 38,604 2036 1,228 40,499 39,271 2037 1,228 41,228 40,000 2038 1,228 42,027 40,799

Appendix 8 43

2039 1,228 42,901 41,672 2040 1,228 43,857 42,629 2041 635 26,293 25,659 2042 635 26,975 26,340 2043 377 12,463 12,086 Financial Net Present Value (Rs Million) 58,710 Financial Internal Rate of Return 23.96%

b. Tranche 4

27. Financial Analysis of Tranche 4 is based on the incremental financial cash flows and cost. Financial evaluation of the Tranche 4 shows that actual FIRR at completion comes out to be 27.0% against the appraisal estimate of 19.0% indicating the financial sustainability of the program (Table A8.5).

Table A8.5: Summary of FIRR Calculations for Program

Net Benefits (PRs Year Cost (PRs million) Benefits (PRs million) million) 2015 136 - (136) 2016 4,911 - (4,911) 2017 6,976 - (6,976) 2018 4,756 - (4,756) 2019 1,926 - (1,926) 2020 281 8,206 7,925 2021 281 8,235 7,954 2022 281 8,266 7,985 2023 281 8,299 8,018 2024 281 8,334 8,054 2025 281 8,372 8,091 2026 281 8,411 8,131 2027 281 8,454 8,173 2028 281 8,499 8,219 2029 281 8,547 8,267 2030 281 8,598 8,318 2031 281 8,653 8,372 2032 281 8,711 8,430 2033 281 8,773 8,492 2034 281 8,839 8,558 2035 281 8,909 8,628 2036 281 8,983 8,703 2037 281 9,062 8,782 2038 281 9,147 8,866 2039 281 9,237 8,956 2040 281 9,333 9,052 Financial Net Present Value (Rs Million) 21,982 Financial Internal Rate of Return 27.01%

F. Conclusion

Reassessment of the economic feasibility of the project based on analysis of benefits associated with the investment program through reduction in line losses, addition of 17,399 MVA and new consumers connected to the system results in economic internal rate of return of 19.92% as against the appraisal stage of 23.00%. This indicates the economic viability and efficiency of

44 Appendix 8 program and establishes the need of sub projects to improve system reliability, efficiency, and quality of supply. A high financial rate of return also indicates the financial sustainability of program in long run. Sensitivity analysis further strengths the economic viability of investment program as any downward movements in benefits and upward trend in cost would not significantly impact the net cash flows benefits.

Appendix 9 45

LIST OF SUBPROJECTS IMPLEMENTED UNDER THE PROGRAM

Table A9.1: Summary of Program Achievements

Description Addition FESCO GEPCO HESCO IESCO LESCO MEPCO PESCO QESCO Total Capacity (MVA) 239 66 286 526 557 234 338 342 2588.00 Tranche 1 Transmission Lines (km) 0 17.9 0 0 0 6.43 0 0 24.33 Subprojects 16 7 25 32 38 18 21 23 180.00 Capacity (MVA) 782 624 752 144 820 948 764 470 5304.00 Tranche 2 Transmission Lines (km) 0 127 267.57 119.35 36.41 26.6 2.5 0 579.43 Subprojects 15 17 25 11 24 32 24 19 167.00 Capacity (MVA) 262 234 312 660 860 340 658 169 3495.00 Tranche 3 Transmission Lines (km) 143 0 178 97.5 10.8 187.2 40 556 1212.50 Subprojects 11 4 22 24 19 19 23 6 128.00 Capacity (MVA) 626 471 349 655 1562 1217 743 389 6012.00 Tranche 4 Transmission Lines (km) 30 0 0 128 6 50 0 82 296.00 Subprojects 33 22 20 39 74 71 38 24 321.00 Capacity (MVA) 1909 1395 1699 1985 3799 2739 2503 1370 17399.00 Program Transmission Lines (km) 173 144.9 445.57 344.85 53.21 270.23 42.5 638 2112.26 Subprojects 75 50 92 106 155 140 106 72 796.00

46 Appendix 9

Table A9.2: Tranche 1 Subprojects

Addition in Addition in Project Scope of Capacity System System No. Project Description Work (MVA) (MVA) (km) A. FESCO A.1 STG Projects 1. 132kV GS Kud Lati Extension 26x1 26 - 2. 132kV GS Jhang-II Extension 26x1 26 - 3. 132kV GS Gojra Extension 26x1 26 - 4. 132kV GS Wan Buchran Extension 26x1 26 - 5. 132kV GS HB Shah Extension 26x1 26 - 6. 132kV GS Lalian Extension 26x1 26 - 7. 132kV GS Sardar Pur Noon Extension of - - - TF Bay 8. 132kV GS OTP Faisalabad Augmentation 40x1 14 - 9. 132kV GS Chinot Road Faisalabad Augmentation 40x1 14 - 10. 132kv GS Sammundri Road Augmentation 14 Faisalabad 11. 132kV GS Narwala Road Augmentation 40x1 14 - Faisalabad 12. 132kV GS Factory Area Faisalabad Augmentation 40x1 14 - 13. 132kV GS Ludewala Sargodha Augmentation 26x1 13 - A.2 Non-STG Projects 14. Replacement of old equipment at Rehabilitation - - - 132kV GS, circuit breakers, bus isolator, line isolator, relays, 11kV outgoing panels, etc. 15. Capacitor installation, 11kV 450kvar Capacitors - - - 16. Single phase meters, 3 phase System - - - meters, 11kV sectionalizers, voltage modernization regulator, LT circuit breaker, low- bed trailers, cranes, heavy duty trucks Subtotal (A) 239 -

B. GEPCO B.1 STG Projects 17. 66kV to 132kV GS at Fateh Pur Conversion 26x2 26 - 18. In-out at Fateh Pur from Gakkhar- Transmission - - 17.9 Hafizabad 132kV TL line B.2 STG Projects from savings 19. 132kV GS S/Abad GEPCO Augmentation 40x1 14 - 20. 132kV GS Sambrial GEPCO Augmentation 26x1 13 - 21. 132kV GS J. Pattan GEPCO Augmentation 26x1 13 - B.3 Non-STG Projects 22. Energy loss reduction ELR - - - 23. Development of power Distribution - - - power Subtotal (B) 66 17.9

C. HESCO C.1 STG Projects 24. 66kV GS Tharo Mirwah Extension 13x1 13 - 25. 66kV Dokri Extension 13x1 13 - 26. 66kV GS Badin Extension 13x1 13 - 27. 132kV GS Tando Adam Augmentation 26x1 13 - 28. 132kV GS Tando Allah Yar Augmentation 26x1 13 - 29. 132kV GS Deharki Augmentation 26x1 13 - 30. 132kV GS Gambat Augmentation 26x1 13 - 31. 132kV GS Nawabshah-1 Augmentation 26x1 13 - 32. 132kV GS Kotri Augmentation 26x1 13 -

Appendix 9 47

Addition in Addition in Project Scope of Capacity System System No. Project Description Work (MVA) (MVA) (km) C.2 STG Projects from Savings 33. 132kV TM Khan Augmentation 26x1 13 - 34. 132kV Larkana-III Extension 26x1 26 - 35. 132kV GS Piariogoth Extension 26x1 26 - 36. 132kV GS Ghotki Augmentation 26x1 13 - 37. 132kV Arain Road Augmentation 26x1 13 - 38. 132kV GS Rajputana (Qasimabad- Extension 26x1 26 - II) 39. 132kV GS Shikarpur Augmentation 26x1 13 - 40. 132kV GS Dadu Augmentation 26x1 13 - 41. 132kV GS Mirpur Khas Augmentation 26x1 13 - 42. 132kV GS Nawab Shah-I Augmentation 26x1 13 - C.3 Non-STG Projects 43. Capacitors Capacitors - - - 44. Energy loss reduction ELR - - - 45. Construction equipment Construction - - - equipment 46. STG Material Rehabilitation - - - C.4 Non-STG Projects from Savings 47. STG material Rehabilitation - - - 48. 1x20/26MVA, 1x10/13MVA TF Miscellaneous - - - Subtotal (C) 286 -

D. IESCO D.1 STG Projects 49. 132kV GS Mirpur Extension 26x1 26 - 50. 132kV GS HMC Taxila Extension 26x1 26 - 51. 132kV GS Khuri Ratta AJK Extension 26x1 26 - 52. 132kV GS F-6 Islamabad Extension 26x1 26 - 53. 132kV GS Gujar Khan Extension 26x1 26 - 54. 132kV GS Pirwadhai Augmentation 40x2 28 - 55. 132kV GS F-11 Islamabad Augmentation 40x1 14 - (Augmentation with 11kV S/Room) 56. 132kV GS KTM Rawalpindi Augmentation 40x1 14 - 57. 132kV GS Dina Augmentation 26x1 13 - 58. 132kV GS Cantt Rawalpindi Augmentation 40x1 14 - 59. 132kV GS Kamalabad Rawalpindi Augmentation 40x1 14 - 60. 132kV GS Margalla Taxila-II Augmentation 26x1 13 - 61. 132kV GS Attock Augmentation 26x1 13 - 62. 132kV GS Rawalakot Augmentation 26x1 13 - 63. 132kV GS Kahuta City Augmentation 26x1 13 - 64. 132kV GS Chakswari Augmentation 26x1 13 - 65. 132kV GS H-11 Islamabad Augmentation 40x1 14 - 66. 132kV GS Mangla Right Bank Augmentation 26x1 13 - 67. 132kV GS Mangla Left Bank Augmentation 26x1 13 - 68. 132kV GS Fiqra bad Augmentation 26x1 13 - 69. 132kV GS Chakwal Augmentation 40x1 14 - 70. 132kV GS Zero Point Islamabad Augmentation 40x2 28 - 71. 132kV GS I-8 Islamabad Augmentation 40x2 28 - 72. 132kV GS Jatali Augmentation 26x1 13 - 73. 132kV GS Rawal Islamabad Augmentation 40x2 28 - D.2 STG Projects from Savings 74. 132kV GS Chaklala Rawalpindi Augmentation 40x1 14 - 75. 132kV GS S/Town Rawalpindi Augmentation 40x1 14 - 76. 132kV GS Kala Gujran Jhelum Augmentation 40x1 14 - 77. 132kV GS Pirwadhai (augmentation with 11kV S/Room) D.3 Non-STG Projects

