Second Power Transmission Enhancement Investment Program (PFR PAK 48078-004)

Project Number: 48078-004 Loan: LXXXX September 2017

Pakistan: Second Power Transmission Enhancement Investment Program and Tranche 2

Project Administration Manual

ABBREVIATIONS

ADB AGP

– –

Asian Development Bank Auditor General of Pakistan

CPPA CPPA-G DMF EA EAD EARF EMP EMS FAM FMA FMC FMICRA

– – – – – – – – – – – –

Central Power Purchasing Agency Central Power Purchasing Agency (Guarantee) Limited design and monitoring framework executing agency Economic Affairs Division environmental assessment and review framework environmental management plan energy management system facility administration manual financial management assessment facility management consultant financial management internal control and risk assessment

GDP – gross domestic product GW GWh

– –

gigawatt gigawatt-hour

HESCO km

– Hyderabad Electric Supply Company kilometer

kV – kilovolt kWh LARF

– –

kilowatt-hour land acquisition and resettlement framework

LCP – least-cost plan MFF MOE MOF

– –

multitranche financing facility Ministry of Energy Ministry of Finance

MVA MW

– –

megavolt-ampere megawatt

NEPRA – National Electric Power Regulatory Authority NTDC – National Transmission and Despatch Company Limited PMU – project management unit PPTA QESCO RMS

– – –

project preparatory technical assistance Quetta Electric Supply Company revenue metering system

RRP SCADA SFS

– – –

Report and Recommendation to The President Supervisory Control and Data Acquisition System for Settlement

TA – technical assistance TASF – technical assistance special fund

CONTENTS Page

I. TRANCHE 2 DESCRIPTION 2

II. IMPLEMENTATION PLANS 4 C. Program and Project Readiness Activities 4 D. Overall Program and Project Implementation Plans 4

III. PROJECT MANAGEMENT ARRANGEMENTS 5 A. Program and Project Implementation Organizations: Roles and Responsibilities 5 B. Key Persons Involved in Implementation 6 C. Program and Project Organization Structure 7

IV. COSTS AND FINANCING 8 A. Cost Estimates Preparation and Revisions 9 B. Key Assumptions 9 C. Detailed Cost Estimates by Expenditure Category for Tranche 1 (Table 7) 10 D. Allocation and Withdrawal of Loan Proceeds for Tranche 2 (Table 8) 11 E. Detailed Cost Estimates by Financier for Tranche 2 (Table 9) 12 F. Detailed Cost Estimates by Year for Tranche 2 (Table 11) 14 G. Contract Award and Disbursement 15 H. Fund Flow Diagram for Tranche 2 (Figure 4) 15

V. FINANCIAL MANAGEMENT 16 A. Financial Management Assessment 16 B. Disbursement 16 C. Accounting 17 Auditing and Public Disclosure 17

VI. PROCUREMENT AND CONSULTING SERVICES 18 A. Advance Contracting and Retroactive Financing 18 B. Procurement of Goods, Works, and Consulting Services 19 C. Procurement Plan for Tranche 1 19

VII. SAFEGUARDS 20 A. Land Acquisition and Resettlement 20 B. Environment 21

VIII. GENDER AND SOCIAL DIMENSIONS 22 A. Gender 22 B. Social Dimensions 22

IX. PERFORMANCE MONITORING, EVALUATION, REPORTING, AND COMMUNICATION 23 A. Program and Project Design and Monitoring Frameworks 23 B. Monitoring 24 C. Evaluation 25 D. Reporting 26 E. Stakeholder Communication Strategy 26

X. ANTICORRUPTION POLICY 27

XI. ACCOUNTABILITY MECHANISM 28

XII. RECORD OF CHANGES TO THE PROJECT ADMINISTRATION MANUAL 29

Project Administration Manual Purpose and Process

1. The project administration manual (PAM) describes the essential administrative and management requirements to implement the project on time, within budget, following the policies and procedures of the government and Asian Development Bank (ADB). The PAM includes references to templates and instructions.

2. 3. The executing agencies (EAs), National Transmission and Despatch Company Limited

(NTDC) and Central Power Purchasing Agency (Guarantee) Limited (CPPA-G), are responsible for implementing the project, as agreed jointly between the Borrower and ADB, and in accordance with government and ADB’s policies and procedures. ADB is responsible to support implementation, including EAs’ compliance of their obligations and responsibilities for project implementation following ADB’s policies and procedures.

4. At Loan Negotiations, the Borrower and ADB shall agree to the PAM and ensure consistency with the Loan Agreements which shall be reflected in the minutes of the Loan Negotiations. In the event of any discrepancy or contradiction between the PAM and the Loan Agreements, the provisions of the Loan Agreements shall prevail.

After ADB Management approval of the Tranche's Periodic Financing Request Report, changes in implementation arrangements are subject to agreement and approval pursuant to relevant government and ADB administrative procedures (including the Project Administration Instructions) and upon such approval they will be subsequently incorporated in the PAM.

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I. TRANCHE 2 DESCRIPTION

1. Rationale. The Second Power Transmission Enhancement Investment Program (MFF II) Tranche 2 will expand 220 kilovolts (kV) transmission system to remove transmission network bottlenecks in the system and to enable the network to handle the expected future loads to meet the technical requirements and economic guidelines. It will also upgrade supervisory control and data acquisition (SCADA)/Revenue Metering System (RMS) to enable the transmission system operator, National Transmission and Despatch Company Limited (NTDC), to monitor and control the grid in real-time and prevent or reduce the duration of outages in the network, thus increase grid stability, reliability and resilience to accommodate more intermittent renewable energy. It will also feed computerized metering data complying with the Grid Code into the system for settlement (SFS) of the market operator, Central Power Purchasing Agency (Guarantee) Limited (CPPA-G), to streamline revenue collection, billing and payment processes, and create a foundation for a future energy trading platform. 2. Impact and Outcome. The project will be aligned with the following impacts: (i) improved transmission infrastructure1, and (ii) improved energy market transparency and efficiency.2 The outcome will be improved coverage, reliability, transparency, and quality of the power transmission service in Pakistan. 3. Outputs. The outputs of Tranche 2 will be: (i) the 220 kV transmission network augmented and expanded, and (ii) the NTDC’s SCADA/RMS upgraded. 4. Tranche 2 subprojects include the construction of new transmission lines and substations, extension of existing substations, and installation of a complete SCADA/RMS pertaining to the Pakistan power grid. The technical justifications are summarized in Table 1, with subproject details in Appendix 1.

Table 1: Technical Justifications for Subprojects

Subproject Technical Justification

Subproject 1: 220 kV Mirpur Khas Substation with associated Transmission Lines

A new 220 kV Mirpur Khas New S/S with 220/132 kV, 2x250 MVA transformers with allied equipment and accessories.

Extension of two line bays at 220 kV Hala Road S/S

220 kV D/C T/L looping in/out of Hala Road - Jamshoro 220 kV T/L at Mirpur Khas New S/S (70 km)

220 kV D/C T/L looping in/out of Jamshoro – T.M. Khan Road 220 kV D/C T/L at Hala Road (10 km)

To meet growing demand in HESCO customers, uprate existing system voltage profile to acceptable conditions, improve system reliability and voltage profile, and reduce transmission loss.

Subproject 2: D.I. Khan-Zhob 220 kV Transmission Line with Zhob Substation

220 kV D/C T/L from D.I. Khan to Zhob S/S. (220 km).

220 kV Zhob substation consisting of two 220 kV transformer bays for 220/132 kV, 2x160 MVA transformers, two 220 kV line bays and six 132 kV line bays along with allied equipment and accessories.

