Financial Management for Senior Public Sector Officials Group 4 Final Course Project Preparation on PESCO (Sub-Project) Energy Loss Reduction Presenters: Ansar Ali Noor Farrukh Latif Adil Rehman Farooqi Hassan Ali Din Mohammad

Afghanistan N Mardan BANNU` TESCO Karak Tank DIKhan Lakki Dargai SWAT Mingora T/Gara A/Abad-1&2 AJK HAZARA Batagram Swabi Hangu KHYBER NSR PESH S/Qdr CHD Chitral Haripur-1& 2 Mansehra-1 & 2 Kohat Upper Dir Bunair Northern areas Name ofNo. of Circle Consumers Hazara Swat Peshawar Bannu Mardan Khyber PESCO AREA OF JURISDICTION 2

Category wise consumers and units billed For Financial Reporting Purposes PESCO Category wise consumers and united billed have been shown in the following slide. Domestic, Commercial, Industrial, Tubewells, Bulk (like LUMS),Others (street lights etc.)

Category Wise Consumers & Units Billed Category No. of Consumers Ending 01/12 Units Billed (Million) Ending 01/12 Dom Coml Indl T/ Well Bulk Others Total Consumers Units Billed 4

Energy Loss Reduction Potential savings = units purchased at current efficiency – units purchased at targeted efficiency We quantify benefits in monitory value = Potential savings in units x Power Purchase Price Example: Suppose PESCO purchases current efficiency = 100,000 units Target efficiency (after system rehabilitation) = 90,000 units Difference (potential savings) = 10,000 units Power Purchase Price in Rs. = 5.86 Savings in Rs.=58,600

Rs. In Million Particulars (Audited) (Audited) (Audited) (Audited) (Audited) (Audited) (Projected) Average Sale Rate (Rs./ kwh) Sales 23,09234,58344,64152,83966,09371,866125,813 Cost of sales 30,73034,46646,86255,23175,27581,086110,665 Gross Profit/(Loss) (7,638)117(2,221)(2,392)(9,182)(9,219)15,148 Other Operating Expenses 5,8976,2558,5179,0799,18510,71215,061 Other Income 2,1282,6232,6713,3273,7893,8332,258 Profit/(Loss) for the year (11,407)(3,515)(8,068)(8,125)(14,578)(16,099)2,345 Accumulated Profit/(Loss) (29,370)(32,884)(40,952)(49,077)(63,656)(79,755)(77,410) 6 PRESENT FINANCIAL STATUS

Budget Comparison FY Particulars NEPRA Determination PESCO Requirements Variance Salaries Wage & Benefits5,2846,608(1326) Maintenance402679(277) Traveling Expenses97150(53) Vehicle Running Expenses103178(75) Other Expenses351567(216) O&M Cost (1947) Provision of Bad Debts (1858) Depreciation1,2151,311(96) Returns on Fixed Assets (781) Total10,03314,715(4682) Less Other Income3,962 0 Total D.M607110,753(4,682) Units Sold7,8876, Average DM RS/Kwh (0.78) 7 Rs In Million

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Authority in its determination assumed that PESCO has earned revenue of Rs. 27,490 million in 1 st Quarter of FY by using tariff of Rs /Kwh & Rs /Kwh of FY on the basis of actual purchases and targeted sales, as a matter of fact Tariff of FY and FY were not implemented due to stay orders issued by Islamabad High Court and Peshawar High Court. PESCO was charging Tariff of Rs per Kwh from its consumers during this period and was claiming subsidy from GOP on the notified Tariff of FY & FY JUSTIFICATION OF LOSSES FY

Governance and Controls of PESCO All the distribution Companies are regulated by NEPRA. However, BOD approve the CAPEX and Operating Budget as well as Losses target for each sub-division of PESCO. Communication gap while setting targets between NEPRA and BOD of PESCO. Resultantly, PESCO is unable to achieve their fiscal projections.

CORRECTIVE MEASURES TO OFFSET LOSSES Transmission of power on higher voltages in Primary & Secondary Grid Systems.  Construction of new 220/132KV Grid Stations to reduce 132KV T/Line. Proposed New 220KV GSS - Chakdara - DIK - Mansehra - Nowshera - Kohat  Construction of new Grid Stations to reduce the length of 11KV distribution feeders. (53 Nos. Grids Cost Rs.12.5 Billion).  Conversion of 33KV & 66KV Voltage Systems to 132KV Systems. (Cost Rs.5.0 Billion)  Rehabilitation of Grid System & Capacitors installation at Grid Stations. (Cost Rs.3.5 Billion)  Bifurcation and rehabilitation of 11KV Distribution System and Capacitors installation.(Cost Rs.2.5 Billion)  Total Feeders682 No.  Feeders for bifurcation/rehabilitation250 No.  Av. cost per KMRs.10.0 Mln  Construction of 11KV lines to Minimize LT (400 Volts) System. (Cost Rs.20.0 Billion)  Length of lines20000 KM  Cost per KMRs.1.0 Mln 11