Lahore Electric Supply Company Limited 2 nd Workshop on Power Sector Reforms 11 th & 12 th November | 2010 WAPDA House Auditorium Lahore

Lahore Electric Supply Company Limited SCHEME OF PRESENTATION Service Territory Consumer Profile Stakeholders Company Level KPIs & Initiatives Stakeholders’ Major Obligations as per Performance Contract Performance Management System Performance Contract & Its Effectiveness Review of KPIs for 1 st Quarter, ending September 2010 AMR Pilot Project – At Consumer End Benefits of AMR Pilot Project AMR Project – Requirements Future AMR Projects: - AMR at CDP, GRID, FEEDER AMR on RF Mesh at Consumer End

Lahore Electric Supply Company Limited SERVICE TERRITORY Sheikhupura Nankana 0.40 M 0.41 M M 0.11 M M FESCO GEPCO MEPCO

Lahore Electric Supply Company Limited Consumers Revenue Category wise Comparison Ending JUN-2010

Lahore Electric Supply Company Limited Category wise Comparison Ending JUN-2010 Revenue Consumption

Lahore Electric Supply Company Limited Stakeholders Customers Employees Suppliers Contractors Regulator Government Lenders Community

Lahore Electric Supply Company Limited Company Level KPIs & Initiatives S#Category Wise KPIs WeightInitiative 1Operational & Commercial Performance 40% AMR, ERP, SBU Line Losses (Transmission & Distribution)15% AMR (CDP, Grid, Feeder) Collection Ratio15% CIBS/Online Banking Transformer Failure Rate2% Oracle MM Line Failure Rate - Below 20 minutes2% AMR, Call Center Line Failure Rate - Above 20 minutes2% AMR, Call Center Defective Meters4% CIBS/AMR (Cons. End) 2Financial Performance 20% Oracle Financials, CIBS,SBU 3Capital Expenditure Project Implementation 15% Oracle Financials & Oracle Projects, MM 4Customer Relations Management 5% CIBS, Call Center 5Human Resource Management 10% Oracle HRMS, BPR, JDs & KPIs 6Employee Safety 10% Safety Stock from Oracle MM, Workshops/Train. Operational & Commercial Performance 40% Line Losses 15% Collection Ration 15% Transformer Failure Rate 2% Line Failure Rate – Below 20 Minutes 2% Line Failure Rate – Above 20 Minutes 2% Defective Meters 4% [ AMR CDP, GRID, FEEDER Oracle ERP (MM) CIBS, AMR (Cons. end) CIBS/Online Banking AMR (CDP,GRID,FEEDER) Call Center SBUSBU Financial Performance 20% Cash – In – Transit 8% Operation & Maintenance12% ERP Oracle Financials CIBS Customer Info & Billing System SBU Strategic Business Unit Capital Expenditure Project Implementation 15% Capitalization (A-90 Form) 5% Capital Expenditure 10% STG 5% DOP 2% ELR 2% RE 1% ERP Oracle Financials ERP Oracle Projects ERP Oracle MM Customer Relations Management 5% New Connection 2% Customer Facilitation 1% Efficiency of Supply Complaints Resolution 1% Efficiency of Billing Complaints Resolution 1% CIBS Customer Info & Billing System Call Center (118) Human Resource Management 10% Officer’ Strength -Occupancy Ratio 2% Staff’ Strength - Occupancy Ratio 2% Resolution of Disciplinary Cases 2% %age of Officers Trained 2% %age of Staff Trained 2% ERP Oracle HRMS Review of Business Processes, JDs, KPIs Employee Safety 10% Safety Policy & Trainings, Awareness Workshops ERP Monitoring of Safety Items Oracle MM

Lahore Electric Supply Company Limited Stakeholders’ Major Obligations- As per Performance Contract Full Corporate Autonomy in their business & commercial operation. No Interference in Companies Operations Support in clearing the outstanding dues relating to GOP & Govt. of Punjab Ensure Timely Implementation of Tariff Adhere to Regulatory Standards & Procedures regarding tariff adjustments Provide Security to Employees where law and order is serious concern Support to obtain soft long term bilateral and multilateral external financial assistance GOP Support & Obligations NEPRA Obligations Timely Determination of Tariff Sustainable Competitive Power Market Monitoring of Companies Performance Ensure Consumers’ Interests Company Obligations Employee Obligations Implement Approved Strategic Business Plan Set Performance Targets Review of Performance Targets by BOD Establish Performance Monitoring & Control Mechanism Align the HR Policies with Performance Contract HR Development w.r.t. Performance Contract Proactive towards Job Efficient use of available resources Act as Custodian of the Assets of the Company