Extension of two line bays at 220 kV D.I Khan S/S

To eliminate load shredding and transmission loss, increase power supply at northeastern Balochistan, uprate existing system voltage profile to acceptable conditions, and improve system reliability and electricity quality.

Subproject 3: Construction of New 220 kV Guddu- Shikarpur-Uch-Sibbi Transmission Line

220 kV S/C T/L Guddu to Interconnection point of 220 kV Shikarpur (150 km)

220 kV S/C T/L Shikarpur Interconnection point to Uch power plant (100 km)

220 kV S/C T/L Uch Power Plant to 220 kV Sibbi Substation (110 km)

Because existing PC pole line is unserviceable and beyond economic repair, new 220 kV transmission line will be developed to increase NTDC’s

1 Government of Pakistan. 2013. National Power Policy. Islamabad. 2 Government of Pakistan. 2014. Vision 2015. Islamabad.

3

Subproject Technical Justification

transmission capacity from 374 MW to 748 MW, facilitate utilization of full generation capacity of Uch Power Plants particularly at N-1 conditions, improve system reliability and voltage profile in Balochistan and Sindh provinces, and reduce transmission loss.

Subproject 4: SCADA Phase 3 and Revenue Metering System (RMS)

SCADA Phase 3 and Revenue Metering System (RMS) for NTDC

Renovation of a dispatch center at NPCC with updated hardware/software

Expansion of fiber optic backbone and backup microwave system

Renovation of an additional backup control center at Jamshoro

Completion of SCADA Phase 2

Connection of all Common Delivery Points to the SCADA System

Installation of Remote Terminal Unit (RTU) interfacing with SCADA System

To enable the Pakistan grid operator to perform real-time grid monitoring and control, preventing or reducing the duration of outages in the network. The SCADA Phase 3 and RMS component will give the needed command and control to NPCC thus greatly increasing system reliability and stability. The SFS will streamline the revenue collection process and the billing and payment processes and create a foundation for a future energy trading platform.

D/C =double circuit, km = kilometer, kV = kilovolt, MVA = megavolt-ampere, MVAR = megavolt-ampere reactive,

MW = megawatt, RMS = revenue metering system, SCADA = supervisory control and data acquisition, S/C =

single circuit, S/S = substation, T/L = transmission line.

5. Subproject 1 will establish a new 220 kV supply point to the Sindh Province to eliminate the low voltage problems in the Mirpur Khas and adjoining areas. It will enhance the power network in the areas of Mirpur Khas, Samaro, Umarkot, Mir Wahg, Sultanabad, Tando Adam, Jamnawaz, Kandari, Sanghar etc and provide a reliable power supply to these areas in keeping with the requirements of the Grid Code. It will also reduce transmission losses in the HESCO network. 6. Subproject 2 will establish a new 220 kV supply point to the Balochistan province to eliminate loan shredding and the persistent low voltage problem which has been a major drawback in the area over a long period. It will enhance the power network in the north-eastern part of Balochistan and provide a reliable supply in keeping with the requirements of the Grid Code. It will also reduce transmission losses in the QESCO network. 7. Subproject 3 will construct a reliable steel tower structure line with increased capacity from the existing 374 megawatts (MW) to 748 MW because existing PC pole line is in a dilapidated condition and beyond economic repair. It will facilitate the full utilization of the Uch power plants operating on natural gas from the Uch gas fields and thus one of the lowest cost power plants in Pakistan. The new line with increased capacity will enable the power plants to feed into the system without problems when there is any major loss of load at Sibi or Quetta when power will be transported to the main power network. It will improve system reliability and voltage profile in Balochistan and Sindh provinces, and reduce transmission losses. 8. Subproject 4 will install a complete SCADA/RMS system pertaining to the Pakistan power grid. This project will complete the effort to monitor and control the grid in real-time and prevent or reduce the duration or outages in the network.

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II. IMPLEMENTATION PLANS

A. Program and Project Readiness Activities

Table 2: Processing Schedule

Indicative Activities 2017 2018 Responsible Party

J F M A M J J A S O N D J F

Advance contracting actions

ADB, NTDC Establish implementation arrangements

Negotiations and PFR signing

ADB, EAD, NTDC ADB Management Consideration of Tranche 2

Loan signing of Tranche 2

Subsidiary on-lending agreement

EAD, NTDC

Loan effectiveness for Tranche 2

ADB, EAD, NTDC

ADB = Asian Development Bank, EAD = Economics Affairs Division, NTDC = National Transmission and Despatch Company Limited, PFR = periodic financing request.

B. Overall Program and Project Implementation Plans 9. The implementation schedules for Tranche 2 are in Tables 3. Details for the Tranche 2 schedule are in Appendix 2.

Table 3: Tranche 2 Implementation Schedule

Activities 2017 2018 2019 2020 2021

Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

A. DMF

Output 1

1.1 Issue tender documents.

1.2 Award contracts.

1.3 Construct assets.

1.4 Make assets operational.

Output 2

2.1 Issue expression of interest for

SCADA-RMS supervision consultants.

2.2 Mobilize SCADA-RMS supervision

consultants.

2.3 Issue tender documents.

2.4 Award contract.

2.5 Construct assets.

2.6 Make the systems operational.

B. Management Activities

EMP activities

Communication activities

Project reviews

5

Midterm review

Project Completion Report

Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

A. DMF

Output 1

1.1. Issue tender documents

1.2. Award contracts

1.3 Construct assets

1.3. Make assets operational

Output 2

2.1. Issue expression of interest for SCADA/EMS

and RMS supervision consultant

2.2. Mobilize SCADA/EMS-RMS Consultant

2.3. Issue tender documents

2.4. Award contract

2.5. Construct assets

2.6. Make the systems operational

B. Management Activities

EMP activities

Communication activities

Project Reviews

Midterm Review

Project Completion Report

Activities20222017 2018 2019 2020 2021

DMF = design and monitoring framework, Q = quarter.

III. PROJECT MANAGEMENT ARRANGEMENTS

A. Program and Project Implementation Organizations: Roles and Responsibilities

Table 4: Management Roles and Responsibilities Implementation Organizations

Management Roles and Responsibilities

Steering committee

Chaired by Secretary, Ministry of Energy (Power Division), and consisting of Joint Secretary (NTDC), Joint Secretary (Power/Finance), Managing Director of NTDC, and representative from Economic Affairs Division (EAD)

Executing Agency

National Transmission and Despatch Company Limited (NTDC) will monitor the implementation of the investment program following the Framework Financing Agreement, and subsequent tranches following the loan and project agreements.

Implementing Agency

NTDC: The existing project management unit (PMU) under the MFF II Tranche 1 will be responsible for day-to-day project implementation for the physical outputs relating to the transmission system and operation (as defined under their transmission license). The facility management consultant will support the PMU for implementation. PMU will also be responsible for complying with the safeguards requirements (Chapter VII) and design and monitoring framework (Chapter IX), and loan covenants.

Borrower Islamic Republic of Pakistan

Financier Asian Development Bank

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B. Key Persons Involved in Implementation

Table 5: Key Persons in Executing Agency and Financier Executing Agency National Transmission and Despatch Company

Managing Director PMU

Zafar Abbas Telephone: (92-42) 9920 2229 Facsimile: (92-42) 9920 2053

Email address: md@ntdc.com.pk Office Address: #414 WAPDA House, Lahore S. Jamal Asghar Chief Engineer Email address: pmu@ntdc.com.pk

Financier Asian Development Bank

Energy Division Joonho. Hwang Officer-in-Charge, CWEN Telephone: (63-2) 632 6800 Email address: jhwang@adb.org

Mission Leader Lei Zhang Senior Energy Specialist, CWEN Email address: zlei@adb.org

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C. Program and Project Organization Structure

Figure 1: Structure of Executing Agency and Project Implementation Unit (National Transmission and Despatch Company Limited)

General Manager

(Procurement & Cont. Manage.)

