GUJRANWALA ELECTRIC POWER COMPANY LTD. Office of the Direct: 055- 9200507 Chief Executive Officer PABX : 055-9200519-26/200 FAX :055-9200122 GEPCO Ltd., 565-A Model Town G.T. Road, Gujranwala. No. CEO/FD/GEPCO/ CPC 3e9 Dated: /1— 7 -2013 The Registrar, National Electric Power Regulatory Authority, OPF Building, 2nd Floor, Shahr-e-Jamhuriyat Sector G-5/2, Islamabad SUBJECT:- Petition of GEPCO for Determination of Consumer-End Tariff alongwith Annual Revenue Requirement FY 2013-14. Enclosed please find herewith the Tariff Petition fnr the FY 201-i-14 alongwith Annual Revenue Requirement of FY 2013 14 ifl ICSIJC(.-1 01 vupul ivvuiu Electric Power Company Limited (GEPCO) Gujranwala. It is requested that the same may please be admitted for Tariff Determination of the FY 2013-14 along with annual revenue requirement r r 20 13- i 4. DA: 1. Petition Summary along with standard petition lenipiul,„ documents 2. Certified copy of resolution of Directors of the Company 3. Affidavit (Mehboob am) Chief Executive Officer GUJRANWALA ELECTRIC POWER COMPANY LTD. 565-A, Model Town, G.T. Road, Gujranwala — Phone 055-9200519-26, Fax 055-9200530 Board Resolution aesolution of the Board of Directors of Gujranwala Electric Power Company Limited on June 24th , 2013. At the aforesaid meeting, it was resolved that: "Resolved unanimously that the petition for determination of consumer end tariff of the Gujranwala Electric Power Company (the "Company") for the financial year 2013-14 alongwith annual revenue requirement FY 2013-14 be filed with National Electric Power Regulatory Authority (NEPRA). Further Resolved that Mr. Mehboob Alam, Chief Executive Officer along-with other management officers indicated in the summary of the petition be and are hereby authorized to sign individually or jointly the necessary documents, pay the necessary filing fees, appear before the Authority as needed, and do all acts necessary for completion and processing of the applications". Certified True Copy (Company Secretary) Date: 10 Jul 20 COMPANY E;En GEPCO LTD: GUJRANWALA A733810 III 111111111111111111111111111111111111131011 AFFIDAVIT I, Mehboob Alam s/o Khurshid Alam, Chief Executive Officer Gujranwala Electric Power Company Limited holding CNIC No. 35202-0608972-1 being duly appointed Attorney of Gujranwala Electric Power Company Limited (GEPCO), 565-A Model Town, Gujranwala, Pakistan, hereby solemnly affirm and declare that the contents of this Tariff Petition for financial year 2013-14 alongwith Annual Revenue Requirement FY 2013- 14 , dated /al ,2013, including all supporting documents are true and correct to the best of my knowledge and belief and that nothing has been concealed. Verified on this INA day of 2013. Deponent (Mehboob Alam.) Before The National Electric Power Regulatory Authority, Islamabad In the Matter of Gujranwala Electric Power Company Limited Case No. of 2013 PETITION UNDER RULE 3 AND SUB-RULE 7 OF RULE 4 OF NI PRA (TARIFF STANDARDS AND PROCEDURE) RULES, 1998 (THE "1998 RULES") READ WITH SECTION 7(3)(a) AND SECTION 31 OF TI1E REGULATION OF GENERATION, TRANSMISSION AND DISTRIBUTION OF ELECTRIC POWER ACT, 1997 (THE "1997 REGULATION • ACT") FOR DETERMINATION OF REVENUE REQUIREMENT AND TARIFF FOR TIIE FINANCIAL YEAR 2013-14 1Zespectfully Sheweth: A. GENERAL SUBMISSIONS (1) Gujranwala Electric Power Company Limited ("GEPCO") is a power distribution licensee pursuanl to Distribution License No.04/1)1.12002 dated 23. April 2002 granted by National Electric Power Regulatory Authority ("NI PRA") under the National Electric Power Regulatory Authority Licensing (Distribution) Rules, 1991, (the "licensing Rules"). (2) This Petition is made under Rule 3 and Sub-Rule 7 of Rule 4 of NI ?PRA (Tariff Standards and Procedure) Rules, 1998 (the "1998 Rules") read with Section 7(3)(a) and Section 31 of the Regulation of Generation, Transmission and Distribution of Electric Power Act, 1997 (the "1997 Regulation Act") for determination of revenue requirement and tariff for the financial year 2013- 14. (3) This Petition is made by the Petitioner through Mr. Mehboob Alam,. its Chief Executive Officer who has been duly authorized by its Board of Directors at its meeting on 24 June 2013. A copy of the Board authorization is Annexure A to this Petition. (4) The details of the Petitioner are: (a) Name and Address Gujranwala Electric Power Company Limited 565-A Model "lown, Gujranwala Distribution 1.icense No. 04/1)1/2002 1 (h) Representatives of GI',PC() (i) Engineer Mchboob Alam, CEO (ii) Mr. Muhammad Asad, Chief Financial Officer (iii) Mr. Ahsan Nasecm Bhutta Operation Director (iv) Engineer Javid Iqbal Ghuman Chief Engineer (P&E), (v) Engineer Munir Ahmed Mian Customer Services Director, (vi) Syed lIashmat Ali Kazmi, Director IIR&A (5) The Petition is structured