48 Appendix 9

Addition in Addition in Project Scope of Capacity System System No. Project Description Work (MVA) (MVA) (km) 78. 200kvar Capacitors Capacitors - - - 79. 132kV circuit breakers, 132kV CTs, Rehabilitation/ - - - 132kV isolators, VCB capacitor ELR panels, load break switches, 200kVA pole mounted TFs D.4 Non-STG Projects from Savings 80. Energy meters System - - - modernization Subtotal (D) - 526 -

E. LESCO E.1 STG Projects 81. 132kV GS Multan Road at Sukh New 26x2 52 - Chayn Substation 82. 132kV GS Chung Extension 26x1 26 - 83. 132kV GS Bhai Pheru Extension 26x1 26 - 84. 132kV GS Bhikki Extension 26x1 26 - 85. 132 kV GS Rustam Extension 26x1 26 - 86. 132kV GS Shamkey Extension 26x1 26 - 87. 132kV GS Wan Radha Ram Augmentation 26x1 13 - (Habibabad) 88. 132kV GS AI Town Augmentation 40x1 14 - 89. 132kV GS Said Pur Augmentation 40x1 14 - 90. 132kV GS Chahmiran Augmentation 40x1 14 - 91. 132kV GS Defence Augmentation 40x1 14 - 92. 132kV GS Ellahbad Augmentation 26x1 13 - 93. 132kV GS Renala Khurd Augmentation 26x1 13 - 94. 132kV GS Fateh Garh Augmentation 40x1 14 - 95. 132kV GS Garden Town Augmentation 40x1 14 - 96. 132kV GS Gulshan-e-Ravi Augmentation 40x1 14 - 97. 132kV GS Johar Town Augmentation 40x1 14 - 98. 132kV GS Kasur Augmentation 40x1 14 - 99. 132kV GS Mcleod Road Augmentation 40x1 14 - 100. 132kV GS Model Town Augmentation 40x1 14 - 101. 132kV GS OKLP Augmentation 40x1 14 - 102. 132kV GS Okara City-I Augmentation 40x1 14 - 103. 132kV GS Rehman Park Augmentation 40x1 14 - 104. 132kV GS Shadman Augmentation 40x1 14 - 105. 132kV GS Shadra New Augmentation 40x1 14 - 106. 132kV GS Township Augmentation 40x1 14 - 107. 132kV GS Badami Bagh Augmentation 40x1 14 - 108. 132kV GS Qartaba (T-1) Augmentation 40x1 14 - 109. 132kV GS Bhogiwal Augmentation 40x1 14 - E.2 STG Projects from Savings 110. 132kV GS Qartaba (T-3) Augmentation 40x1 14 - 111. 132kV GS Shadman (T-3) Augmentation 40x1 14 - 112. 132kV GS Attabad Augmentation 40x1 14 - 113. 132kV GS Sarfaraznagar Augmentation 40x1 14 - E.3 Non-STG Projects 114. Capacitors (132kV and 11kV) ELR - - - 115. Other equipment (i.e. vehicles, System - - - meters, and T&I equipment) modernization 116. Circuit breakers, power cables Rehabilitation - - - (1000MCM and 500MCM) 117. Distribution transformers ELR - - - 118. 40MVA TFs for emergency use Misc. - - - (spares) Subtotal (E) - 557 -

Appendix 9 49

Addition in Addition in Project Scope of Capacity System System No. Project Description Work (MVA) (MVA) (km)

F. MEPCO F.1 STG Projects 119. 132kV GS Lar New 26x2 52 - substation 120. 132kV GS Bahawalnagar Additional line - - - bay 121. 132kV Gujrat South Additional - - - transformer and line bay 122. 132kV GS Chishtian Additional line - - - bay 123. 132kV GS Khan Pur Extension 26x1 26 - 124. 132kV GS Samma Satta Extension 26x1 26 - 125. 132kV GS Feroza Extension of 13x1 13 - TF bay 126. 132kV GS Rajan Pur Augmentation 26x1 13 127. 132kV GS Liaqat Pur Augmentation 26x2 26 - 128. 132kV GS Shujabad Augmentation 26x1 13 - 129. 132kV GS Bonga Hayat Augmentation 26x1 13 - 130. 132kV GS Shahdun Lund Conversions 26x2 26 - 131. 132kV GS Fazil Pur Conversions 26x2 26 - 132. 132kV TL F/F Lar Transmission - - 0.25 lines 133. 132kV TL F/F Fazil Pur Transmission - - 1.5 lines 134. 132kV TL F/F Shahdun Lund Transmission - - 4.68 lines F.2 Non-STG Projects from Savings 135. Material issued to ADB ELR works ELR - - - F.3 Non-STG Projects 136. 11kV 3x150kvar capacitors (sets) Capacitors - - - Subtotal (F) - 234 6.43

G. PESCO G.1 STG Projects 137. 132kV GS Hattar Extension 26x1 26 - 138. 132kV GS Rehman Baba Extension 26x1 26 - 139. 132kV GS Peshawar Cantt Extension 26x1 26 - 140. 132kV GS Dalazak Road Extension 26x1 26 - 141. 132kV GS Jalall Extension 26x1 26 - 142. 132kV GS Timergara Extension 26x1 26 - 143. 132kV GS Proca Extension 26x1 26 - 144. 132kV GS Jehangira Extension 26x1 26 - 145. 132kV GS DI Khan Augmentation 26x1 13 - 146. 132kV GS Shabqadar Extension 26x1 26 - 147. 132kV GS Battal Extension 26x1 26 - 148. 132kV GS Gadoon Amazai Extension 26x1 26 - 149. 132kV GS Mardan-II Augmentation 26x1 13 - 150. 132kV GS Khawaza Khela Augmentation 26x1 13 - 151. 132kV GS Chakdara Augmentation 26x1 13 - G.2 STG Projects from Savings 152. 26/26MVA transformers (4 Nos.) Rehabilitation - - - G.3 Non-STG Projects 153. 24mvar capacitors (4 Nos.) Capacitors - - -

50 Appendix 9

Addition in Addition in Project Scope of Capacity System System No. Project Description Work (MVA) (MVA) (km) 154. PC Poles, HT structures, ELR - - - accessories, conductors, 11/0.45kV, 25kV, 50kV, 100kV, 200kV distribution TFs 155. 132kV circuit breakers Rehabilitation - - - G.4 Non-STG Projects from Savings 156. 200kVA TFs (200 Nos.) ELR - - - 157. Construction equipment and meters System - - - modernization Subtotal (G) 338 -

H. QESCO H.1 STG Projects 158. 132kV GS Kalat Extension 26x1 26 - 159. 132kV GS Mastung Extension 26x1 26 - 160. 132kV GS Musafir Pur Extension 26x1 26 - 161. 132kV GS Nal Extension 26x1 26 - 162. 132kV GS Kharan Extension 26x1 26 - 163. 132kV GS Rakni Extension 26x1 26 - 164. 132kV GS Kalat Augmentation 26x1 13 - 165. 132kV GS Sariab Augmentation 26x1 13 - 166. 132kV GS Kanak Conversion 26x1 26 - 167. 132kV GS Alizai Conversion 26x1 26 - H.2 STG Projects from Savings 168. 132kV GS Loralai Augmentation 40x1 14 - 169. 132kV GS Gawal Hyderzai Augmentation 26x1 13 - 170. 132kV GS Khuzdar Augmentation 40x1 14 - 171. 132kV GS Pishin Augmentation 40x1 14 - 172. 132kV GS Kirdgap Augmentation 26x1 13 - 173. 132kV GS Marriabad Augmentation 26x1 13 - 174. 132kV GS Mangoocher Augmentation 40x1 14 - 175. 132kV GS Zhob Augmentation 26x1 13 - 176. 132kV GS Bhag Augmentation 26x1 13 - 177. 132kV GS Kharam Augmentation 26x1 13 - 178. ELR (16xHT works, 57xLT work), ELR - - - DOP (6xLT works) 179. Installation of static energy meters, System - - - construction equipment modernization 180. Panels, circuit breakers, isolators Rehabilitation - - - Subtotal (H) 342 - GRAND TOTAL (A+B+C+D+E+F+G+H) 2,588 24.33

Appendix 9 51

Table A9.3: Tranche 2 Subprojects

Installed Addition in Project Scope of Capacity System Commiss- No. Project Description Work (MVA) (km) ioning Date A. FESCO A.1 Subprojects 1. 132/11 kV G/S Factory Area Augmentation 40x2 0 22/02/2017 & Faisalabad 02/03/2017 2. 132/11 kV G/S Jhang City Augmentation 40x3 0 16/08/2016 3. 132/11 kV G/S Gojra Augmentation 40x2 0 18/03/2017 & 08/08/2017 4. 132/11 kV G/S Jaranwala Augmentation 40x3 0 03/07/2017 5. 132/11 kV G/S Jhang Road Augmentation 40x2 0 18/06/2015 6. 132/11 kV G/S Samundri Road Augmentation 40x2 0 26/06/2015, 30/07/2015 7. 132/11 kV G/S Daud Khel Extension 26x1 0 15/01/2018 8. 132/11 kV G/S Ludewala Extension 26x1 0 26/01/2018 9. 132/11 kV G/S Jauhrabad Extension 26x1 0 11/06/2012 10. 132/11 kV G/S Nishtabad New Extension 26x1 0 20/11/2012 11. 132/11 kV G/S Kamalia Extension 26x1 0 18/09/2018 12. 132/11 kV G/S Mianwali Extension 26x1 0 16/02/2018 13. Grid Station equipment & Materials Procurement 0 0 29/08/2014 of goods A.2 Subprojects from Savings 14. 132/11kV G/S Bhera Augmentation 26x1 0 19/02/2018 15. 132/11kV G/S Bhakar Augmentation 40x1 0 09/07/2017 Subtotal (A) 782 0 B. GEPCO B.1 Subprojects 16. 66/11 kV G/S Kolu Tarrar Conversions 26x2 0 19/05/2014 17. 66/11 kV G/S Jalal Pur Nau Conversions 26x2 0 19/05/2014 18. 132KV Hafizabad Road Gujranwala Augmentation 40x1 0 14/06/2013 19. 132/11 kV G/S Sialkot Cantt Augmentation 40x1 0 29/06/2013 20. 132KV Therisansi Gujranwala Augmentation 40x1 0 30/09/2013 21. 132/11 kV G/S Gujrat – 1 Augmentation 40x1 0 20/06/2013 132/11 kV G/S Gujranwala Cantt Augmentation 40x1 0 23/06/2013 22. 132/11 kV G/S Godh Pur New 40x2 0 07/10/2017 Substation 23. 132/11 kV G/S Daska – New New 40x1 0 28/11/2014 Substation &10/7/2017 24. 132/11 kV G/S Khiali Bypass New 40x2 0 19/05/2015 (Gujranwala) Substation 25. 132/11 kV G/S Sheranwala Gate New 40x2 0 19/05/2015 (Gujranwala) GIS Substation 26. 132 kV Nokhar GS to Hafizabad-II Transmission 0 28.4 20/09/2016 GS (Alternate Feed) Lines 27. 132kV In-Out Gujranwala-New GS – Transmission 0 15.4 28/08/2014 Their Sansi GS Lines 28. 132 kV In-Out Gakhar GS- Transmission 0 16.5 26/02/2014 Hafizabad GS (Main Feed) Lines 29. 132 kV Sahuwala GS to Pasrur GS Transmission 0 43.4 Not completed Lines at loan closure 30. 132 kV In-Out Naukhar GS to Transmission 0 23.3 30/07/2015 Hafizabad Rd. Sansi GS Lines 31. Grid Station equipment & Materials Procurement 0 0 10/01/2013 of goods