Officials, Project Execution

DMD Panning& Engineering

Reporting/ supervision (Non-ADB projects)

Reporting/ supervision (ADB projects)

Coordination (Non-ADB projects)

Coordination (ADB projects)

PMU Head Chief Engineer

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10. To cope with its unprecedented challenges to at least double the transmission capacity within several years, NTDC is restructuring its organization to improve institutional efficiency. The restructuring focuses on strengthening its core functions: planning, design, project development, system management and operations, and improving regulatory compliance, such as timely submission of tariff petition, investment plan and loan forecast, among others, in accordance with NEPRA rules and regulations. These functions will be strengthened through creating two groups, i.e., (i) planning, design and engineering (Group 1), and (ii) asset development and management (Group 2). Two deputy managing directors (DMD), DMD (Planning & Engineering) and DMD (Asset Development & Management) have been selected on merit-based to lead the two groups. A Corporate Affair Department headed by General Manager was established to improve regulatory compliance and strategic planning. 11. Under this context, ADB’s project management unit (PMU) is positioned under Group 2. Dedicated project managers (PMs) are being assigned reporting to a dedicated program manager responsible for each tranche or loan. Program managers will report to dedicated PMU Head (Chief Engineer) who will further report to General Manager, Project Delivery North or South, under Group 2, depending on the subproject location. The PMs will be full responsible at subproject level for procurement and execution until commissioning, under the overall guidance of program manager. The PMs will select staff to be responsible for design and engineering, procurement and contract management, construction execution, and safeguards compliance. These staff will report to PMs and coordinate with their line departments in parallel. Considering the size of the ADB financed projects ($810 million from MFF II and EU75 million for MFF I T4 with AFD financing, a project coordinator funded by ADB loan will assist DMD (Asset Development & Management) in overall ADB project management. This is to ensure DMD (Asset Development & Management) be closely informed on the various implementation issues and assist him and NTDC management make timely decision and actions. For ADB-funded projects, GM Project Delivery North or South will report to DMD (Asset Development and Management) through Project Coordinator (ADB). 12. The new NTDC PMU will address the chronic issue of existing PMU that lacks ownership, responsibility, and authority. Once dedicated PMs and PGM are appointed, PMU performance will be regularly examined. The new PMU structure can be adjusted subject to its performance. Before the new PMU is in place, the existing PMU will continue its functions. In addition, a facility management consultant (FMC)3 will support PMU in design, construction supervision, and environmental and social safeguards monitoring throughout MFF II. In particular, they will enhance technical capacity of PMU in state of the art design of 500 kV substations, and introduce international good practice.

IV. COSTS AND FINANCING

13. MFF. The government requested an MFF in an amount of up to $810.0 million from ADB's ordinary capital resources (OCR) and Special Funds resources to help finance a part of the investment program. The MFF will consist of several tranches, subject to the government's submission of related periodic financing requests, execution of the related loan and project agreements for each tranche, and fulfillment of terms and conditions and undertakings set forth in the framework financing agreement. 14. The MFF will combine OCR and Special Funds resources, i.e., Asian Development Fund (ADF) resources, up to the aggregate MFF amount. The provision of any ADF resources will be

3 The consultants were engaged through PAK: Second Power Transmission Enhancement Investment Program

Tranche 1 (Loan 3420).

9

balanced by a corresponding reduction in available ordinary capital resources (and vice versa), with total financing provided under the MFF not to exceed the aggregate MFF total of $810.0 million. Any ADF allocation will be subject to (i) the availability of ADF resources, (ii) Pakistan’s access to such resources pursuant to ADB’s then applicable Graduation Policy4 and the requirements of ADF donors, and (iii) the availability of such resources to Pakistan given ADB’s then applicable policy on performance-based allocation of ADF resources.5 15. Tranche 2. A loan of $260.0 million from ADB’s OCR. The loan will have a 25-year term, including a grace period of 5 years, custom-tailored repayment schedule, an annual interest rate determined in accordance with ADB’s London interbank offered rate (LIBOR)-based lending facility plus a contractual spread of 0.5% and 0.10% of maturity premium, a commitment charge of 0.15% per year (the interest and other charges during construction to be capitalized in the loan), and such other terms and conditions set forth in the loan and project agreements. 16. Counterpart funding. NTDC will finance environmental mitigation measures; resettlement compensation; administration and audit; inland transportation; and insurance, taxes, and duties. ADB will finance the turnkey contracts, and consulting services for SCADA system, interest during construction (on ADB portion of financing), and contingency. A. Cost Estimates Preparation and Revisions 17. The cost estimates for Tranche 2 were prepared based on the updated technical analysis by NTDC and consultants. The cost estimates were based on the most recent prices and a market assessment done by NTDC and consultants. These estimates were reviewed by ADB and endorsed by NTDC. B. Key Assumptions

18. The following key assumptions underpin the cost estimates and financing plan:

(i) Exchange rate: 1 USD = PRs104.7 as of 19 May 2017. (ii) Price contingencies based on expected cumulative inflation over the

implementation period are as follows:

Table 6: Escalation Rates for Price Contingency Calculation (Tranche 2)

Item 2017 2018 2019 2020 Average

Foreign rate of price inflation 1.4% 1.5% 1.5% 1.5% 1.5% Domestic rate of price inflation 4.7% 5.0% 5.2% 5.5% 5.2% Source: Asian Development Bank.

(iii) All costs are expressed in May 2017 prices. (iv) Physical contingencies are computed at 5% of total base costs and 9% for taxes

and duties. (v) Financial charges during implementation consist of interest during construction of

12% per annum (government’s on-lending rate to NTDC) calculated on the average outstanding amount, and commitment charges of 0.15% per annum calculated on the average undisbursed amount of ADB loan.

4 Currently, ADB. 2008. Review of the 1998 Graduation Policy of the Asian Development Bank. Manila. 5 Currently, ADB. 2004. Review of the Asian Development Bank’s Policy on the Performance-Based Allocation of

Asian Development Fund Resources. Manila; and ADB. 2008. Refining the Performance-Based Allocation of Asian Development Fund Resources. Manila.

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C. Detailed Cost Estimates by Expenditure Category

Table 7. Detailed Cost Estimates by Expenditure Category for Tranche 2 ($ million)

Item Local

Currency Foreign

currency Total Costa

% of Base Cost

A. Investment Costsb

1 Turnkey Contracts

66.05

148.99 215.04 82.3% 2 Consulting Services for NTDC SCADA 1.81 3.21 5.02 1.9% 3 Project management 2.14 - 2.14 0.8%

4 Social and Environment Mitigation

- - - 0.0% 5 Land Acquisition and Resettlement 7.08 - 7.08 2.7% 6 Taxes and duties of Turnkey Contracts 15.78 16.36 32.13 12.3%

Total Base Cost (A)

92.85

168.56 261.41 100.0% B. Contingenciesc

1 Physical

4.76

10.61 15.37 5.9%

2 Price 13.85 8.70 22.55 8.6%

Subtotal (B)

18.61

19.31 37.92 14.5% C. Financing Charges During Implementationd

1 Interest during Implementation 34.46 10.00 44.46 17.0% 2 Commitment Charges 0 1.21 1.21 0.5% Subtotal (C) 34.46 11.21 45.67 17.5%

Total (A+B+C)

145.92

199.08 345.00 132.0% a Includes taxes and duties of $32.13 million to be financed from NTDC cash resources for Tranche 2.

b In Mid- 2017 prices. c Physical contingencies are computed at 5% and 9% for Taxes and Duties. Price contingencies computed at 1.5% in 2017, 1.4% in 2018, 1.5% in 2019 and onward on foreign exchange costs; and 4.7% in 2017, 5.0 in 2018, 5.2% in 2019, 5.5% in 2020 and onward on local currency costs; includes provision for potential exchange rate fluctuation under the assumption of a purchasing power parity exchange rate. d Includes interest and commitment charges. Interest during construction for ADB loan has been computed at the 5-year fixed swap rate plus a contractual spread of 0.5% and 0.10% of maturity premium. The ADB loan will be on-lent at 12.00% per annum and carry the same repayment and grace periods. Commitment charges are calculated at 0.15% on average undisbursed amount. Source: Asian Development Bank.

