7th SAGC Workshop Dhahran 9 June 2009

Central Power Purchasing Agency (CPPA)National Transmission and Dispatch Company (NTDC)

NTDC Internship Program 201121st June 2011BackgroundCPPA - An Overview A Snapshot of Major FunctionsSome of Our Business ProcessesRoadmap to the FutureQuestions and AnswersTodays AgendaCPPA3

CPPA1. Background1.1 Restructuring of Power SectorCPPA5

GenerationTransmissionDistributionDesignCPPAPlanningProtectionWAPDAAfter restructuring, the existing practices, rules, and procedures will need to be formalized and documented.System OperatorCentral Power Purchase AgencyNational Transmission and Dispatch Company (NTDC)Transmission Network OperatorContracts Registrar & Power Exchange Administrator1.2 Components of NTDCCPPA6

Initiation of commercial operation by NTDCEstablishment of WAPDACPPA registered with Pakistan Security ExchangeLaunching of CPPA as a function of NTDCMar. 1958Dec. 1998Jan. 2009Feb. 20041.3 Important MilestonesCPPA7Autonomous functioning of CPPAExpected in near futureCPPA2. CPPA An OverviewCPPA was created by Government of Pakistan under Restructuring of Power Sector in 1992.Working as an agent of NTDC, CPPA is mandated to buy each unit of generated electricity for DISCOs.It is a seller of electrical energy to whole sale purchasers i.e. DISCOs and Bulk Power Consumers including KESC.CPPA is an entity with Zero Asset and Zero Liability; it manages it business through wheeling charges.2.1 Important FactsCPPA9CPPA was established under the provisions of Article 8 of NTDC license (No. TL/01/2022) and clause 62 and 63 of NEPRA Tariff determination for NTDC 2004 on 26 July 2004 with a mandate to procure electric power on behalf of xWDISCOs to meet their demand.Central Power Purchasing Agency (Guarantee) Limited is registered as an independent company under the Companies Ordinance 1984 with Securities and Exchange Commission of Pakistan on 28 January 2009. 9Managing DirectorChief Engineer SettlementCentral Power Purchasing Agency (CPPA)CPPA102.2 Existing Organizational StructureStaff Officer TechnicalDirector GeneralITChief Operating Officer/General ManagerD.M (5)A.M (5)Manager Tech(3)Manager Tech(2)D.M (4)A.M (4)Manager IT(2)Manager(4)D.M (4)A.M (4)D.M (7)A.M (13)D.M (2)A.M (2)Manager L&CA(4)Chief Engineer ProcurementDeputy G. M.FinanceManager HR&A(4)Pakistan has the immense potential to emerge, sustain and be acknowledged as the best electric power market, in South Asia, facilitating win-win-win situation for investors, customers and utility professionals.2.3 Vision11CPPA

We undertake to procure each unit of electricity produced by different sources and to sell it to DISCOs and bulk consumers for easing out the prevailing scarce supply of electricity to the consumers.2.4 Mission12CPPA

2.5 Strategic GoalCentral Power Purchasing Agency13

CPPA to be acknowledged as a trusted, professional and efficient agency owing to its internationally accepted working procedures, non-discriminatory and transparent business operations, and excellent performance standards.13CPPAEnsure verification of invoices from generators (IPPs, GENCOs and WAPDA Hydel plants) Execute settlement functions (Billing to DISCOs and bulk consumers including KESC under NEPRA determined mechanism)Monitor functioning of different role players (Generators, NTDC and Purchasers); suggest changes in the SOPs2.6 ObjectivesCPPA14

CPPA is primarily responsible for purchasing power from all generators located throughout Pakistan excluding Karachi and selling it to all DISCOs and bulk consumers including KESC.