B.2 Subprojects from Savings

52 Appendix 9

Installed Addition in Project Scope of Capacity System Commiss- No. Project Description Work (MVA) (km) ioning Date 32. 11/0.4kV Pole mounted Distribution New 0.2x920 0 Transformers Subtotal (B) 624 127 C. HESCO C.1 Subprojects 33. 66/11 kV G/S Sukkur City Conversions 26x2 7 G/S 09/08/2014. T/L 26/06/2014. 34. 66/11 kV G/S Larkana Old Conversions 26x2 1.97 23/09/2014 35. 66/11 kV G/S Talhar Conversions 13x1 0.9 G/S 04/08/2014 T/L 24/06/2014. 36. 132/11 kV G/S Jacobaabad-II New 13x1 0.5 24/9/2014 Substation 37. 132 kV Dadu N – Mehar – Larkana Transmission 0 127.72 21/02/2019 Lines 38. 132 kV Shikarpur-N – Larkana Transmission 0 65.1 01/09/2015 Lines 39. 132 kV Mir Pur Khas – Kandiar – Transmission 0 64.38 01/06/2016 Sanghar Lines 40. Grid Station equipment & Materials Procurement 0 0 05/05/2016 of goods C.2 Subprojects from Savings 41. 132/11 kV Pano Akil Augmentation 40x1 0 29/08/2018 42. 132/11 kV Jacobad Augmentation 40x1 0 01/03/2017 43. 132/11 kV Sukkur City Augmentation 40x1 0 09/12/2016 44. 132/11 kV Rohri Augmentation 40x1 0 10/01/2017 45. 132/11 kV Ghotki Augmentation 40x1 0 06/01/2017 46. 132/11 kV Larkana-2 Augmentation 40x1 0 10/07/2017 47. 132/11 kV Khairpu Augmentation 40x1 0 29/12/2016 48. 132/11 kV Kandh Kot Augmentation 40x1 0 29/11/2018 49. 132/11 kV Moro Augmentation 40x1 0 10/07/2017 50. 66/11 kV Thul Conversions 26x1 0 31/03/2017 51. 66/11 kV Kamber Conversions 26x1 0 31/12/2017 52. 132/11 kV Kandiar Augmentation 40x1 0 10/02/2017 53. 66/11 kV Nara-1 Conversions 26x1 0 09/04/2018 54. 66/11 kV Warah Conversions 26x1 0 30/0/.2018 55. 66/11 kV Radhan Conversions 26x1 0 31.05.2018 56. 66/11 kV Bhirya Road New 26x1 0 04/04/2018 Substation 57. 132/11 kV Dadu Augmentation 40x1 0 03/12/2017 Subtotal (C) 752 267.57 D. IESCO D.1 Subprojects 58. 132/11 kV G/S H-11 Islamabad Augmentation 26x1 0 14/10/2013 59. 132/11 kV G/S Mangla Left Bank Augmentation 26x1 0 31/01/2011 (L.B. Mangla) 60. 132/11 kV G/S Satellite Town Extension 26x1 0 17/01/2011 61. 132/11 kV G/S E-8 Islamabad Extension 40x1 0 20/02/2014 62. 66/11 kV G/S Noor Pur Sethi Conversions 13x2 0 09/06/2014 63. 132kV Choa Saiden Shah - Noorpur Transmission 0 45.13 09/06/2014 Sehti Lines 64. 132kV Hattain – Bagh Transmission 0 26.72 07/04/2016 Lines 65. 132kV Mangla – LB Mangla – Rajar Transmission 0 47.5 03/04/2017 Lines

Appendix 9 53

Installed Addition in Project Scope of Capacity System Commiss- No. Project Description Work (MVA) (km) ioning Date 66. Capacitor banks installation on 11kV Capacitors (78 0 0 30/05/2012 Busbars in 9 Grid Stations x 150kVar) 67. Capacitor banks installation on 11kV Capacitors (60 0 0 30/05/2012 Busbars in 9 Grid Stations x 200kVar) 68. Grid Station equipment & Materials Procurement 0 0 08/04/2016 of goods Subtotal (D) 144 119.35 E. LESCO E.1 Subprojects 69. 132/11 kV G/S Allama Iqbal Town T- Augmentation 40x1 0 11/12/2015 3 70. 132/11 kV G/S Said Pur T-3 Augmentation 40x1 0 29/02/2016 71 132/11 kV G/S Garden Town T-3 Augmentation 40x1 0 22/05/2015 72. 132/11 kV G/S Fateh Garh T-3 Augmentation 40x1 0 13/10/2015 73. 132/11 kV G/S Old Kot Lakhpat T-3 Augmentation 40x1 0 25/11/2015 74. 132/11 kV G/S Rehman Park T-3 Augmentation 40x1 0 11/08/2015 75. 132/11 kV G/S Shadman T-2 Augmentation 40x1 0 05/11/2010 76. 132/11 kV G/S Wapda Town T-1 Augmentation 40x1 0 11/11/2015 77. 132/11 kV G/S Badami Bagh T-2 Augmentation 40x1 0 31/01/2018 78. 132/11 kV G/S Bhatti Gate T-2 Augmentation 40x1 0 29/04/2009 79. 132/11 kV G/S Qartaba T-2 Augmentation 40x1 0 02/08/2011 80. 132/11 kV G/S Manga Mandi Augmentation 40x1 0 26/11/2015 81. 132/11 kV G/S DHA Rahber (Audit New 26x2 0.8 14/08/2017 and Acct. Housing Scheme) Substation 82. 132/11 kV G/S Jubliee Town New 26x2 1.7 01/01/2016 Housing Scheme Substation 83. 132/11 kV G/S Central Park New 26x2 13.5 07/03/2019 Housing Scheme Substation 84. 132/11 kV G/S Press Club Housing New 26x2 0.15 26/05/2017 Scheme Harbanspura (Shaffi Substation Colony) 85. 132/11 kV G/S Doula Chuchak New 0 20.26 19/04/2016 Substation 86. Capacitor banks installation on 11kV Capacitors 0 0 22/02/2013 Busbars in 37 Grid Stations (475 x 200kVar) 87. Capacitor banks installation on 11kV Capacitors 0 0 22/02/2013 Busbars in 37 Grid Stations (211 x 450kVar) 88. Grid Station equipment & Materials Procurement 0 0 22/01/2013 of goods E.2 Subprojects from Savings 89. 11/0.4kV Pole mounted Distribution New 0.2x1000 0 Transformers 90. 100 kVA, 11/0.4kV Distribution New 0.1x200 0 Transformers (200 nos.) 91. 132/11 kV G/S Bhai Pheru Augmentation 40x1 0 26/10/2017 92. 132/11 kV G/S Boghiwal Augmentation 40x1 0 18/11/2017 Subtotal (E) 820 36.41 F. MEPCO F.1 Subprojects 93. 132/11 kV G/S Dunya pur Augmentation 26x1 0 06/09/2012 94. 132/11 kV G/S Baghdad-ul-Jadid Augmentation 26x1 0 24/01/2013 95. 132/11 kV G/S Chak No. 211/W. B Augmentation 26x1 0 07/01/2013 96. 132/11 kV G/S Kot Adu Augmentation 26x1 0 06/12/2012 97. 132/11 kV G/S Layyah Augmentation 26x1 0 20/12/2012 98. 132/11 kV G/S Noor Pur Augmentation 26x1 0 11/12/2012 99. 132/11 kV G/S Sheikh Fazal Augmentation 26x1 0 05/11/2012 100. 132/11 kV G/S Basti Muluk Augmentation 40x1 0 27/11/2012

54 Appendix 9

Installed Addition in Project Scope of Capacity System Commiss- No. Project Description Work (MVA) (km) ioning Date 101. 132/11 kV G/S Bahawalnagar Augmentation 40x1 0 22/01/2013 102. 132/11 kV G/S Multan Ind. Estate Augmentation 40x1 0 04/12/2012