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D. Allocation and Withdrawal of Loan Proceeds

Table 8. Allocation and Withdrawal Loan Proceeds for Loan [XXXX]

Number Item

Total Amount Allocated for

ADB Financing ($)

Basis for Withdrawal from the Loan Amount

1 Turnkey Contracts**

215,040,000 100% of total expenditures claimed*

2 Consulting Services for NTDC SCADA

5,020,000 100% of total expenditures claimed

3 Interest and Commitment Charges

11,210,000 100% amount dues

4 Unallocated

28,730,000

Total

260,000,000 Source: Asian Development Bank. *Exclusive of taxes and duties imposed within the territory of the Borrower. **Subject to the condition for withdrawal described in paragraph 7 of Schedule 3 to the Ordinary Operations Loan Agreement.

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E. Detailed Cost Estimates by Financier

Table 9. Detailed Cost Estimates by Financier for Tranche 2 ($ million)

ADB NTDC

Item Amount

% of Cost

Category Amount

% of Cost

Category Total Cost

A. Investment Costsb

1 Turnkey Contracts 215.04 100.0% 0.00 0.0% 215.04

2 Consulting Services for NTDC SCADA 5.02 100.0% 0.00 0.0% 5.02

3 Project management - 0.0% 2.14 100.0% 2.14

4 Social and Environment Mitigation - 0.0% 0.00 0.0% -

5 Land Acquisition and Resettlement - 0.0% 7.08 100.0% 7.08

6 Taxes and duties of Turnkey Contracts

0.0% 32.13 100.0% 32.13

Total Base Cost (A) 220.06 84.2% 41.35 15.8% 261.41

B. Contingenciesc 28.73 75.8% 9.19 24.2% 37.92

C. Financing Charges During Implementationd 11.21 24.5% 34.46 75.5% 45.67

Total (A+B+C) 260.00 75.4% 85.00 24.6% 345.00 a Includes taxes and duties of $32.13 million to be financed from NTDC cash resources for Tranche 2. b In Mid- 2017 prices. c Physical contingencies are computed at 5% and 9% for Taxes and Duties. Price contingencies computed at 1.5% in 2017, 1.4% in 2018, 1.5% in 2019 and onward on foreign exchange costs; and 4.7% in 2017, 5.0 in 2018, 5.2% in 2019, 5.5% in 2020 and onward on local currency costs; includes provision for potential exchange rate fluctuation under the assumption of a purchasing power parity exchange rate. d Includes interest and commitment charges. Interest during construction for ADB loan has been computed at the 5-year fixed swap rate plus a contractual spread of 0.5% and 0.10% of maturity premium. The ADB loan will be on-lent at 12.00% per annum and carry the same repayment and grace periods. Commitment charges are calculated at 0.15% on average undisbursed amount. Source: Asian Development Bank.

1

3

F. Detailed Cost Estimates by Outputs

Table 10. Detailed Cost Estimates by Outputs ($ million)

Sub-Project 1 Sub-Project 2 Sub-Project 3 Sub-Project 4

220 kV Mirpur

Khas S/S and TLs

220 kV D I Khan TLs and 220 kV

Zhob S/S

220 kV Guddu-Shikarpur-Uch-

Sibbi TLs

NTDC SCADA -RMS

Item Total Cost

Amount % of Cost

Category Amount

% of Cost

Category Amount

% of Cost

Category Amount

% of Cost

Category

A. Investment Costsb

1 Turnkey Contracts 215.04

28.45 13.2%

50.57 23.5%

59.34 27.6%

76.68 35.7%

2 Consulting Services for NTDC SCADA 5.02 - 0.0% - 0.0% - 0.0% 5.02 100.0%

3 Project management 2.14 0.28 13.0% 0.10 4.4% 1.77 82.6% - 0.0%

4 Social and Environment Mitigation

5 Land Acquisition and Resettlement 7.08 2.50 35.4% 2.17 30.6% 2.41 34.0% 0.0%

6 Taxes and duties of Turnkey Contracts 32.13 2.89 9.0% 5.85 18.2% 7.04 21.9% 16.36 50.9%

Total Base Cost (A)

261.41

34.12 13.1% 58.69 22.5% 70.55 27.0% 98.06 37.5%

B. Contingenciesc

1 Physical 15.37 1.71 11.1% 2.93 19.1% 3.52 22.9% 7.21 46.9%

2 Price 22.55 3.06 13.6% 6.06 26.9% 7.38 32.7% 6.06 26.9%

Subtotal (B)

37.92

4.77 12.6%

8.99 23.7%

10.89 28.7%

13.27 35.0%

C. Financing Charges During Implementationd 45.67 12.6%

10.03 22.0%

12.15 26.6%

17.74 38.8%

Total (A+B+C)

345.00

44.65 12.9%

77.71 22.5%

93.59 27.1%

129.07 37.4% a Includes taxes and duties of $32.13 million to be financed from NTDC cash resources for Tranche 2. b In Mid- 2017 prices. c Physical contingencies are computed at 5% and 9% for Taxes and Duties. Price contingencies computed at 1.5% in 2017, 1.4% in 2018, 1.5% in 2019 and onward on foreign exchange costs; and 4.7% in 2017, 5.0 in 2018, 5.2% in 2019, 5.5% in 2020 and onward on local currency costs; includes provision for potential exchange rate fluctuation under the assumption of a purchasing power parity exchange rate. d Includes interest and commitment charges. Interest during construction for ADB loan has been computed at the 5-year fixed swap rate plus a contractual spread of 0.5% and 0.10% of maturity premium. The ADB loan will be on-lent at 12.00% per annum and carry the same repayment and grace periods. Commitment charges are calculated at 0.15% on average undisbursed amount. Source: Asian Development Bank.

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G. Detailed Cost Estimates by Year

Table 11. Detailed Cost Estimates by Year for Tranche 2 ($ million)

Year 1 Year 2 Year 3 Year 4 Year 5

Item Total costa 2018 2019 2020 2021 2022

A. Investment Costsb

1 Turnkey Contracts 215.04 10.75 21.50 43.01 107.52 32.26

2 Consulting Services for NTDC SCADA 5.02 0.25 0.50 1.00 2.51 0.75

3 Project management 2.14 0.11 0.21 0.43 1.07 0.32

4 Social and Environment Mitigation 0.00 - - - - -

5 Land Acquisition and Resettlement 7.08 0.35 0.71 1.42 3.54 1.06

6 Taxes and duties of Turnkey Contracts 32.13 1.61 3.21 6.43 16.07 4.82

Total Base Cost (A) 261.41

13.07

26.14

52.28

130.71 39.21

B. Contingenciesc

1 Physical 15.37 0.77 1.54 3.07 7.69 2.31

2 Price 22.55 1.13 2.26 4.51 11.28 3.38

Subtotal (B) 37.92

1.90

3.79

7.58

18.96

5.69

C. Financing Charges During Implementationd

1 Interest during Implementation 44.46 2.22 4.45 8.89 22.23 6.67

2 Commitment Charges 1.21 0.06 0.12 0.24 0.61 0.18

Subtotal (C) 45.67

2.28

4.57

9.13

22.84

6.85

Total (A+B+C) 345.00 17.25 34.50 69.00 172.50 51.75 a Includes taxes and duties of $32.13 million to be financed from NTDC cash resources for Tranche 2. b In Mid- 2017 prices. c Physical contingencies are computed at 5% and 9% for Taxes and Duties. Price contingencies computed at 1.5% in 2017, 1.4% in 2018, 1.5% in 2019 and onward on foreign exchange costs; and 4.7% in 2017, 5.0 in 2018, 5.2% in 2019, 5.5% in 2020 and onward on local currency costs; includes provision for potential exchange rate fluctuation under the assumption of a purchasing power parity exchange rate. d Includes interest and commitment charges. Interest during construction for ADB loan has been computed at the 5-year fixed swap rate plus a contractual spread of 0.5% and 0.10% of maturity premium. The ADB loan will be on-lent at 12.00% per annum and carry the same repayment and grace periods. Commitment charges are calculated at 0.15% on average undisbursed amount. Source: Asian Development Bank.