as follows: A. GENERAL SUI3MISSIONS 13. CONCISE STATEMENT RE BASIS OF PETITION AND PETITIONER'S INTEREST C. PRELIMINARY AND ADDITIONAL SUBMISSIONS D. REQUEST FOR IMMEDIATELY EFFECTIVE TARIFF E. GROUNDS FOR TARIFF DETERMINATION 1. Sale of Units 2. Power Purchase (PPP) 3. Distribution Margin (1) Operation and Maintenance Expenses: (2) Note on the Long Term Retirement Benefits 4. Progress on the matter of Power Sector Employees retirement benefits who retired before 1 July 1998 5. Recruitment Plan 6. Depreciation 7. Return On Regulatory Asset Base (RORB) 8. Other income 9. Investment Plan & Financing (CAPEX) (1) Rationale of the Investment (a) Distribution of Power Program (b) Energy Loss Reduction (ELR) (2) 6`1' STG Own Sources (3) 6111 STG -- Loans (4) Deposit Works/Capital Contributions: 10. Prior Year Adjustment 11. Statement of Revenue Requirement F. SCIIEDULES G. PRAYERS B. CONCISE STATEMENT RE BASIS OF PETITION AND PETITIONER'S INTEREST (1) Under the 1997 Regulation Act, the National Electric Power Regulatory Authority (the "Authority" and/or "NEPRA") is responsible for determining tariffs and other terms and conditions for the supply of electricity by the generations, transmission and distribution companies and to recommend these to the Federal Government, subject to the need to comply with guidelines, not inconsistent with the provisions of the 1997 Regulation Act, laid = down by the Federal Government. NEPRA is also responsible for determining the process and-procedures for reviewing tariffs and recommending tariff adjustments. (2) Gujranwala Electric Power Company Limited (the "Petitioner" and/or "GEPCO"), being a bona fide Power Distribution Licensee, requires adequate funding in order to • perform its obligatory duties prescribed by the Authority, under the 1997 Regulation Act, NEPRA Performance Standards (Distribution) Rules 2005, NEPRA Consumer Eligibility Criteria 2003, the Distribution License of GEPCO and other obligations as determined by NEPRA from time to time. (3) There are three main sources of funding available with the Petitioner (i) internal efficiency improvements, (ii) borrowings and (iii) adequate revenue through tariff. While the Petitioner is already a highly motivated utility towards continuous internal efficiency improvements, such improvement/measures require commensurate financial resources either through borrowings or adequate tariff. As per general principles of banking industry, international or local, the financial viability of borrowing organization is always taken as fundamental .for lending decisions. In short, internal financial viability of a utility is basic to embark upon and explore other resources of funds; which can only be ensured through adequate consumer end tariff. (4) GEPCO tariff has two components i.e pass through cost and distribution margin .The major portion of pass through cost is power purchased which GEPCO must pay for on regular basis to ensure continuous flow of power in its distribution system. Distribution margin is equally important. GEPCO must earn sufficient distribution margin and adequate stream of cash flow to maintain its system, discharge its financial commitments, invest on the au Cation and 3 expansion of the network and a reasonable return to the sponsors on their investment. Stable and predictable tariff rate is beneficial both for the distribution company (DISCO) and its customers for a long term planning. The length of the review period is important for determining the size of the incentive for OTC° to improve its efficiency. The longer the period of review, the larger the incentive to make efficiency gains, reduce losses or achieve cost efficiencies in stable economic conditions. C. PRELIMINARY AND ADDITIONAL SUBMISSIONS (1) The Authority, has time and again, directed CPPA to sign/execute power purchase agreements with GENCOs and power sale agreements with I)ISCOs but these instructions have not been complied with. The Petitioner, on its part, complied with this direction and submitted a draft of the Power Sale Agreement (the "PSA") to the CPPA and the Authority on 26 September 2012 but still awaits further action by the CPPA to progress this to conclusion. (2) The Petitioner is handicapped in making its submissions and case for an appropriate tariff without a concluded PSA. The PSA, on effectiveness, will he the basis for the requests of the Petitioner. The Authority needs to approve the PSA and directs CPPA to execute the PSA in the interest of the Petitioner and its customers. (3) The regulatory regime developed by N1 PRA under Section 31(1) and (2) of the 1997 Regulation Act for the determination of the tariff is, at places, general and does not provide the specificity so necessary Ibr the reasonable exercise of its discretion.