103. 132/11 kV G/S Multan Qasimpur Augmentation 40x1 0 31/01/2013 104. 132/11 kV G/S Sadiqabad Augmentation 40x1 0 04/02/2013 105. 132/11 kV G/S Vehari Road Augmentation 40x1 0 07/02/2013 106. 132/11 kV G/S D.G. Khan Augmentation 40x1 0 07/10/2012 107. 66/11 kV G/S Ali Pur Conversions 13x2 11.4 24/11/2016 108. 66/11 kV G/S Fatehpur Conversions 13x2 2.7 13/04/2015 109. 66/11 kV G/S Noor Sar Conversions 13x2 0.5 19/10/2014 110. 132/11 kV G/S Miran Pur (Galaywal) New 26x2 11.5 09/07/2015 Substation 111. 132/11 kV G/S Kamir New 26x2 0.5 29/09/2015 Substation 112. Capacitor banks installation on 11kV Capacitors 0 0 27/07/2012 Busbars in 33 Grid Stations (255 x 200kVar) 113. Capacitor banks installation on 11kV Capacitors 0 0 27/07/2012 Busbars in 33 Grid Stations (115 x 450kVar) 114. Grid Station equipment & Materials Procurement 0 0 06/01/2014 of goods 115. F.2 Subprojects from Savings 116. 132/11 kV Khanewal Rd Multan Augmentation 40x1 0 28/03/2015 117. 132/11 kV R.Y khan Augmentation 40x1 0 20/03/2013 118. 132/11 kV Jalal Pur Pirwala Augmentation 26x1 0 28/02/2013 119. 132/11 kV Makhdum Rashid Augmentation 26x1 0 17/02/2015 120 132/11 kV Burewala Extension 26x1 0 05/11/2012 121. 132/11 kV Qadir Abad Augmentation 26x1 0 02/11/2012 122. 132/11 kV R.Y Khan Augmentation 40x1 0 02/11/2015 123. 132/11 kV Sadiqabad Augmentation 40x1 0 30/03/2015 124. 132/11 kV M/Garh Augmentation 40x1 0 26/12/2012 Subtotal (F) 948 26.6 G. PESCO G.1 Subprojects 125. 132/11 kV G/S Kohat Augmentation 40x1 0 23/05/2013 126. 132/11 kV G/S Peshawar Industrial Augmentation 40x1 0 05/07/2013 127. 132/11 kV G/S Peshawar City Augmentation 40x1 0 05/07/2013 128. 132/11 kV G/S Peshawar Fort Augmentation 40x1 0 30/10/2013 129. 132/11 kV G/S Peshawar University Augmentation 40x1 0 21/02/2013 130. 132/11 kV G/S Sakhi Chashma Augmentation 26x1 0 19/02/2013 131. 132/11 kV G/S Warsak Augmentation 26x1 0 29/03/2015 132. 132/11 kV G/S Hussai Augmentation 26x1 0 13/07/2013 133. 132/11 kV G/S Swabi Augmentation 26x1 0 31/08/2015 134. 132/11 kV G/S Bannu Augmentation 40x1 0 17/02/2013 135. 132/11 kV G/S Muzaffarabad Augmentation 26x1 0 12/06/2014 136. 132/11 kV G/S Charsadda Extension 26x1 0 02/28/2014 137. 132/11 kV G/S Hayatabad Extension 40x1 0 07/06/2013 138. 132/11 kV G/S Pabbi Extension 26x1 0 07/01/2014 139. 132/11 kV G/S Nowshera City Extension 26x1 0 02/25/2013 140. 132/11 kV G/S Swat Extension 26x1 0 28/08/2013 141. 132/11 kV G/S Abbotabad Extension 26x1 0 03/06/2014 142. 132/11 kV G/S Mansehra Extension 26x1 0 29/08/2014 143. 132/11 kV G/S Haripur Extension 26x1 0 27/05/2014 144. 132/11 kV G/S D.I. Khan Industrial New 26x2 2.5 22/05/2014 (Gomal Unversity) with T/L Substation 145. Grid Station equipment & Materials Procurement 0 21/03/2016 of goods 146. G.2 Subprojects from Savings

Appendix 9 55

Installed Addition in Project Scope of Capacity System Commiss- No. Project Description Work (MVA) (km) ioning Date 132/11 kV Hattar-I Augmentation 40x1 0 12/12/2017 147. 132/11 kV Mardan-II Augmentation 40x1 0 08/10/2017 148. 132/11 kV Mardan-III Augmentation 40x1 0 10/10/2017 Subtotal (G) 764 2.5 H. QESCO H.1 STG Projects 149. 132/11 kV G/S Yaru Augmentation 26x1 0 03/26/2012 150. 132/11 kV G/S Khanozai Augmentation 26x1 0 04/13/2012 151. 132/11 kV G/S Khudkucha Augmentation 26x1 0 05/04/2012 152. 132/11 kV G/S Sibbi Augmentation 26x1 0 24/01/2012 & 01/10/2012 153. 132/11 kV G/S Kharan Augmentation 26x1 0 28/04/2014 154. 132/11 kV G/S Turbat Augmentation 26x1 0 01/10/2012 155. 132/11 kV G/S Surab Augmentation 26x1 0 31/08/2013 156. 132/11 kV G/S Subhatpur Augmentation 26x1 0 03/02/2013 157. 132/11 kV G/S Duki Augmentation 26x1 0 10/04/2013 158. 132/11 kV G/S Gawadar Augmentation 26x1 0 05/12/2013 159. 132/11 kV G/S Muslim Bagh Extension 26x1 0 29/07/2013 160. 132/11 kV G/S Killa Saifullah Augmentation 26x2 & 0 08/03/2015 & Extension 40x2 161. 132/11 kV G/S Wadh Extension 26x1 0 07/11/2012 162. 132/11 kV G/S Quetta Industrial Augmentation 26x2 & 0 05/03/2015 & Extension 40x2 163. 132/11 kV G/S Zohri Extension 26x1 0 23/06/2012 164. Capacitor Banks Installation at 24 MVAR 0 0 24/03/2015 132/11 kV G/S Hurramzai Capacitors 165. 3.6 MVAR Capacitor Banks installed Capacitors 0 0 11/7/2013 to at 32 Grid Stations 6/2/2015 166. Purchase of Vehicles 0 0 14/07/2017 167. Grid Station equipment & Materials Procurement 0 0 18/12/2013 of goods Subtotal (H) 470 0 GRAND TOTAL (A+B+C+D+E+F+G+H) 5,304 579.43

56 Appendix 9

Table A9.4: Tranche 3 Subprojects

Installed Addition in Project Scope of Capacity System Commiss- No. Project Description Work (MVA) (km) ioning Date A. FESCO A.1 Subprojects 1. 132/11 kV G/S Faisalabad New 40x2 0 26/10/2018 substation 2. 132/11 kV G/S Shahbaz Khel New 13x2 0 24/12/2017 Mianwali substation 3. 66/11 kV G/S 18 Hazari Conversion 26x2 0 15/06/2017 4. 66/11 kV G/S GM Raja Conversion 39x1 0 10/10/2017 5. 66/11 kV G/S Rakh Dagran Conversion 39x1 0 08/04/2016 6. 66/11 kV G/S Kala Bagh Conversion 13x2 0 19/09/2017 7. 132 kV Grid TT Singh to HB Shah Double circuit 0 60 transmission 14/06/2017 line 8. 132 kV Piplan Bhakkar in and out Double circuit 0 3 (F/F Rakh Dagran) transmission 08/04/2016 line 9. 132 kV HB Shah - 18 Hazari (F/F 18 Double circuit 0 30 Hazari) transmission 14/06/2017 line 10. 132 kV Hydropower - 220 kV Kala Double circuit 0 5 Bagh transmission 10/07/2016 line 11. 132 kV D/C 18 Hazari- GM Raja Single and 0 45 double circuit 10/03/2017 (towers) Subtotal (A) 262 143

B. GEPCO B.1 Subprojects 12. 66/11 kV G/S Malikwal Conversions 26x2 0 02/09/2018 13. 66/11 kV G/S Head Marala Conversions 26x2 0 21/07/2017 14. 66/11 kV G/S Siranwali Conversions 26x2 0 19/08/2017 15. 66/11 kV G/S Daska Conversions 26x3 0 11/03/2017 Subtotal (B) 234 0

C. HESCO C.1 Subprojects 16. New Matli New 26x1 0 06/09/2017 substation 17. 66/11 kV G/S TG Ali Conversion 26x1 0 06/10/2017 18. 66/11 kV G/S Digri Conversion 26x1 0 06/10/2017 19. 66/11 kV G/S T. Jan Muhammad Conversion 26x1 0 06/10/2017 20. TM Khan 132 kV new Matli (Feed Double circuit 0 2 06/10/2017 for New Matli) transmission line 21. 132 kV new TG Ali-New Matli (Feed Single and 0 30 06/10/2017 for New Matli) double circuit (towers) 22. TG Ali 132 kV Digri (Feed for TJM) Single and 0 31 06/10/2017 double circuit (towers) 23. 132 kV Digri 132kV T Jan Single and 0 20 06/10/2017 Muhammad (Feed for TJM) double circuit (towers) 24. 132 kV TJM - 132 kV Noukot Single and 30 19/11/2018 double circuit (towers)

Appendix 9 57

Installed Addition in Project Scope of Capacity System Commiss- No. Project Description Work (MVA) (km) ioning Date 25. 220/132 kV Hala Road - Hala - Single and 0 65 97% work Sakrand double circuit completed. (towers) Completion by August 2019. 26. 220/132 kV Hala Road Extension bay 0 0 95% work completed. Completion by August 2019. 27. 132 kV G/S Hala Extension bay 0 0 12/04/2019 28. 132kV G/S Noukot Extension bay 0 0 19/11/2018 C.2 Subprojects from Savings 29. Procurement Of 132 kV Grid Station Goods 0 0 18/09/2018 Equipment 30. 132 kV G/S Thatta Augmentation 26x1 0 23/01/2019 31. 132 kV G/S Sehwan Augmentation 26x1 0 28/02/2019 32. 132 kV G/S Gulshan-e-Shebaz Augmentation 26x1 0 15/10/2018 33. 132 kV G/S Matiari Augmentation 26x1 0 16/05/2018 34. 132 kV G/S Daur Augmentation 26x1 0 24/12/2018 35. 132 kV G/S Umerkot Augmentation 26x1 0 28/02/2019 36. 132 kV G/S Saeedabad Augmentation 26x1 0 02/01/2019 37. 132 kV G/S Badin Extension 26x1 0 15/02/2018 Subtotal (C) 312 178

D. IESCO D.1 Subprojects 38. 132/11 kV G/S Chakri Road New 26x2 0 Expected substation completion by 30/09/2019. 39. 132/11 kV G/S Bhara Kahu New 26x2 0 Expected substation completion by 30/09/2019. 40. 132/11 kV G/S Sangjani New 26x2 0 Expected substation completion by 30/09/2019. 41. Replacement of Sangjani Zero-point Double circuit 0 28 27/03/2017 Line with new Double Circuit transmission line 42. Feed for Bara Kahu GS Double circuit 0 0.5 Expected transmission completion by line 30/09/2019. 43. Feed from chakri Road GS for Double circuit 0 10 Expected Adyala transmission completion by line 30/09/2019. 44. Feed for 132 kV Sangjani-2 GS Double circuit 0 2 29/01/2019 transmission line 45. KTM- Chakri Road T/Line (old) Double circuit 0 10 Expected I-16-Chakri Road T/Line (New) transmission completion by line 30/09/2019. 46. Replacement of Burhan N/Wah Cct1 Double circuit 0 13 20/02/2017 & 2 transmission line – (goods) 47. Replacement of existing New Rewat Double circuit 0 12 25/05/2016 - Sowan transmission line – (goods) 48. In and Out Construction at Chakri Double circuit 0 22 28/11/2015 132 kV substation transmission line – (goods) 49. 132/11 kV G/S Rajjar Extension bay 26x1 0 16/11/2016