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H. Contract Award and Disbursement Projections

Figure 2. Tranche 2 S-Curve

Table 12. Contract Award and Disbursement Projection

Year Contract Awards (in USD million) Disbursements (in USD million)

Q1 Q2 Q3 Q4 Total Q1 Q2 Q3 Q4 Total

2018 73.70 114.75 188.45 7.37 11.48 18.84

2019 0.20 0.20 3.00 22.00 25.40

2020 0.20 0.20 28.00 25.00 53.40

2021 61.99 61.99 20.00 30.00 40.00 40.00 130.00

2022 0.20 18.00 14.14 32.35

2023

IDC 11.21

Total 250.44 Total 260.00 Unallocated 28.73 IDC = interest during construction, OCR = ordinary capital resources, Q = quarter Source: Asian Development Bank estimates.

I. FUND FLOW DIAGRAM Figure 3. Fund Flow

ADB

GOP

NTDC

(Implementing Agency)

Financing Agreement (Loan)

Onlending Agreement

Contractor

ContractInvoice

With

draw

al

appli

catio

n

Dire

ct Pa

ymen

t

Project Agreement

For commitment procedure, ADB loan proceeds go directly from ADB to a nominated bank of the supplier on a reimbursement basis.

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V. FINANCIAL MANAGEMENT

A. Financial Management Assessment 19. The financial management assessment (FMA) was conducted in May 2017 following ADB’s Guidelines for the Financial Management and Analysis of Projects and the Financial Due Diligence: A Methodology Note. The FMA considered the capacity of the NTDC, including funds-flow arrangements, staffing, accounting and financial reporting systems, financial information systems, and internal and external auditing arrangements. 20. Based on the assessment, the key financial management risks identified are: (i) incomplete and in accurate financial reports due to manual system; (ii) several days to collect revenue which could cause cash flow issue to NTDC; and (iii) delaying in submission of NTDC’s audited financial statements to ADB which could undermine NTDC’s ability to meet financial covenant and NTDC’s sustainability to implement the project. 21. It is concluded that the overall pre-mitigation financial management risk of NTDC is substantial. NTDC has agreed to implement an action plan to address the deficiencies (Table 13).

Table 13: Financial Management Action Plan

Action Responsibility Resources Timing

Implement a computerized accounting software to automate the accounting and reporting processes to ensure that the financial statements are free of material errors and misstatements and for timely submission and resolution of issues.

NTDC NTDC By 20206

Provide audited project financial statements to ADB within 6 months after each financial year ended.

NTDC NTDC After effectiveness

Submit NTDC’s projected financial statements and capital expenditure plans (5 years projection).

NTDC NTDC Annually

ADB = Asian Development Bank, NTDC = National Transmission and Despatch Company Limited.

B. Disbursement

1. Disbursement Arrangements for ADB Funds 22. The loan proceeds will be disbursed following ADB’s Loan Disbursement Handbook (2017, as amended from time to time),7 and detailed arrangements agreed upon between the government and ADB. Online training for project staff on disbursement policies and procedures is available.8 Project staff are encouraged to avail of this training to help ensure efficient disbursement and fiduciary control. 23. Statement of expenditure (SOE) procedure.9 The SOE procedure may be used for reimbursement of eligible expenditures up to $100,000. Supporting documents and records for

6 Pilot version to be implemented by 2016. Complete enterprise resource planning system expected by 2023. 7 http://www.adb.org/documents/ loan-disbursement-handbook 8 Disbursement eLearning available in http://wpqr4.adb.org/disbursement_elearning. 9 SOE forms are available in Appendix 7B and 7D of ADB’s Loan Disbursement Handbook (2017, as amended from

time to time).

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the expenditures claimed under the SOE should be made readily available for review by ADB's disbursement and review missions upon ADB's request for submission of supporting documents on a sampling basis, and for independent audit. 24. Before submitting the first withdrawal application, the borrower should submit to ADB sufficient evidence of the authority of the person(s) who will sign the withdrawal applications on behalf of the government, together with the authenticated specimen signatures of each authorized person. The minimum value per withdrawal application is set following the Loan Disbursement Handbook. Individual payments below this amount should be paid by NTDC and subsequently claimed to ADB through reimbursement, unless otherwise accepted by ADB. 25. No withdrawals (other than in relation to interest and commitment charges ADB is entitled to withdraw from the loan account and pay to itself, on behalf of the borrower) shall be made from the loan account until (i) ADB has received a certified copy of the duly executed and effective subsidiary loan agreement between the borrower and NTDC; (ii) ADB has received a copy of the audited annual financial statements of NTDC for the fiscal year ending 30 June 2016; and (iii) the PMU has been established and staffed in accordance with the specifications set out in the PAM.

2. Disbursement Arrangements for Counterpart Fund 26. NTDC, as a revenue generating company, will finance taxes and duties, project administration, and cost of land acquisition and resettlement, following the government regulations. C. Accounting 27. NTDC will maintain, or cause to be maintained, separate books and records by funding source for all expenditures incurred on the project following International Public Sector Accounting Standard for cash-based accounting. NTDC will prepare separate project financial statements in accordance with the government's accounting laws and regulations which are consistent with international accounting principles and practices. D. Auditing and Public Disclosure 28. NTDC will cause the detailed project financial statements to be audited following International Standards for Supreme Audit Institutions, by Office of Auditor General of Pakistan. The audited project financial statements (APFS) together with the auditor’s opinion will be presented in the English language to ADB within 6 months from the end of the fiscal year by NTDC. 29. NTDC will also cause the entity-level financial statements to be audited in accordance with International Standards on Auditing, by an independent auditor acceptable to ADB. The audited entity-level financial statements, together with the auditors’ report and management letter, will be submitted in the English language to ADB within one month after their approval by the relevant authority. 30. The annual audit report for the project accounts will include an audit management letter and audit opinions which cover (i) whether the project financial statements present a true and fair view or are presented fairly, in all material respects, in accordance with the applicable financial reporting framework; (ii) whether loan and grant proceeds were used only for the

18

purposes of the project or not; and (iii) the level of compliance for each financial covenant contained in the legal agreements for the project. 31. Compliance with financial reporting and auditing requirements will be monitored by review missions and during normal program supervision, and followed up regularly with all concerned, including the external auditor. 32. The government and NTDC have been made aware of ADB’s approach to delay submission, and the requirements for satisfactory and acceptable quality of the audited project financial statements (APFS).10 ADB reserves the right to require a change in the auditor (in a manner consistent with the constitution of the borrower), or for additional support to be provided to the auditor, if the audits are not conducted satisfactorily to ADB, or if the audits are substantially delayed. ADB reserves the right to verify the project's financial accounts to confirm that the share of ADB’s financing is used following ADB’s policies and procedures. 33. Public disclosure of the APFS, including the auditor’s opinion on the project financial statements, will be guided by ADB’s Public Communications Policy 2011.11 After the review, ADB will disclose the APFS and the opinion of the auditors on the project financial statements no later than 14 days of ADB’s confirmation of their acceptability by posting them on ADB’s website. The management letter, additional auditor’s opinions, and audited entity financial statements will not be disclosed.12