Lahore Electric Supply Company Limited Performance Management System Cascading of Performance Contract Review of Job Descriptions (JDs) Linkage of KPIs with Proposed JDs Signing of Revised / New Contracts Revised HR Polices / Procedures Targets Setting Performance Evaluation Criteria Rewards & Penalties Business Process Re-engineering Operation & Customer Services Financials Human Resource Projects Employee Safety Cascading of Perf. ContractOrganization Development Information System

Lahore Electric Supply Company Limited Performance Contract & Its Effectiveness MW&P Vs CEO CEO Vs Functional Heads Functional Heads Vs SEs SEs Vs DCMDDTXEN XEN Vs SDOs SDOs Vs LSs MaintenanceRecovery Meter Reading Complaint Individual Employee Level Very Good Tool to Align All the Employees to the Company Objectives & Targets For Its Effective Implementation, Job Description of Each Employee Needs to be Reviewed & Related KPI should be embedded in Job Description. USAID/IRG Has Been Requested to Provide Assistance for Development of Performance Measurement System Very Good Tool to Align All the Employees to the Company Objectives & Targets For Its Effective Implementation, Job Description of Each Employee Needs to be Reviewed & Related KPI should be embedded in Job Description. USAID/IRG Has Been Requested to Provide Assistance for Development of Performance Measurement System Signed In Progress

Lahore Electric Supply Company Limited Performance Contract Targets & Results for (1 st Quarter) KPIs Goal 1 st Quarter st Quarter Achievement Score Line Losses (D)13.4%14.9%14.4% 7.5 Collection Ratio93.0%88.5%92.82% 15 Transformer Failure Rate3.75%6.6%3.84% 2 Line Failure Rate < 20 Minutes Line Failure Rate > 20 Minutes Defective Meters (7-12 months as % of total defective) 5.0%26.16%30.52%0 Total Score Operational & Commercial 69%

Lahore Electric Supply Company Limited Financial Performance KPIs Goal 1 st Quarter st Quarter Achievement score Cash In Transit (Monthly Average)9.0%9.21%5.96%8 O & M Expenses (Rs./ kWh) Total20 Performance Contract Targets & Results for (1 st Quarter) 100%

Lahore Electric Supply Company Limited Capital Expenditure Project Implementation KPIs Goal 1 st Quarter Achievement score Capitalization (A-90)80%79%2.5 Capital Expenditure STG90% 3.75 Distribution of Power90% 1.5 Energy Loss Reduction90% 1.5 Rural Electrification90% 0.75 Total1510 Performance Contract Targets & Results for (1 st Quarter) 67%

Lahore Electric Supply Company Limited KPIs Goal 1 st Quarter st Quarter Achievement Score New Connection100.00%99.61%97.79%1.5 Customer Facilitation96.00%95%95.00%1 Efficiency of Supply Compliant Resolution % 1 Efficiency of Billing Complaint Resolution % 1 Total54.5 Customer Relations Management Performance Contract Targets & Results for (1 st Quarter) 90%

Lahore Electric Supply Company Limited Human Resource Management KPIs Goal 1 st Quarter Achievement Score Officers’ Strength – Occupancy Ratio95.33%96.65% 1.5 Staff Strength – Occupancy Ratio79.33%81.97% 1.5 Resolution of Disciplinary Cases80.00%74.88% 0.5 % of Officers Trained24.86%13.38% 2 % of Staff Trained12.28%13.75% 2 Total1077 Employee Safety KPIs Goal 1 st Quarter Achievement Score No. of Accidents – Fatal0 00 No. of Accidents – Non Fatal243 0 Performance Contract Targets & Results for (1 st Quarter) 70%

Internet (DSL) AMR Server Server at America Internet Gateway LESCO Shad Bagh Sub Division Office Delhi Gate-Feeder AMR Pilot Project Lahore Electric Supply Company Limited Single Phase Meter Three Phase Meter MDI Firefly Repeater Mesh

Lahore Electric Supply Company Limited Installation of AMR Meters On 11-KV Delhi Gate-3 Feeder 10 No. General Duty Distribution T/F 48 No. Independent T/F 11 KV Dehli Gate-3 Feeder from 132 KV Badami Bagh G/S 48 No. Domestic 136 No. Industrial B No. Commercial 9 No. Industrial B-2 Note: - All the AMR Meters are functioning properly 1 No. B-3 Connection

Lahore Electric Supply Company Limited Benefit of AMR Pilot Project Months %age Line Losses [Apr-08 to Mar-09] Before Installation of AMR Meters {12-Months} 13.2% [Apr-2009 to Mar-2010] After Installation of AMR Meters{12-Months} 4.4%

AMR Project – Requirements Lahore Electric Supply Company Limited Description Hardware 1.Meter compatible with utility software 2.Modem / Gateway 3.Server Machines Communication NetworkPublic GSM Network / LESCO WAN SoftwareMultivendor compliant Human ResourceTraining & Motivation Project TeamDedicated preferably external hiring