58 Appendix 9

Installed Addition in Project Scope of Capacity System Commiss- No. Project Description Work (MVA) (km) ioning Date 50. 132/11 kV G/S Fateh Jang Extension bay 26x1 0 04/12/2016 51. 132/11 kV G/S F-11 Extension bay 26x1 0 29/09/2016 52. 132/11 kV G/S Sowan Extension bay 26x1 0 24/09/2016 53. 132/11 kV G/S Kamalabad (T2 and Augmentation 40x2 0 21/08/2016 & T3) 16/12/2016 54. 132/11 kV G/S KTM (T3) Augmentation 40x1 0 03/09/2016 55. 132/11 kV G/S New Wah (T2) Augmentation 40x1 0 26/12/2016 56. 132/11 kV G/S Jehlum (T1) Augmentation 40x1 0 26/11/2016 57. 132/11 kV G/S Cantt Repco (T1) Augmentation 40x1 0 24/11/2016 58. 132/11 kV G/S Zero point (T2) Augmentation 40x1 0 31/12/2016 59. 132/11 kV G/S I-10 (T2) Augmentation 40x1 0 01/12/2016 60. 132/11 kV G/S I-8 (T2) Augmentation 40x1 0 11/12/2016 61. 132/11 kV G/S Chaklala Augmentation 40x1 0 25/08/2016 Subtotal (D) 660 97.5

E. LESCO E.1 Subprojects 62. 132/11 kV G/S Fruit Market New 40x2 0 10/09/2018 substation 63. 132/11 kV G/S DHA Phase 8, New 26x2 0 Expected Sector-T (New name) Barki-DHA substation commissioning Phase 6 (Old name) by June 2019. 64. 132/11 kV G/S Sadhoki (Audit and New 26x2 0 Grid station Accounts Society) substation work is completed on 29/01/2018, necessary tests carried out, but final commissioning is pending due to ROW issues with line. 65. 132/11 kV G/S DHA 7 (Dera New 26x2 0 10/11/2018 Chahel) substation 66. 132/11 kV G/S DHA Phase 8, Double circuit 0 0.2 Expected Sector-T (New name) Barki-DHA transmission commissioning Phase 6 (Old name) line by June 2019 67. 132 kV Barki DHA Phase 7 (Number Double circuit 0 5 10/11/2018 2) transmission line 68. 132 kV Fruit Market to Kahna Double circuit 0 0.1 10/09/2018 WAPDA town transmission line 69. 132 kV Sadhoki - Kahna Double circuit 0 5 Transmission transmission Line pending line due to ROW issue. 70. 132/11 kV G/S Sharaqpur Road Extension bay 26x1 0 22/04/2016 SKP (T2) 71. 132/11 kV G/S Kasur New (T-3) Extension bay 26x1 0 25/04/2016 72. 132/11 kV G/S Depalpur (T-4) Extension bay 26x1 0 05/05/2016 73. 132/11 kV G/S Warburton (T-3) Extension bay 26x1 0 05/12/2016 74. 132/11 kV G/S Fort (T1 and T2) Augmentation 40x2 0 19/04/2016 75. 132/11 kV G/S Khuddian (T1,2 and Augmentation 40x3 0 27/03/2016, 3) 13/07/2017, 21/08/2017 76. 132/11 kV G/S Shahdara New (T2 Augmentation 40x2 0 17/03/15 & and T3) 12/4/16

Appendix 9 59

Installed Addition in Project Scope of Capacity System Commiss- No. Project Description Work (MVA) (km) ioning Date 77. 132/11 kV G/S SKP (T1, 2 and 3) Augmentation 40x3 0 23/3/16, 03/11/15, 21/03/2017 78. 132/11 kV G/S Farooqabad (T1, 2 Augmentation 40x3 0 28/10/2015, and 3) 19/07/2017, 01/04/2018 E.2 Subprojects from Savings 79. Construction of New 132 kV Double Transmission 0 0.5 Completion Circuit Underground Cable (220 kV lines expected by Shalamar GIS – 132 kV Shalamar – Jul 2019 II Grid Station) 80. Procurement of maintenance bucket Goods 0 0 Tender mounted cranes and cranes with scrapped. winch machines Rebidding was conducted and evaluation was delayed due to which subproject was cancelled Subtotal (E) 860 10.8

F. MEPCO F.1 Subprojects 81. 132/11 kV G/S Mubarakpur New 13x2 0 13/01/2017 substation 82. 132/11 kV G/S Chuna Wala New 13x1 0 14/07/2017 substation 83. 66/11 kV Chak 83/12 -L Conversion 26x2 0 30/06/2016 84. 66/11 kV Dharan Wala Conversion 13x2 0 11/11/2016 85. 66/11 kV Faqir Wali Conversion 39x1 0 23/01/2017 86. 66/11 kV Fort Abbas Conversion 39x1 0 28/02/2017 87. 66/11 kV Shah Sadar Conversion 39x1 0 28/07/2017 88. 220kV B/pur-Ahmadpur East, Feed Double circuit 0 2 06/01/2016 to Mubarikpur transmission line 89. In/out from 132 kV Khanewal - Single and 0 23 30/06/2016 Kassowal Line double circuit (towers) 90. 132 kV Chishtian - Dharanwala Single and 0 30 10/09/2016 double circuit (towers) 91. 132 kV Haroonabad - Faqirwali Single and 0 25 16/01/2017 double circuit (towers) 92. 132 kV Faqir Wali - Fort Abbas Single and 0 32 xxx double circuit (towers) 93. 132 kV D.G Khan-II - Shah Sadar Single and 0 33.2 30/06/2017 din double circuit (towers) 94. 132 kV Hasilpur - Chunnawala Single circuit 0 26 09/10/2017 transmission line 95. 132/11 kV Lodhran Augmentation 40x1 0 30/08/2016 96. 132/11 kV Bahawalpur Augmentation 40x1 0 03/04/2017 97. 132/11 kV Burewala Old Augmentation 26x1 0 19/10/2016 F.2 Subprojects from Savings 98. 66/11 kV Yazman grid station Conversion 26x1 0 11/05/2018

60 Appendix 9

Installed Addition in Project Scope of Capacity System Commiss- No. Project Description Work (MVA) (km) ioning Date 99. 132kV Yazman grid station Single circuit 0 16 31/01/2018 transmission line Subtotal (F) 340 187.2

G. PESCO G.1 Subprojects 100. 132 kV Taru Jaba New 26x2 0 25/01/2016 substation 101. 132 kV PESCO Colony Sakhi New 26x2 0 23/10/2018 Chashma (AIS) substation 102. 66/11 kV Kulachi Conversion 26x1 0 02/07/2018 103. 66/11 kV Daraban Conversion 26x1 0 13/12/2018 104. 132/11 kV G/S Feed for Kulachi Double circuit 0 15 02/07/2018 transmission line 105. 132/11 kV G/S Feed for Daraban Single and 0 25 13/12/2018 double circuit (towers) 106. 132/11 kV G/S Dalazak Extension bay 26x1 0 21/01/2016 107. 132/11 kV G/S Karak Extension bay 26x1 0 06/03/2016 108. 132/11 kV G/S Tank Extension bay 26x1 0 24/09/2016 109. 132/11 kV G/S Hussai Extension bay 26x1 0 05/06/2016 110. 132/11 kV G/S Timergara Extension bay 26x1 0 08/11/2016 111. 132/11 kV G/S Rehman Baba Augmentation 40x1 0 03/05/2016 112. 132/11 kV G/S Swabi Augmentation 40x1 0 30/03/2016 113. 132/11 kV G/S Bannu Augmentation 40x1 0 16/09/2015 114. 132/11 kV G/S D.I. Khan Augmentation 40x1 0 28/08/2015 115. 132/11 kV G/S Kotla Town Kohat Augmentation 40x1 0 11/06/2015 116. 132/11 kV G/S Jalala Augmentation 40x1 0 12/11/2015 117. 132/11 kV G/S Jehangira Augmentation 26x1 0 24/04/2015 132/11 kV G/S Batal Augmentation 26x1 0 05/05/2015 118. G.2 Subprojects from Savings 119. 132/11kV Daggar Augmentation 40x1 0 02/05/2017 120. 132/11kV Mardan-II Augmentation 40x1 0 121. 132/11kV Ddargai Augmentation 40x1 0 28/04/2017 122. Procurement Of 132 kV Grid Station Goods 0 0 29/06/2018 Equipment Subtotal (G) 658 40

H. QESCO H.1 STG Projects 123. Khuzdar - Quetta Industrial Double circuit 0 209 28/06/2017 transmission line 124. Loralai - Quetta Double circuit 0 267 10/06/2018 transmission line H.2 Subprojects from Savings 125. Dera Murad Jamali Conversion 26x2 17 30/05/2018 along with T/L 126. 66/11 kV G/S Usta Muhammad Conversion 39x1 31 03/08/2018 along with T/L 127. 66/11 kV G/S Jhal Magsi Conversion 39x1 90 19/09/2018 along with T/L 128. 66/11 kV G/S Rojhan Jamali Conversion 39x1 32 6/06/2018 along with T/L Subtotal (H) 169 556 GRAND TOTAL (A+B+C+D+E+F+G+H) 3495 1213