VI. PROCUREMENT AND CONSULTING SERVICES

A. Advance Contracting and Retroactive Financing 34. ADB approved advanced contracting for procurement of goods and works for all tranches under the MFF, including the project. All advance contracting and retroactive financing will follow ADB Procurement Guidelines (2015, as amended from time to time)13 and ADB’s Guidelines on the Use of Consultants (2013, as amended from time to time).14 The issuance of invitations to bid will be subject to ADB approval. Approval of advance contracting and retroactive financing does not commit ADB to finance the project. 35. Advance contracting. All activities for procuring goods and works, and consultant recruitment prior to contract signing may be undertaken before Tranche 2 effectiveness. 36. Retroactive financing. Tranche 2 may finance eligible expenditures up to 20% of the

10 ADB’s approach and procedures regarding delayed submission of audited project financial statements:

(i) When audited project financial statements are not received by the due date, ADB will write to the executing agency advising that (a) the audit documents are overdue, and (b) if they are not received within the next 6 months, requests for new contract awards and disbursement new reimbursement, and new commitment letters will not be processed.

(ii) When audited project financial statements are not received within 6 months after the due date, ADB will withhold processing requests for new contract awards and disbursement of new reimbursement, and new commitment letters. ADB will inform the NTDC of ADB’s actions and advise that the loan may be suspended if the audit documents are not received within the next 6 months.

(iii) When audited project financial statements are not received within 12 months after the due date, ADB may suspend the loan.

11 Public Communications Policy: http://www.adb.org/documents/pcp-2011?ref=site/disclosure/publications 12 This type of information would generally fall under public communications policy exceptions to disclosure. ADB.

2011. Public Communications Policy. Paragraph 97(iv) and/or 97(v). 13 Available in http://www.adb.org/site/business-opportunities/operational-procurement/goods-

services/documents#procurement. 14 Available in http://www.adb.org/documents/guidelines-use-consultants-asian-development-bank-and-its-borrowers.

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ADB loan, incurred within 12 months before signing the loan agreement. Such financing will be subject to compliance with the requirements in the subproject land acquisition and resettlement framework (LARF) (see Chapter VII). B. Procurement of Goods, Works, and Consulting Services 37. To improve procurement efficiency and streamline procurement decision making at management level, NTDC will increase financial delegation threshold to its management up to $50 million for procurement of each works or turnkey contract, $15 million for procurement of each goods contract, and $5 million for recruiting consulting firm. 38. All procurement will follow ADB’s Procurement Guidelines (2015, as amended from time to time), using international competitive bidding (ICB). ADB’s User’s Guide and Standard Bidding Documents for (i) Goods, (ii) Large Works, and (iii) Plant: Design, Supply, and Installation (for the EPC contract) will be used. The master bidding documents for Tranche 1 will also be used as master bidding documents for NTDC to prepare the bidding documents under Tranche 2. 39. Tranche 2 will follow a procurement plan indicating the methods and review procedures for goods, works, and consulting services which will be updated at least every 18 months. The procurement plan for Tranche 2 is in Section C. The packages are described in the succeeding paras. 40. Goods and works for Tranche 2. Three packages will be procured under Tranche 2 comprising of (i) 2 turnkey contracts for 220 kV substations for NTDC (ADB-200); (ii) 5 turnkey contracts for 220 kV transmission lines for NTDC (ADB-201); and (iii) 1 turnkey contact for SCADA/RMS (ADB-202). The detailed procurement and contract implementation schedules are in Appendix 1. 41. Before the start of Tranche 2, ADB and the government will review the public procurement laws of the federal and provincial governments to ensure consistency with ADB Procurement Guidelines (2015, as amended from time to time). 42. Consulting services for Tranche 2. An implementation support consultant for the rehabilitation and upgradation of SCADA/EMS System and RMS will be engaged to assist NTDC in management, construction, supervision, and implementation. The indicative terms of reference (Appendix 2) require 4 international key experts (minimum 68 person-months) and 3 national key experts (minimum 31 person-months) over 4 years. 43. To help ensure highly-competent experts for these complex assignments, NTDC will engage the consulting firms using the quality- and cost-based selection method using 90:10 quality-cost ratio. During contract negotiations, NTDC will agree on indicators to assess the consultants’ performance and deliverables. 44. Project management experts may also be recruited to augment NTDC’s PMU, particularly on management of SCADA/EMS contract. At the government’s request, selection of individual consultants will be delegated to ADB before NTDC negotiates and signs the contracts.

C. Procurement Plan for Tranche 2

45. The Procurement Plan is in Appendix 3.

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VII. SAFEGUARDS

46. Prohibited investment activities. Pursuant to ADB’s Safeguard Policy Statement (SPS 2009, as amended from time to time),15 ADB funds may not be applied to the activities described in the ADB Prohibited Investment Activities List in Appendix 5 of the SPS. 47. Accessing safeguards documents. Safeguards documents [e.g., land acquisition and resettlement framework (LARF) and land acquisition and resettlement plans (LARPs) and environmental assessment review framework (EARF)] are available on the program and project records on the ADB website. A. Land Acquisition and Resettlement 48. Land acquisition, compensation and income rehabilitation will follow the requirements in the SPS, and the same stipulations in the LARF and subproject specific LARPs/RP for the respective tranche. 49. The tranche 2 comprises four subprojects, two of which involve construction of new substations (SS) and installation of allied transmission lines (T/L); one subproject involves installation of T/L only while the remaining one subproject involves installation of software for supervisory control of data acquisition/revenue metering system. The SS and T/L subprojects involving permanent acquisition of private land will have the LARPs prepared while those involving only temporary impacts to land and land based assets will have the RPs prepared in accordance with the requirements of ADB’s Safeguard Policy Statement 2009 (SPS). 50. Accordingly, two draft LARPs and a draft RP has been prepared while a due diligence report of IR and IP category C has been prepared, which will be finalized/updated by NTDC by its Environment and Social Unit (ESIC) based on the design of subprojects to be finalized by the turnkey contractors when awarded/contracted. The final/updated LARPs/RP will be submitted to ADB for clearance. The LARPs and RP will be implemented in three phases of construction, i.e., (a) construction of towers bases/footing; (b) erection of towers; and (c) stringing of wires. All displaced persons (DPs) must be compensated and validated as such by external monitoring consultant-EMC before start of any construction phase. NTDC will notify the contractor to commence the construction work only after (i) obtaining ADB’s clearance of the subproject-specific LARP or RP and (ii) approval of internal monitoring report (IMR) and a validation report by EMC. 51. The IMRs of LARPs/RP will be prepared on a quarterly basis by NTDC/ESIC with assistance of Facility Management Consultant (FMC) and submitted to ADB for clearance. The EMC will review and verify and validate IMRs (especially payment of compensation to DPs before startup of any construction activities). The EMC will provide EMRs on a semi-annual basis. Additional EMRs may also be provided (if required) to ADB before start of each construction phase. Keeping in view the safeguards compliance issues of the ongoing MFF I, the MFFII (all tranches including all IR category A and B subprojects that are to be implemented in phases), will have the EMC engaged to (i) avoid risks to safeguards compliance and (ii) verify/validate payment of compensation to DPs before start of construction activities until all DPs are fully compensated and LARPs/RP implemented. The ADB’s clearance of IMR and EMR is a prerequisite to the commencement of construction work as scheduled in the LARP/RP.

