Theft control in 3 Discos: CDWP seeks techno-economic feasibility for ADB-funded projects

ISLAMABAD: The Central Development Working Party (CDWP) has sought a proper techno-economic feasibility study for the entire scope of PC-1s of ADB-funded power strengthening projects in three power Distribution Companies (Discos); i.e., LESCO, MEPCO and SPECO, worth Rs59 billion, after Project Director, PD&SI claimed that the APMS meters possess only protection function by tripping the overloaded or unbalanced transformers but could not control theft, well-informed sources told Business Recorder.

The project cost for LESCO is estimated to be Rs27.613 billion, SEPCO, Rs9.015 billion and MEPCO, Rs22.230 billion.

Sharing the details, sources said that a CDWP meeting was held on November 15, 2024 under deputy chairman Planning Commission to discuss the PC-1 of the Project.

Power theft: PM asks provinces to support Discos

Chief Energy (Power), Ministry of PD&SI, apprised the forum that an umbrella PC-1, at a cost of Rs72,203 billion, was considered by CDWP on June 27, 2024, wherein, CDWP directed Power Division to bifurcate the scope and cost of umbrella PC-1, Discos wise and carry out techno-economic feasibility duly validated by independent Panel of Experts.

The CDWP also directed that concerned BODs of respective Discos should approve their scope of work and take ownership for the proposed ADB loan and its repayment and Power Division will confirm the financial viability of the proposed investment keeping in view the impending privatisation/ long-term concessions of the Discos.

Further, the Power Division will certify provision of sufficient funds, within its PSDP allocation, for timely completion of the project and will submit performance report of installation of previous APMS under EDEIP WB finance projects for PESCO and MEPCO.

Accordingly, Power Division will submit modified PC-Is for consideration of CDWP after compliance of aforementioned directions/decisions. In compliance of CDWP decision, Power Division submitted modified PC-1s of nine Discos by segregating the scope which was discussed in pre-CDWP meeting held on September 26, 2024 under Member (Energy), Planning Commission and those individual PC-1s were returned to the sponsors to submit updated PC-1s in line with the CDWP decisions of June 27, 2024, by incorporating the updated financing plan in consultation with EAD, ADB and WB along with inclusion of the status of Multi-Year Tariff (MYT) petition for each Disco.

According to Chief Energy (Power), LESCO has now submitted subject PC-1 on November 12, 2024 with additional scope of construction of five new 132kV grid stations, 04 Aug/Extension of 132kv grid stations, installation of 1,600 APMS, 1,328 km AB cable and 13,1901 AMI/ AMR meters, while curtailing scope of APMS as proposed in the umbrella PCJ considered by CDWP.

Power Division has now submitted subject PC-1 for SEPCO for installation of 50,000 AMR meters, 04 66kV Grid Station conversion into 132 kV Grid Station, installation of APMS on 1200 general duty DTs and bifurcation 40 feeders having load above 300 Amps while curtailing the scope of APMS as proposed in the umbrella PC-1 considered by CDWP. For MEPCO, Power Division has now submitted new PC-1 on the subject with additional scope of installation of 13,323 of APMS and 150,000 AMI meters, while curtailing scope of APMS as proposed in the umbrella PC-1 considered by CDWP.

The PC-1s was discussed in a pre-CDWP meeting held on November l4 under Member (Energy) and it was decided that the subject PC-l will be submitted to CDWP with recommendations that Power Division/ Discos will comply the previous decision of CDWP on June 27, 2024 regarding validation of techno-economic feasibility, submit performance reports of installation of APMS under previously approved PSDP projects; i.e., EDEIP, financed by World Bank and AMI meters of IESCO, financed by ADB and will provide rationale rationale/justification of subject PC-Is for inclusion in PSDP 2024-25, having major variations in scope and cost from the umbrella PC-1 reflected in the PSDP 2024-25.