Appendix 9 61

Table A9.5: Tranche 4 Subprojects

Installed Addition Project Capacity in System Commiss- No. Project Description Scope of Work (MVA) (km) ioning Date A. FESCO A.1 Subprojects 1. 132/11 kV G/S Agricultural Augmentation 14 24/06/2015 University 2. 132/11 kV G/S Agricultural Augmentation 14 03/03/2016 University 3. 132/11 kV G/S Chiniot indst Augmentation 14 13/04/2017 4. 132/11 kV G/S Chiniot indst Augmentation 14 5. 132/11 kV G/S Samundri Augmentation 14 04/09/2016 Road 6. 132/11 kV G/S Jhang Road Augmentation 14 24/03/2016 7. 132/11 kV G/S Nishat Abad Augmentation 14 25/02/2016 New 8. 132/11 kV G/S Factory Area Augmentation 14 31/03/2016 9. 132/11 kV G/S Jauhar Abad Augmentation 14 27/08/2016 10. 132/11 kV G/S Tandlian Extension 26 21/12/2017 wala 11. 132/11 kV G/S Thikri wala Extension 26 18/01/2018 12. 132/11 kV G/S Kamalia Augmentation 14 31/05/2016 13. 132/11 kV G/S T.T Singh Extension 26 03/02/2018 14. 132/11 kV G/S T.T Singh Augmentation 14 05/04/2016 15. 132/11 kV G/S Chak Jhumra Extension 26 16. 132/11 kV G/SPir Mahal Extension 26 17. 132/11 kV G/S Bhalwal Extension 26 18. 132/11 kV G/S Bhakkar Extension 26 09/07/2017 19. 132/11 kV G/S Bhamb Extension 26 20. 132/11 kV G/S Sammundri Extension 26 20/02/2018 21. 132/11 kV G/S Barana Augmentation 13 14/10/2016 22. 132/11 kV G/S Kamal Pur Augmentation 13 15/03/2018 23. 132/11 kV G/S Khewa Extension 13 16/03/2018 24. 132/11 kV G/S Bhowana Extension 13 17/03/2018 25. 132/11 kV G/S Kirana Extension 26 16/01/2018 26. 132/11 kV G/S Manjhla Extension 13 20/2/2018 Bagh 27. 132/11 kV G/S Lalian Extension 13 28. 132/11 kV G/SKhurrian wala Augmentation 14 17/03/2016 29. 132/11 kV G/S Samundri Extension 13 27/03/2016 Road 30. 132/11 kV G/S Jhang Road Extension 13 31. 132/11 kV G/S Khurrianwala Augmentation 14 03/10/2016 32. Strategic Spares Spare 80 24/06/2015 A.2 Subprojects from

Savings 33. 132/11 kV G/SAhmad Pur Conversion 0 30 23/11/2017 Sial Subtotal (A) 626 30

B. GEPCO B.1 Subprojects 34. 132/11 kV G/SDinga Extension 26 08/01/2016 35. 132/11 kV G/S Fateh Pur Extension 26 11/07/2016 36. 132/11 kV G/S Gujrat-2 Augmentation 14 19/08/2015 37. 132/11 kV G/SHellan Extension 26 28/11/2016 38. 132/11 kV G/SJ. P Jattan Augmentation 14 19/12/2015 39. 132/11 kV G/S Kuthiala Augmentation 14 09/11/2015 Sheikhan 40. 132/11 kV G/S Lala Musa Augmentation 14 19/09/2015

62 Appendix 9

Installed Addition Project Capacity in System Commiss- No. Project Description Scope of Work (MVA) (km) ioning Date 41. 132/11 kV G/S Mangowal Extension 26 31/08/2016 42. 132/11 kV G/S M.B Din Augmentation 14 20/10/2015 43. 132/11 kV G/S Narowal Augmentation 14 28/08/2015 44. 132/11 kV G/S Pasrur Extension 26 09/08/2017 45. 132/11 kV G/SQila Dedar Extension 26 04/06/2017 Singh 46. 132/11 kV G/S Shakar Garh Extension 13 22/04/2016 47. 132/11 kV G/SWazir Abad Augmentation 14 27/11/2015 Strategic Spares Spare 80 31/12/2015 48. B.2 Subprojects from Savings 49. 132/11 kV G/S Kamoki Augmentation 14 01/05/2017 50. 132/11 kV G/S Shaeenabad Augmentation 14 12/04/2015 51. 132/11 kV G/S Sialkot Cantt Augmentation 14 13/03/2017 52. 132/11 kV G/S Zafarwal Augmentation 14 02/10/2017 53. 132/11 kV G/S Bhimber Augmentation 14 18/01/2017 54. 132/11 kV G/S Kharian Augmentation 14 23/02/2017 55. 132/11 kV G/S Pasrur road Extension 40 20/5/2016 Subtotal (B) 471 0

C. HESCO C.1 Subprojects 56. 132/11 kV G/S Ghangramori Extension 40 0 22/11/2017 57. 132/11 kV G/S Gulshan Extension 13 0 24/02/2015 Shahbaz 58. 132/11 kV G/SJamshoro Augmentation 13 0 59. 132/11 kV G/S Jamshoro Augmentation 13 0 31/05/2016 60. 132/11 kV G/S Kohsar Augmentation 14 26/05/2017 61. 132/11 kV G/S Kohsar Augmentation 14 09/12/2017 62. 132/11 kV G/S Mirpur Khas Augmentation 14 23/07/2016 63. 132/11 kV G/S N-Shah2 Augmentation 13 04/12/2017 64. 132/11 kV G/S NTPS Augmentation 14 13/05/2017 65. 132/11 kV G/S Qasim Extension 40 15/09/2017 Abad2 66. 132/11 kV G/SShahdad pur Augmentation 14 21/04/2016 67. 132/11 kV G/SSanghar Augmentation 14 23/12/2017 68. 132/11 kV G/S Shalmani Extension 13 69. 132/11 kV G/S SP Chakar Extension 13 03/04/2017 70. 132/11 kV G/S Tando A. Yar Augmentation 14 10/06/2017 71. 132/11 kV G/S Tando Jam Augmentation 13 11/07/2017 72. 132/11 kV G/S Tando Adam Augmentation 14 15/03/2018 73. 132/11 kV G/S Tando Augmentation 13 0 08/01/2017 Muhammad Khan 74. 132/11 kV G/SUmar Kot Extension 13 0 19/01/2016 75. Strategic Spares Spare 40 0 22/11/2017 Subtotal (C) 349 0

D. IESCO D.1 Subprojects 76. 132/11 kV G/S F- 11 Augmentation 14 0 Expected completion by 30/09/2019. 77. 132/11 kV G/S Faqirabad Augmentation 14 0 Expected completion by 30/09/2019. 78. 132/11 kV G/SNew Wah Augmentation 14 0 Expected completion by 30/09/2019.

Appendix 9 63

Installed Addition Project Capacity in System Commiss- No. Project Description Scope of Work (MVA) (km) ioning Date 79. 132/11 kV G/SPir wadhai Augmentation 14 0 Expected completion by 30/09/2019. 80. 132/11 kV G/S H- 11 Augmentation 14 0 Expected completion by 30/09/2019. 81. 132/11 kV G/S KTM Augmentation 14 0 Expected completion by 30/09/2019. 82. 132/11 kV G/S Sowan Augmentation 14 0 Expected completion by 30/09/2019. 83. 132/11 kV G/S Satellite Augmentation 14 0 Expected Town completion by 30/09/2019. 84. 132/11 kV G/S Rawal Augmentation 14 0 Expected completion by 30/09/2019. 85. 132/11 kV G/S Jhelum Augmentation 14 0 Expected completion by 30/09/2019. 86. 132/11 kV G/S Chakwal Augmentation 14 0 Expected completion by 30/09/2019. 87. 132/11 kV G/S Kallar Sydan Augmentation 13 0 Expected completion by 30/09/2019. 88. 132/11 kV G/S Padshahan Augmentation 13 0 Expected completion by 30/09/2019. 89. 132/11 kV G/S N. P Augmentation 13 0 Expected Foundation completion by 30/09/2019. 90. 132/11 kV G/SN. P Augmentation 13 0 Expected Foundation completion by 30/09/2019. 91. 132/11 kV G/S Talagang Augmentation 13 0 Expected completion by 30/09/2019. 92. 132/11 kV G/S Kahuta City Augmentation 13 0 Expected completion by 30/09/2019. 93. 132/11 kV G/S Nilore Augmentation 13 0 Expected completion by 30/09/2019. 94. 132/11 kV G/S Attock New Augmentation 13 0 Expected completion by 30/09/2019. 95. 132/11 kV G/S Neela Extension 13 0 Expected Bogowal completion by 30/09/2019. 96. 132/11 kV G/S Bara Gowa Extension 13 0 Expected completion by 30/09/2019. 97. 132/11 kV G/S C. S Shah Extension 13 0 Expected completion by 30/09/2019.

64 Appendix 9

Installed Addition Project Capacity in System Commiss- No. Project Description Scope of Work (MVA) (km) ioning Date 98. 132/11 kV G/S Cheint Extension 13 0 Expected completion by 30/09/2019. 99. 132/11 kV G/S Chakri Extension 13 0 Expected completion by 30/09/2019. 100. 132/11 kV G/S Basal Extension 13 0 Expected completion by 30/09/2019. 101. 132/11 kV G/S Chatar Pari Extension 13 0 Expected completion by 30/09/2019. 102. 132/11 kV G/S Palendari Extension 13 0 Expected completion by 30/09/2019. 103. 132/11 kV G/S Hajeera Extension 13 0 Expected completion by 30/09/2019. 104. 132/11 kV G/S Ahmadal Extension 13 0 Expected completion by 30/09/2019. 105. 132/11 kV G/S Pindi Gheb Extension 13 0 Expected completion by 30/09/2019. 106. 132/11 kV G/S New Wah Augmentation 14 0 Expected completion by 30/09/2019. 107. 132/11 kV G/S Chakwal Augmentation 14 0 Expected completion by 30/09/2019. 108. 132/11 kV G/S Talagang Extension 26 0 Expected completion by 30/09/2019. 109. 132/11 kV G/S Minhasa Extension 13 0 Expected completion by 30/09/2019. 110. Strategic Spares Spare 80 0 Expected completion by 30/09/2019. D.2 Subprojects from Savings 111. 66/132 kV Danda Shah Conversion 48 Work order Bilawal issued and civil work started at site 112. 66/132 kV Tamman Conversion 20 Tender for civil work has been opened and is under evaluation 113. 66/132 kV Jand Grid Conversion 23 Tender for civil work has been opened and is under evaluation 114. 66/132 kV Lakarmar Conversion 37 Work order issued and civil work started at site Subtotal (D) 655 128