15 Available at http://www.adb.org/documents/safeguard-policy-statement

21

52. All LARPs/RP will be summarized and disclosed to the DPs and copies made available in the relevant project implementation units and district libraries. The PMU will submit quarterly IMRs to ADB, and be responsible for complying with the loan agreement, the facility’s LARF, and subproject-specific LARPs, RPs, any corrective action plans and any safeguards related actions reported in the monitoring reports. 53. The capacity of NTDC’s ESIC will be strengthened through intermittent engagement of safeguard experts of the FMC, being recruited under Tranche 1. The safeguard experts of FMC will assist ESIC in updating the draft LARPs/RP, improve grievance redress mechanism and record, establish a central gender disaggregated resettlement database, and assist in undertaking internal monitoring of LARPs/RP. The detailed TOR of safeguard experts including technical qualification and person months are provided at Appendix 2 of the Facility Administration Manual (FAM) of the MFF II. 54. No subprojects in Tranche 1 involves permanent land acquisition. The Faisalabad West substation phase II and Guddu transmission line subprojects will involve temporary impacts during the transmission line construction. Draft LARPs were prepared for each subproject (involving temporary impacts), which will be updated/finalized as part of the detailed design process by Turnkey contractor, expected to be awarded in Q4 2017. Efforts will be made to further minimize the impacts. Cost of compensation will be determined based on fair market price including all transaction costs and associated charges as mentioned in ADB’s SPS 2009 (para 10 of SR2). Crop and tree losses are based on yield and market value of crops, and on age and productivity of trees, respectively. Compensation will be based on the market value of crops and trees as maintained by government’s departments regulating market value of crops and trees in the country. B. Environment 55. To ensure compliance with the SPS, NTDC, through the PMU, will implement the initial environmental examinations and environmental management plans. The PMU will ensure that:

(i) obtain environmental assessment reports and all regulatory clearances from the provincial Environmental Protection Agency before starting civil works;

(ii) submit updated environmental assessment reports (if any) to ADB for review and disclosure on the ADB website;

(iii) include EMPs in bidding documents for future contracts; (iv) ensure that contractors prepare site-specific EMPs at least 10 days before taking

possession of any work site, and implement site-specific EMPs; (v) monitor implementation of the site-specific EMPs; (vi) disclose environment-related documents locally in the relevant project

implementation units and on the project website; (vii) in case of unanticipated environmental impacts occurring during project

implementation, prepare and implement a corrective action plan; (viii) a non-compliance notice will be issued to the contractor in case of

nonconformance with the EMP, and (ix) submit semi-annual safeguard monitoring reports to ADB.

ADB will ensure that:

(x) monitoring and supervision activities on the subprojects are carried out on an ongoing basis until a project completion report is issued;

(xi) project review missions visit project sites to ascertain the status of implementing

22

the EMP with detailed review by ADB's safeguard specialists, officers and/or consultants

(xii) updated environmental assessment reports are timely reviewed and disclosed on the ADB website; and

(xiii) semi-annual safeguard monitoring reports are timely reviewed to disclosed on the ADB web-site.

The Contractor will ensure that:

(xiv) site-specific EMPs are prepared and submitted for approval to the PMU at least 10 days before taking possession of any work site,

(xv) the site-specific EMPs are implemented and monitored, and monthly environmental monitoring reports sent to PMU; and

(xvi) in case of unanticipated environmental impacts occurring during project implementation, a corrective action plan needs to be prepared in coordination with the PMU and duly implemented.

C. Indigenous Peoples 56. Sites that have impacts on indigenous peoples will be avoided. However, where this is not possible, due to no other reasonably viable alternative, an indigenous people’s plan (IPP) will be prepared and implemented following SPS 2009. All efforts will be made to select sites with unencumbered government land, before taking course of land acquisition.

VIII. GENDER AND SOCIAL DIMENSIONS

A. Gender 57. Given the scope and nature of MFF II and Tranche 2, the subprojects under Tranche 2 do not offer direct gender benefits. However, carrying over from Tranche 1, women’s employment will be encouraged at the institutional levels with gender-fair human resources policies implemented. NTDC will ensure that the national anti-sexual harassment law at the workplace is implemented, and women benefit from new employment opportunities, and are included in training and career development. Women are the primary users of electricity, hence will significantly benefit from increased power supply with reduced time poverty and more opportunities to engage in productive activities. No gender specific adverse impacts are noted. B. Social Dimensions 58. Pakistan is currently facing a severe power crisis, mostly hitting the low income and poor segments of the population. Small and medium enterprises (SMEs) sector which generates 77% of the total employment of the industrial sector is adversely affected from the existing energy crisis. Small businesses like tailoring, cleaning, small restaurants, repair/maintenance, and retail shops are facing losses while paying significant amount of money to operate through power generators. The MFF II and Tranche 2 will indirectly benefit all these population segments including poor and vulnerable through improved infrastructure of power supply. 59. The MFF II and Tranche 2 do not entail direct impacts on affordability or operational employment opportunities. During construction, the turnkey contractor will be required to ensure equal opportunities for all social groups, equal pay for equal work regardless of gender, and prohibition of child labor. The contractor will also be required to undertake HIV/AIDS awareness activities with foreign workers. Monitoring will be done by the PMU.

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IX. PERFORMANCE MONITORING, EVALUATION, REPORTING, AND COMMUNICATION

A. Design and Monitoring Framework Impact(s) the Project is Aligned with

Transmission infrastructure improved (National Power Policy, 2013)16

Energy market transparency and efficiency improved (Pakistan 2025: One Nation, One Vision)17

Results Chain

Performance Indicators with Targets and

Baselines Data Sources and

Reporting Risks

Outcome By 2023 Coverage, reliability, transparency, and quality of the power transmission service in Pakistan improved

a. About 1.2 GW of additional peak power supplied (metered) through the grid (2016 baseline: 22.9 GW)

a.-b. NEPRA’s Annual State of the Industry Report

Delayed progress on policy, regulatory, and institutional reforms.

b. Transmission losses reduced to less than 2.5%(2016 baseline: 2.6%)

c. System duration interruption of NTDC’s system decreased by at least 20% (2016 baseline: 27.6 minutes)

c. NTDC’s Annual Performance Evaluation Report

Outputs By 2022 1. 220kV transmission network augmented and expanded

1a. 660 km of new 220 kV transmission lines connecting Mirpur Khas New Substation, Hala Road Substation and T.M. Khan Substation (80 km), connecting Zhob Substation and D.I. Khan Substation (220 km), and connecting Guddu-Sikapur-Uchi-Sibbi (360 km) commissioned. (2016 baseline: 9,814 km of 220 kV transmission line)

1b. Additional 337 MW transmission capacity of Guddu-Sikapur-Uchi-Sibbi transmission line added. (2016 baseline: 337 MW transmission capacity of existing Guddu-Sikapur-Uchi-

1a-c. NEPRA’s Annual State of the Industry Report

Security concerns in covered areas.

16 Government of Pakistan. 2013. National Power Policy. Islamabad. 17 Government of Pakistan. 2014. Vision 2015. Islamabad.

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Results Chain

Performance Indicators with Targets and

Baselines Data Sources and

Reporting Risks

Sibbi transmission line)

1c. 820 MVA new substation capacity at Mirpur Khas New Substation (500 MVA) and Zhob Substation (320 MVA) commissioned. (2016 baseline: 24,063 MW of NTDC’s 220/132 kV grid stations)

2. SCADA/RMS system upgraded

2. 100% of transmission network covered by SCADA system (2016 baseline: less than 10% of total system covered)

2. NEPRA’s Annual State of the Industry Report

Security concerns in covered areas.