Lahore Electric Supply Company Limited AMR Proposed Project at CDP, GRID, FEEDER Modem LESCO MIS LESCO Grid Station Transmission Lines 132KV Feeders Lines 11KV MIS Server AMR Server GPRS Cloud With VPN TCP/IP Cloud With VPN LESCO Network LESCO USER LESCO User NEPRA

Firefly Repeater Wireless LESCO Sub Division/ Division/RO Office Gateway Router LESCO Network Wi-Fi LESCO MIS AMR Server Billing Server Gateway Router LESCO Sub Division/ Division/RO Office Ethernet Lahore Electric Supply Company Limited AMR Future Strategy on RF Mesh at Consumer End Firefly Single Phase Meter Three Phase Meter MDI Single Phase Meter Three Phase Meter MDI Regulatory Authority MW&P LESCO Office/User

Financial Summary – 1 st Quarter, 2010 Lahore Electric Supply Company Limited

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RECORDED LOAD OF DIFFERENT CATEGORIES OF 11KV FEEDERS UNDER LESCO FROM DEC-2009 TO JUNE-2010 Lahore Electric Supply Company Limited #FEEDERS CATEGORY Dec-09Jan-10Feb-10Mar-10Apr-10May-10Jun-10 Load in MW 1Dedicated Industrial Load Dominating Industrial Load Commercial Load Sub Total Agricultural Load Domestic Load Exempted Load Grand Total * Tentative load required for Industrial & Commercial Sectors with zero load shedding round the clock.

ADDITIONAL LOAD REQUIRED FOR ZERO LOAD SHEDDING ON DEDICATED & DOMINATED INDUSTRY Lahore Electric Supply Company Limited PEROID MAX. LOAD (MW) DRAWN BY LESCO LOAD MANAGEMENT QUOTA (MW) INERRUPTIONS 1 HOUR EACH TO BE CARRIED OUT Last year Quota * Required Load for Proposed Quota Dec Hrs closure of Market Feeders 04 Hrs closure of Flour Mills Feeders 08 Hrs closure of T/Well Feeders 04 Hrs closure of Urban Domestic Feeders 08 Hrs closure of Rural Domestic Feeders Jan Feb Mar Hrs closure of Market Feeders 09 Hrs closure of Flour Mills Feeders 12 Hrs closure of T/Well Feeders 09 Hrs closure of Urban Domestic Feeders 12 Hrs closure of Rural Domestic Feeders Apr May Hrs closure of Market Feeders 04 Hrs closure of Flour Mills Feeders 08 Hrs closure of T/Well Feeders 04 Hrs closure of Urban Domestic Feeders 08 Hrs closure of Rural Domestic Feeders Jun * For zero load shedding to industrial sector in LESCO areas.

ADDITIONAL LOAD REQUIRED FOR ZERO LOAD SHEDDING ON COMMERCIAL, DEDICATED & DOMINATED INDUSTRY Lahore Electric Supply Company Limited PEROID MAX. LOAD (MW) DRAWN BY LESCO LOAD MANAGEMENT QUOTA (MW) INERRUPTIONS 1 HOUR EACH TO BE CARRIED OUT Last year Quota Required Load for Proposed Quota Dec Hrs closure of Flour Mills Feeders. 08 Hrs closure of T/Well Feeders. 04 Hrs closure of Urban Domestic Feeders. 08 Hrs closure of Rural Domestic Feeders Jan Feb Mar Hrs closure of Flour Mills Feeders. 12 Hrs closure of T/Well Feeders. 09 Hrs closure of Urban Domestic Feeders. 12 Hrs closure of Rural Domestic Feeders Apr May Hrs closure of Flour Mills Feeders. 08 Hrs closure of T/Well Feeders. 04 Hrs closure of Urban Domestic Feeders. 08 Hrs closure of Rural Domestic Feeders Jun * For zero load shedding to commercial, dedicated & dominated industry in LESCO areas.

Lahore Electric Supply Company Limited Remittance To CPPA – Current Procedure Consumers Collection in Bank Branches HBLUBLABLMCBOthers HBL ESCROW Agent Taxes/ Duties SPPsD.M. CPPA

Lahore Electric Supply Company Limited Settlement with CPPA – Proposed Mechanism Purchase of Power From CPPA (100%) Billing Consumer (76%) To GOP Subsidy (24%) Collection in Escrow A/c Daily Basis 100% Payment to CPPA Through L/C Net of Subsidy L/C Arrangement (subsidy) 24% GOP with CPPA L/C Arrangement 76% LESCO with CPPA Credit Line with Banks To meet Seasonal Variations Limitations Individual bank may not be able to have more exposure on power sector Heavy collateral may be required by the bank Additional financing cost Taxes/ Duties SPPsD.M.