Appendix 9 65

Installed Addition Project Capacity in System Commiss- No. Project Description Scope of Work (MVA) (km) ioning Date E. LESCO E.1 Subprojects 115. 132/11 kV G/S Allama Iqbal Extension 40 0 Town 116. 132/11 kV G/S Aysha Extension 26 0 06/06/2017 117. 132/11 kV G/S Bhai Pheru Augmentation 14 0 05/12/2017 118. 132/11 kV G/S Bhai Pheru Augmentation 14 0 11/05/2015 119. 132/11 kV G/S Bata Pur Extension 26 0 120. 132/11 kV G/S Boghiwal Augmentation 14 0 16/03/2016 121. 132/11 kV G/S Bhikki Extension 26 0 04/09/2016 122. 132/11 kV G/S Chung Augmentation 14 0 26/05/2016 123. 132/11 kV G/S Defence Extension 40 0 21/09/2017 124. 132/11 kV G/S DHA (Phase Extension 26 0 27/05/2017 V) 125. 132/11 kV G/S Ellah Abad Extension 26 0 07/01/2016 126. 132/11 kV G/S Farooq Abad Extension 26 0 29/10/2017 127. 132/11 kV G/S Green View Augmentation 14 0 14/09/2017 128. 132/11 kV G/S Green View Augmentation 14 0 16/07/2017 129. 132/11 kV G/S Ghazi New Extension 40 0 15/10/2017 130. 132/11 kV G/S Garden Augmentation 14 0 04/07/2016 Town 131. 132/11 kV G/S Gulshan-e- Extension 40 0 23/05/2017 Ravi 132. 132/11 kV G/S Haveli Lakha Augmentation 14 0 31/07/2017 133. 132/11 kV G/S Haveli Lakha Augmentation 14 0 13/10/17 134. 132/11 kV G/S Hujra Shah Extension 26 0 06/09/2016 Muqeem 135. 132/11 kV G/S ICI Public Extension 26 0 11/10/2017 136. 132/11 kV G/S Kasur Augmentation 14 0 21/05/2017 137. 132/11 kV G/S Kasur Augmentation 14 0 08/10/2017 138. 132/11 kV G/S Kasur New Extension 40 0 139. 132/11 kV G/S Kahna Nau Extension 40 0 16/08/2017 140. 132/11 kV G/S Khuddian Extension 40 0 13/06/2017 141. 132/11 kV G/S Kot Radha Extension 26 0 Kishan 142. 132/11 kV G/S Lefo Augmentation 14 0 21/05/2015 143. 132/11 kV G/S Narang Augmentation 13 0 144. 132/11 kV G/S Narang Augmentation 13 0 145. 132/11 kV G/S Nankana Extension 26 0 146. 132/11 kV G/S Nankana Extension 26 0 147. 132/11 kV G/S PWR Augmentation 14 0 23/10/2017 148. 132/11 kV G/S Pattoki Extension 26 0 16/06/2017 149. 132/11 kV G/S Raiwind Extension 26 0 04/07/2016 150. 132/11 kV G/S Rehman Extension 26 0 Park 151. 132/11 kV G/S Renala Extension 26 0 Khurd 152. 132/11 kV G/S Said Pur Extension 26 0 153. 132/11 kV G/S Said Pur Augmentation 14 0 154. 132/11 kV G/S Sabza Zar Extension 26 0 155. 132/11 kV G/S Shadman Extension 26 0 156. 132/11 kV G/S Shahdara Extension 40 0 26/092017 New 157. 132/11 kV G/S Shahdara Extension 26 0 Scarp 158. 132/11 kV G/S Sharaqpur Extension 26 0 Rd (SKP) 159. 132/11 kV G/S Shahlamar-I Augmentation 14 0 21/04/2016 160. 132/11 kV G/S Shahlamar-I Augmentation 14 0

66 Appendix 9

Installed Addition Project Capacity in System Commiss- No. Project Description Scope of Work (MVA) (km) ioning Date 161. 132/11 kV G/S Shahlamar-II Augmentation 14 0 19/05/2017 162. 132/11 kV G/S Shahlamar-II Augmentation 14 0 27/07/2017 163. 132/11 kV G/S Shah Kot Augmentation 14 0 23/07/2017 164. 132/11 kV G/S Shah Kot Augmentation 14 0 09/11/2017 165. 132/11 kV G/S Sheikhupura Extension 26 0 166. 132/11 kV G/S Sheikhupura Extension 26 0 (Indst) 167. 132/11 kV G/S Town Ship Augmentation 14 0 12/01/2015 168. 132/11 kV G/S Walington Augmentation 14 0 13/05/2017 Mall 169. 132/11 kV G/S Wan Radha Extension 26 0 Ram 170. 132/11 kV G/S Warburton Extension 26 0 171. 132/11 kV G/S Walgan Extension 26 0 Sohail 172. 132/11 kV G/S Walgan Extension 26 0 Sohail 173. 220 kV G/S Bund Rd Augmentation 14 0 30/07/2015 174. 220 kV Bund Rd Augmentation 14 0 07/11/2017 175. 220 KV G/S Ravi Augmentation 14 0 22/01/2016 176. 220 kV G/S Ravi Augmentation 14 0 29/11/2017 177. 220 kV G/S Sarfaraz Nagar Augmentation 14 0 20/08/2017 178. 220 kV G/S NKLP Augmentation 14 0 14/09/2015 179. 220 kV G/S NKLP Augmentation 14 0 24/05/2017 180. 220 kV G/S NKLP Augmentation 14 0 21/09/2017 181. 220 kV G/S Kala Shah Kaku Extension 40 0 18/09/2017 (220 kV) Strategic Spares Spare 80 0 E.2 Subprojects from Savings 182. 132KV GIS Grid Station New Substation Punjab University 183. Sunny View to Mcleod Road Transmission Lines 2.1 Cable Laying 184. Mcleod Road To Qartaba Transmission Lines 3.9 Cable Laying 185. Material for Upgradation Of Goods Grids (Malikpur/& Baseerpur) 186. Material/Equipment To be Goods Purchased Against Already Awarded Contracts 187. Procurement of additional Goods equipment (15% enhancement)-06 Nos. 40MVA PTFs 188. Procurement of additional Goods equipment (30% enhancement) Subtotal (E) 1562 6

F. MEPCO F.1 Subprojects 189. 132/11 kV G/S A.P East Augmentation 14 190. 132/11 kV G/S A.P East Extension 26 20/04/2017 191. 132/11 kV G/S Arif Wala Augmentation 14 29/10/2016 192. 132/11 kV G/S Baghdad-ul- Augmentation 14 03/04/2017 Jadeed 193. 132/11 kV G/S Augmentation 14 04/03/2017 Bahawalnagar

Appendix 9 67

Installed Addition Project Capacity in System Commiss- No. Project Description Scope of Work (MVA) (km) ioning Date 194. 132/11 kV G/S Basti Malook Extension 26 04/07/2016 195. 132/11 kV G/S Bosan Rd Augmentation 14 12/11/2016 196. 132/11 kV G/S Burewala Augmentation 14 17/11/2016 197. 132/11 kV G/S Burewala Augmentation 14 19/10/2016 (Old ) 198. 132/11 kV G/S Chak 211 Extension 26 19/01/2018 199. 132/11 kV G/S Chichawatni Augmentation 14 15/10/2016 200. 132/11 kV G/S Chistian Extension 40 10/09/2017 201. 132/11 kV G/S Chowk Azam Augmentation 13 27/02/2017 202. 132/11 kV G/S Chowk Extension 13 30/04/2016 Munda 203. 132/11 kV G/S Damar Wala Augmentation 13 16/03/2016 204. 132/11 kV G/S Dunyapur Augmentation 14 205. 132/11 kV G/S Fazilpur Augmentation 13 03/09/2016 206. 132/11 kV G/S Feroza Augmentation 13 207. 132/11 kV G/S Gara More Augmentation 13 29/05/2014 208. 132/11 kV G/S Gujrat South Augmentation 14 209. 132/11 kV G/S Harrapa Augmentation 14 19/01/2016 210. 132/11 kV G/S Haroon Abad Extension 26 22/12/2016 211. 132/11 kV G/S Haroon Abad Augmentation 14 22/12/2016 212. 132/11 kV G/S Hasil Pur Augmentation 14 14/12/2015 213. 132/11 kV G/S Industrial Augmentation 14 17/10/2016 (Estate) 214. 132/11 kV G/S J. P Wala Augmentation 14 22/11/2016 215. 132/11 kV G/S Jahanian Augmentation 14 01/04/2016 216. 132/11 kV G/S K. Pur Sadat Extension 13 03/09/2018 217. 132/11 kV G/S Kabir Wala Augmentation 14 02/12/2018 218. 132/11 kV G/S Kacha Khu Extension 26 28/03/2017 219. 132/11 kV G/S Kacha Khu Augmentation 14 220. 132/11 kV G/S Khan Pur Augmentation 14 21/01/2017 221. 132/11 kV G/S Khan Pur Augmentation 14 25/01/2018 222. 132/11 kV G/S Khanewal Augmentation 14 11/03/2016 223. 132/11 kV G/S Khanewal Rd Augmentation 14 28/03/2015 224. 132/11 kV G/S Kot Addu Extension 26 21/05/2016 225. 132/11 kV G/S Kot Chutta Extension 13 28/08/2017 226. 132/11 kV G/S Layyah Extension 26 02/01/2018 227. 132/11 kV G/S Ludden Augmentation 13 09/01/2014 228. 132/11 kV G/S Mailsi Augmentation 14 29/09/2016 229. 132/11 kV G/S Mailsi Augmentation 14 230. 132/11 kV G/S Makhdoom Augmentation 13 Ras 231. 132/11 kV G/S Makhdoom Augmentation 13 17/02/2015 Ras 232. 132/11 kV G/S Mehra Khas Augmentation 13 28/03/2016 233. 132/11 kV G/S Mian Channu Extension 26 11/08/2016 234. 132/11 kV G/S Noor Ahmad Extension 13 17/04/2017 235. 132/11 kV G/S Noor Pur Augmentation 13 236. 132/11 kV G/S Pak Pattan Augmentation 14 31/10/2016 237. 132/11 kV G/S Qabula Extension 13 25/11/2016 238. 132/11 kV G/S Qabula Augmentation 14 25/11/2016 239. 132/11 kV G/S Qadir Abad Augmentation 13 240. 132/11 kV G/S Rahim Yar Augmentation 14 02/11/2015 Khan 241. 132/11 kV G/S Rahim Yar Augmentation 14 31/12/2016 Khan-II 242. 132/11 kV G/S Sahiwal Extension 26 12/06/2016 243. 132/11 kV G/S Sahiwal New Augmentation 14 02/04/2016 244. 132/11 kV G/S Sahuka Augmentation 13 10/04/2016 245. 132/11 kV G/S Sakhi sarwar Extension 13 28/06/2016