2.7 Core ResponsibilityCPPA15

HydelThermal Furnace OilRenewableThermal -NuclearThermal - Natural GasThermal - CoalCPPA3. A Snapshot ofMajor FunctionsManage networking of CDPs for collection of energy dataMonitor functioning of meters installed at CDPs with grid users (GENCOs, IPPs and DISCOs)Undertake corrective measures for metering systems errorsEstablish Operating Committees, Metering Committees and Interconnection Committees for all IPPsReconcile and process energy data received from Metering Committees (NTDC, IPPs & DISCOs)Monitor compliance with respective PPA3.1 CPPAs Functions17CPPASetup teams to witness generators Commissioning Tests and Annual Dependable Capacity TestsProcess and execute necessary amendments to PPAsCo-ordinate with Planning Power for technical studiesParticipate in NEPRA public hearings on multiple aspectsCo-ordinate with various NTDC departments for arrangement of interconnection facilitiesDevelopment of different application software was outsourced to Academia (UET: Al-Khawarzimi Institute of Computer Sciences)Central Power Purchasing Agency (CPPA)3.2 CPPAs Functions (Continued)CPPA18Technical Studies: Interconnection studies, load flow studies essentially required for plants site selectionNEPRA hearings: Issuance of generation licenses, tariff determination for generators Arrangement of interconnection facilities: For power transmission from new IPPsApplication software outsourced to Academia: Real time data collection from CDPs Data processing at CPPA HQs Vetting of EPP and CPP Invoices18Central Power Purchasing Agency (CPPA)#IPP NameLocationCapacity (MW)COD1Attock Generation LtdShiekhupura Road, Lhr.15617-03-092Atlas Power ProjectMorgah, Rawalpindi21418-12-093Engro Power ProjectGhottki21727-03-104Saif Power Generation Co.Sahiwal20930-04-105Orient Power LtdKasur20924-05-106Nishat Power LimitedKasur19509-06-107Nishat Chunian Power Ltd.Kasur19521-07-108Sapphire Elect. Co. LtdShiekhupura20905-10-109Liberty Power TechFaisalabad19613-01-1110HUBCO PowerNarowal21422-04-1111Foundation Power Co.Daharki17817-05-11Total : 2193 MWIPPs Under 2002 Power PolicyCPPA19Central Power Purchasing Agency (CPPA)#IPP NameLocationCapacity(MW)Expected COD1Halmore Power GenerationBhikki, Sheikhpura209June, 20112Star Power GenerationDaharki126Dec, 20133Uch-II Power PlantDera Murad Jamali375Dec, 2013Total : 710 MWUpcoming IPPs Under 2002 P. PolicyCPPA20Coordinate NEPRA for:Issuance of Generation Licenses Tariff determinationMaintain close liaison with AEDB on:Capacity building on Renewable Energy (RE) technologiesActualizing of CER for RE ProjectsDevelopment of Renewable Energy (RE) projectsSupport DISCOs, Punjab Power Development Board and AJK Power Development Board for developing of small hydro power projectsDraft and negotiate PPAs with sponsorsManage PPAs of completed projects3.3 Renewable PerspectiveCPPA21

Central Power Purchasing Agency (CPPA)3.4 Status of Wind Power ProjectsCPPA22

EPA was signed with FFCEL on 15th April 2011.CPPA is negotiating standard draft EPA with several IPPs. NEPRA approved tariff for 5 IPPs.7 IPPs have so far acquired Generation Licenses.21 IPPs with 1,054 MW of Wind Energy are on the way.#IPP NameCapacity(MW)Tariff(US$ Cents per kWh)Anticipated COD1Green Power Pvt. Ltd.50.010.285Jun. 20132Dawood Power Ltd.50.011.870Aug. 20133Zorlu Enerji Pakistan Ltd.56.412.105Oct. 20124Arabian Sea Wind Energy49.5

11.920Oct. 20135Fauji Fertilizer Company Ltd.49.516.109Sep. 2012Total : 255.4 MW3.5 NEPRA Determined Tariff - Wind ProjectsCPPA23CPPA4. Some of Our Business Processes

4.1 Flow of Revenue Cycle25CPPA1Verify bills from generators & compute payments2Evaluate price chargeable to DISCOs & bulk consumers3Bill to DISCOs, KESC and bulk consumers4Collection of funds against bills issued by CPPA5Monthly disbursal of funds to the generatorsCPPA4.2 IPPSs Invoices Verification ProcessVerification of Monthly Energy Purchase Price (EPP) InvoicesVerification of Monthly Capacity Purchase Price (CPP) InvoicesVerification of Monthly Supplementary Invoices (Markup, WPPF, WWF, etc.)Preparation of Liquidated Damage Invoices26Central Power Purchasing Agency (CPPA)4.3 GENCOs & WAPDA Hydel InvoicingCPPA27Verification of Energy Purchase Price Invoices (EPP)Verification of Capacity Purchase Price Invoices (CPP)Supplementary Invoices claimed by the generatorsEPP: Block-wise Energy, Open Cycle Energy and Block-Wise Rates determined by NEPRA are the main parameters for the verification of EPPCPP: Annual Dependability Capacity and Rates determined by NEPRA are the main parameters for the verification of CPP27Central Power Purchasing Agency (CPPA)4.4 Invoicing Process for DISCOs & IPPsCPPA28Sale of electricity invoices to DISCOs and KESCBilling to IPPs against energy purchased through NTDC networkCalculation of Energy Transfer Rate (ETR) & Capacity Transfer Price (CTR)Monitoring for recovery of amount billed to DISCOs and KESCReconciliation of Energy with GeneratorsReconciliation of Energy with DISCOsReconciliation of Financial Issues with IPPsResolve legal issues like arbitration proceedings under Article XV of the PPA (Dispute Procedure)Resolve disputes/issues with IPPs under PPACPPA294.5 Reconciliation & Disputes ResolutionCPPA5. Roadmap to the FutureMaintain transparencyEnsure effective accountabilityExhibit non-discrimination among generators & customersAchieve highest efficiency through corporate cultureBuild industry standard capacity to manage businessPrepare and execute business planMitigate cash shortfall risksMonitor functioning of different role playersDevelop formalized business standards and procedures5.1 Objectives As Autonomous EntityCPPA31

Prepare and execute business plan: Plan generation and sales using estimated PPP & UoSCMonitor functioning of different role players i.e. Generators, NTDC and Purchasers31CPPAYour questions would certainly add value to our approach, operations and performance