Further, Power Division/ Discos were also directed to rationalise the cost for indirect components; i.e., institutional capacity strengthening, physical and price contingencies, project implementation consultant and to furnish break-up of total cost (item-wise) in LCC, FEC and foreign aid/ loan.

The pre-CDWP also directed EAD to approach ADB for concessional loan for the projects instead of standard terms.

Chief Energy (Power) further informed that the compliance of pre-CDWP decisions have not been received and he pointed out that the subject PC-1 may be recommended by CDWP to the extent of concept clearance the loan negotiation with ADB and Power Division may be directed to fulfil all codal formalities regarding techno-economic feasibility as well as justification for additional scope of work in view of AMI IESCO and APMS projects under EDIP programme.

Senior Chief (Energy) apprised that compliance of previous CDWP decision of June 27, 2024 needs to be fully complied including carrying out techno-economic feasibility/ validation and repayment schedule of ADB loan, being not a concessional loan vis-à-vis respective Disco’s financial position and its anticipated privatisation and incorporated in the PC-1. It was suggested that only concept clearance may be granted at this stage for carrying out loan finalisation with ADB.

Project Director, Monitoring and Evaluation Project, Ministry of PD&SI observed that the scope of the PC-1s is drastically changed due to addition of AMI meters, ABC cables and grids rehabilitation and is not in line with the directions of previous CDWP. He contested that the APMS meters possess only protection function by tripping the overloaded or unbalanced transformers but could not control theft.

The fault clearance after tripping is to be done by the Disco staff manually. He also shared his previous lesson learned when circuit breakers were installed in distribution transformers which resulted in undesirable switching on and off of transformers, making Disco staff bypass them from the circuit. He suggested the Chair that Power Division may submit separate PC-1s for grid station and metering project.

Joint Chief Economist (Ops), Ministry of PD&SI apprised that the through forward of Power Division has already increased Rs500 billion, while this project will further increase the through forward portfolio of Power Division. He emphasised that PFM Act 2019 stipulates allocation of PSDP project with respect to their financial phasing in the PC-1. As per PC-l phasing it will be difficult for Ministry of PD&SI to allocate requisite funds from PSDP for the project.

The additional secretary Power Division stressed the importance of project in minimising the technical losses of Discos, curbing theft and improving efficiency of the distribution network. He informed that ADB has committed $200 million financing for three projects of MEPCO, LESCO and SEPCO.

He requested the chair that these PC-1s need to be approved in principle in order to lock financing commitment of ADB and ensured that the observations raised during the meeting will be duly addressed and incorporated in the PC-1s.

The chair observed that objective of the project to strengthen the distribution network of Discos is desirable. However, to get the desired results a proper techno-economic feasibility study and performance reports of pilot projects of APMS and AMI, currently under execution is mandatory. EAD and Power Division assured that the scope of the project PC1s for SEPCO, LESCO, and MEPCO, can be redesigned as per techno feasibility study and performance report of AMI, AMR and APMS metering system.

After detailed deliberations, the CDWP approved the project, in principle, to the extent of loan agreement with ADB, with the following directions: (i) A proper techno-economic feasibility study for the entire scope of subject PC-1, duly validated by independent panel of experts will be carried out; (ii) EAD/ Power Division will ensure that the ADB loan is finalised in a manner that commitment charges may not accrue till such time project is ready for implementation; (iii) Power Division/ Discos will submit performance reports of already installed APMS under EDIP project of World Bank and AMI LESCO pilot project of ADB.

The Power Division will constitute a Committee of relevant stakeholders with technical experts to review the report for finalisation of scope for LESCO; (iv) Power Division/ Discos will rationalise the cost for indirect components; i.e., institutional capacity strengthening, physical and price contingencies, project implementation consultant and will furnish break-up of total cost (item-wise) in LCC, FEC and foreign aid/ loan, as per Planning Commission guidelines; and (v) after compliance of decisions Power Division will submit modified PC-1 for approval of ECNEC.

Copyright Business Recorder, 2024