68 Appendix 9

Installed Addition Project Capacity in System Commiss- No. Project Description Scope of Work (MVA) (km) ioning Date 246. 132/11 kV G/S Shuja Abad Extension 26 26/02/2015 247. 132/11 kV G/S Shuja Abad Augmentation 14 28/03/2017 248. 132/11 kV G/S Taunsa Augmentation 13 03/02/2017 249. 132/11 kV G/S Uch Sharif Augmentation 13 06/06/2016 250. 132/11 kV G/S Uch Sharif Extension 13 06/06/2016 251. 132/11 kV G/S Vehari Augmentation 14 17/05/2017 252. 132/11 kV G/S Vehari Augmentation 13 253. Strategic Spares Spare 80 20/04/2017 F.2 Subprojects from Savings 254. 132/11 kV G/S Buch Villas New Substation 26 4 Housing Society Multan 255. 132/11 kV G/S Punjab New Substation 26 5 Governement Employees Housing Society 256. 132/11 kV G/S Sanjar Pur New Substation 26 10 Sadiqabad 257. 132/11 kV G/S Peer Jughi New Substation 26 11 Shah 258. 66/11 kV G/S Choti Conversion 13 259. 66/11 kV G/S Choti Transmission Line 20 Subtotal (F) 1217 50.0

G. PESCO G.1 Subprojects 260. 132/11 kV G/S Abbottabad Augmentation 14 261. 132/11 kV G/S Charsadda Augmentation 14 262. 132/11 kV G/S D.I Khan Augmentation 14 263. 132/11 kV G/S Swat Augmentation 14 264. 132/11 kV G/S Swat Augmentation 14 265. 132/11 kV G/S Peshawar Augmentation 14 Cantt 266. 132/11 kV G/S Peshawar Augmentation 14 Cantt 267. 132/11 kV G/S Jamrud Augmentation 14 268. 132/11 kV G/S Jamrud Augmentation 14 269. 132/11 kV G/S Shahi Bagh Augmentation 14 270. 132/11 kV G/S Chakdara Augmentation 14 271. 132/11 kV G/S Shabqadar Augmentation 14 272. 132/11 kV G/S Tangi Augmentation 14 273. 132/11 kV G/S Pabbi Augmentation 14 274. 132/11 kV G/S Nowshera Augmentation 14 City 275. 132/11 kV G/S Jalala Augmentation 14 276. 132/11 kV G/S Haripur Augmentation 14 277. 132/11 kV G/S Jehangira Augmentation 14 278. 132/11 kV G/S Mansehra Augmentation 14 279. 132/11 kV G/S Hattar Augmentation 14 280. 132/11 kV G/S R.B Tarbela Extension 26 281. 132/11 kV G/S K. Khela Extension 26 282. 132/11 kV G/S Daggar Extension 26 283. 132/11 kV G/S Rehman Augmentation 13 Baba 284. 132/11 kV G/S S. Chashma Extension 26 285. 132/11 kV G/S Nowshera Extension 26 Indst 286. Strategic Spares Spare 80 287. 11 kV Distribution T/Fs Distribution T/Fs 0 288. 132/11 kV G/S Abbottabad Augmentation 14

Appendix 9 69

Installed Addition Project Capacity in System Commiss- No. Project Description Scope of Work (MVA) (km) ioning Date 289. 132/11 kV G/S Charsadda Augmentation 14 G.2 Subprojects from Savings 290. 132/11 kV G/S Jalala Augmentation 40 291. 132/11 kV G/S Mardan III Augmentation 40 292. 132/11 kV G/S Khwaza Augmentation 40

khela 293. 132/11 kV G/S Phabi Augmentation 40 294. 132/11 kV G/S Nowshera Augmentation 40

City 295. 132/11 kV G/S ShahiBagh Augmentation 40

Peshawar 296. Miscellaneous Electrical Goods 40

Equipment 297. Procurement of circuit Goods 40 breakers, line/ Transformer, CTs/PTs, Control Cables,

ACSR Lynx Conductors and 03 Nos. 132kV MVAR Capacitor Banks Subtotal (G) 743 0

H. QESCO H.1 STG Projects 298. 132/11 kV G/S Alizai Extension 26 18/11/2016 299. 132/11 kV G/S Chaman Augmentation 14 14/11/2014 300. 132/11 kV G/S Hurramzai Extension 13 03/06/2017 301. 132/11 kV G/S Baghbana Augmentation 14 14/03/2016 302. 132/11 kV G/S Darwaza Extension 13 20/02/2017 303. 132/11 kV G/S Gidder Augmentation 14 07/03/2016 304. 132/11 kV G/S Kallat Augmentation 14 10/03/2016 305. 132/11 kV G/S Kanak Extension 26 22/05/2016 306. 132/11 kV G/S Khanozai Extension 40 14/06/2017 307. 132/11 kV G/S Pishin Augmentation 14 25/02/2016 308. 132/11 kV G/S Loralai Extension 26 22/07/2017 309. 132/11 kV G/S Quetta City Augmentation 14 17/02/2016 310. 132/11 kV G/S Kuchlak Extension 26 17/02/2017 311. 132/11 kV G/S Sariab Augmentation 14 13/02/2016 312. 132/11 kV G/S Mariabad Extension 26 22/02/2017 313. 132/11 kV G/S Panjpai Augmentation 13 11/03/2014 314. 132/11 kV G/S Kingri Extension 13 05/10/2017 315. 132/11 kV G/S Barkhan Extension 13 28/12/2016 316. 132/11 kV G/S Pishin Augmentation 14 01/03/2016 H.2 Subprojects from Savings 317. 132/11 kV G/S Shaikh Augmentation 14 11/04/2016 Manda 318. 132/11 kV G/S Gulistan Augmentation 14 09/09/2016 319. 132/11 kV G/S Killa Abdulah Augmentation 14 13/10/2016 320. Line b/w Kharan and Mall Goods 82 11/04/2016 G/S 321. Miscellaneous Electrical Goods 09/09/2016 Equipment Subtotal (H) 389 82 GAND TOTAL (A+B+C+D+E+F+G+H) 6,012 296

70 Appendix 10

STATUS OF COMPLIANCE WITH FINANCIAL COVENANTS

Table A10.1: Status of APFS for the Program

DISCO Required Submitted Deferred a Pending FESCO 24 21 3 0 GEPCO 24 21 3 0 HESCO 24 21 3 0 IESCO 24 19 5 0 LESCO 24 21 3 0 MEPCO 24 21 3 0 PESCO 24 21 3 0 QESCO 24 17 7 0 PEPCO 10 10 0 0 Total 202 171 31 0 DISCO = distribution company a Deferred because of nil expenditure in the respective fiscal year

Table A10.2: Status of APFS for Tranche 4

DISCO Required Submitted Deferred a Pending FESCO 5 4 1 0 GEPCO 5 4 1 0 HESCO 5 5 0 0 IESCO 5 4 1 0 LESCO 5 4 1 0 MEPCO 5 4 1 0 PESCO 5 5 0 0 QESCO 5 3 2 0 PEPCO 5 4 0 0 Total 40 33 7 0 DISCO = distribution company a Deferred because of NIL expenditure in the respective fiscal year

Appendix 10 71

Table A10.3: Status of AEFS for the Program

DISCO Required Submitted Not Submitted Pending a FESCO 10 10 0 0 GEPCO 10 9 1 1 HESCO 10 9 1 1 IESCO 10 10 0 0 LESCO 10 7 3 3 MEPCO 10 10 0 0 PESCO 10 10 0 0 QESCO 10 10 0 0 PEPCO 10 10 0 0 Total 90 85 5 5 DISCO = distribution company a Audit is in progress or reports are pending final approval

Table A10.4: Status of AEFS for Tranche 4

DISCO Required Submitted Not Submitted Pending a FESCO 5 5 0 0 GEPCO 5 4 1 1 HESCO 5 4 1 1 IESCO 5 5 0 0 LESCO 5 2 3 3 MEPCO 5 5 0 0 PESCO 5 5 0 0 QESCO 5 5 0 0 Total 40 35 5 5 DISCO = distribution company a Audit is in progress or reports are pending final approval

72 Appendix 10

Table A10.5: Financial Ratios Compliance by DISCOs for the Program

DISCO FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 DSCRa SFRb DSCRa SFRb DSCRa SFRb DSCRa SFRb DSCRa SFRb DSCRa SFRb DSCRa SFRb DSCRa SFRb FESCO (68.86) 45 (108.80) (13) 25.53 47 40.40 31 8.18 133 92.08 127 NC NC 4.40 141 GEPCO 1.24 77 (2.59) 113 28.46 77 12.47 63 0.27 50 NC NC NC NC 1.63 103 HESCO (39.88) 1 (52.56) (30) (20.59) 8 (11.14) 47 NC NC (18.12) 66 NC NC (0.16) 48 IESCO 0.41 88 (8.00) 75 4.57 90 8.45 32 NC NC NC NC 0.14 99 (0.06) 106 LESCO 17.24 32 (25.78) 13 17.53 40 18.73 90 NA NA NA NA NA NA NA NA MEPCO (6.25) (22) (29.99) (25) 16.78 13 11.58 51 NC NC (0.57) 52 0.41 34 1.23 62 PESCO (287.01) 84 (158.31) 34 (4.01) (806) (1.24) (2,242) (3.18) (154) (3.91) (201) NC NC (0.02) 70 QESCO 69.08 22 (0.64) (472) (0.56) 48 (1.17) (1,124) (7.27) 61 (15.05) (33) (2.95) (325) NA NA DISCO = distribution company DSCR = debt service coverage ratio SFR = self-financing ratio NA = AEFS not available due to non-submission NC = AEFS submitted without auditor’s opinion on financial covenant compliance/performance a Debt service coverage ratio: calculated as free cash flow divided by annual debt service. A minimum of 1.2 DSCR required for compliance to project and loan agreement. b Self-financing ratio: calculated as cash from internal sources divided by average annual capital expenditures. A minimum 20% SFR required for compliance to project and loan agreement. The units are percent (%).