Key Activities with Milestones

1. 220kV transmission network augmented and expanded

1.1 Issue tender documents (October 2017).

1.2 Award contracts (Q2 2018).

1.3 Construct assets (Q2 2018–Q2 2021).

1.4 Make assets operational (Q3 2021–Q2 2022).

2. SCADA system upgraded

2.1 Issue expression of interest for SCADA-RMS supervision consultants (May 2017).

2.2 Mobilize SCADA-RMS supervision consultants (Q1 2018).

2.3 Issue tender documents (October 2017).

2.4 Award contract (Q1 2018).

2.5 Construct assets (Q2 201–Q1 2021)

2.6 Make the systems operational (Q2 2021–Q1 2022).

Inputs

ADB: $260.0 million (ordinary capital resources, regular loan)

NTDC: $85 million

Assumptions for Partner Financing

Not Applicable.

ADB = Asian Development Bank, ADF = Asian Development Fund, GW = gigawatt, km = kilometers, MVA = megavolt-ampere, NEPRA = National Electric Power Regulatory Agency, NTDC = National Transmission and Despatch Company Limited, RMS = Revenue Metering System, SCADA = supervisory control & data acquisition. Source: Asian Development Bank.

B. Monitoring

60. Project performance monitoring. The indicators below will be monitored and reported on in NTDC’s quarterly progress reports and ADB review missions. The financial indicators will

25

be monitored annually during the audit of the financial statements: (i) annual power supplied through the grid (GW) and electricity (GWh); (ii) transmission losses (GWh); (iii) transmission capacity (MVA); (iv) annual net income after tax; (v) NTDC’s annual debt-service coverage ratio (ratio of cash flow from

operations to annual debt service obligations); (vi) receivable ratio (days in receivable is calculated by taking average account

receivables for last year and current year multiply by 360 days and divide by revenues or sales); and

(vii) annual self-financing ratio (ratio of cash flow from operations to average capital expenditures).

61. Compliance monitoring. Loan covenants—i.e., policy, legal, financial, economic, environmental, and others—will be monitored through the quarterly progress reports and review missions. 62. Safeguards monitoring. Safeguards compliance will be performed by NTDC’s PMU through ESIC, with the FMC’s support and individual consultants to complete external monitoring requirements. The monitoring results will be included in the quarterly progress reports and semi-annual safeguards monitoring reports submitted to ADB and disclosed on the ADB website. Findings of the monitoring reports will be disclosed locally. 63. Gender and social dimensions monitoring. Monitoring will be required for ensuring that the gender targets are met for women’s recruitment and training. Social dimensions, particularly equal employment opportunities for all social groups, equal pay for equal work regardless of gender, and prohibition of child labor will be monitored by NTDC’s PMU. Social monitoring results will be included in the quarterly progress reports, and semi-annual safeguards monitoring reports. C. Evaluation 64. Inception mission. ADB will field an inception mission after loan signing to (i) re-establish the working relationship between ADB and NTDC, and (ii) ensure that the executing agencies understand ADB's procedures. 65. Review missions. ADB will field semi-annual review missions until the subprojects are complete to assess overall project implementation and update the project implementation schedule based on mission findings. 66. Midterm review mission. ADB will field a midterm review mission within one year after loan effectiveness to assess whether attainment of the project’s immediate objective (in terms of the design and monitoring framework) is still likely to be achieved. 67. Project completion review mission. ADB will also field a project completion review mission upon physical completion of the project to commence preparation of ADB’s project completion report (PCR). NTDC, in coordination with CPPA-G, will also submit a PCR to ADB within six months of physical completion of the project.

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D. Reporting 68. NTDC will provide ADB with (i) quarterly progress reports in a format consistent with ADB's project performance reporting system; (ii) consolidated annual reports including (a) progress achieved by output as measured through the indicator's performance targets, (b) key implementation issues and solutions, (c) updated procurement plan, and (d) updated implementation plan for the next 12 months; and (iii) a project completion report within 6 months of physical completion of the project. To ensure that project continue to be both viable and sustainable, project financial statement and the EA’s audited financial statement, together with the associated auditor's report, should be adequately reviewed. E. Stakeholder Communication Strategy 69. Project information will be strategically disseminated through media at main milestones including loan signing, contract awards and project completion. A grievance redress mechanism will be established on site for each subproject. 70. In compliance with the minimum requirements of ADB’s Public Communications Policy (2011), NTDC will be responsible for (i) designating a focal point for regular contact with project-affected people and other stakeholders; (ii) identifying mechanisms for feedback during design and implementation; (iii) identifying details of types of information to be disclosed, and mechanisms for public notice including language and timing; and (iv) implementing and monitoring disclosure and dissemination. 71. Project documents will be disclosed on the ADB website. Table 14 outlines the framework communication strategy to be implemented by ADB.

Table 14: Disclosure of Project Documents

Project Document Disclosure Audience

Design and Monitoring Framework

Included in Project Administration Manual Project-affected people

Initial environmental examination

Post fact-finding mission, and as updated during project implementation

General public, project-affected people in particular

Resettlement planning documents

Post fact-finding mission, and as updated during project implementation

General public, project-affected people in particular

Periodic Financing Request Report

Within 2 weeks of approval of the loan General public

Legal agreements No later than 14 days of approval of the project

General public

Project administration manual

After loan negotiations General public, project-affected people in particular

Audited Project Financial Reports

Within 14 days after ADB’s confirmation of their acceptability

General public

Social and environmental monitoring reports

Routinely disclosed, no specific requirements

General public

Major change in scope Within 2 weeks of approval of the change General public

Progress reports Within 2 weeks of circulation to Board or management approval

General public

Completion reports Within 2 weeks of circulation to Board for information

General public

Evaluation reports Routinely disclosed, no specific requirements

General public

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X. ANTICORRUPTION POLICY

72. The Borrower, through NTDC shall comply with ADB's Anticorruption Policy (1998, as amended to date), and operate fully with any investigation by ADB and extend all necessary assistance, including providing access to all relevant books and records for the satisfactory completion of such investigation. ADB reserves the right to investigate, directly or through its agents, any violations of the Anticorruption Policy relating to the project.18 NTDC shall ensure that anticorruption provisions acceptable to ADB are included in all bidding documents and contracts, including provisions specifying the right of ADB to audit and examine the record and account of NTDC and all project consultants, suppliers, consultants and other service providers as they relate to the project. Individuals/entities on ADB’s anticorruption debarment list are ineligible to participate in ADB-financed activity and may not be awarded any contracts under the project.19

73. To support these efforts, relevant provisions will be included in the loan agreement/regulations and the bidding documents for the project. Procurement will follow ADB's Procurement Guidelines, consultant selection will adopt ADB's Guidelines on the Use of Consultants, and disbursement will be made in accordance with ADB's disbursement policies, guidelines, practices, and procedures.

18 Anticorruption Policy: http://www.adb.org/Documents/Policies/Anticorruption-Integrity/Policies-Strategies.pdf 19 ADB's Integrity Office web site: http://www.adb.org/integrity/unit.asp

28

XI. ACCOUNTABILITY MECHANISM

74. People who are, or may in the future be, adversely affected by the project may submit complaints to ADB’s Accountability Mechanism. The Accountability Mechanism provides an independent forum and process whereby people adversely affected by ADB-assisted projects can voice, and seek a resolution of their problems, as well as report alleged violations of ADB’s operational policies and procedures. Before submitting a complaint to the Accountability Mechanism, affected people should make an effort in good faith to solve their problems by working with the concerned ADB operations department. Only after doing that, and if they are still dissatisfied, should they approach the Accountability Mechanism.20

20 Accountability Mechanism. http://www.adb.org/Accountability-Mechanism/default.asp.

29

XII. RECORD OF CHANGES TO THE PROJECT ADMINISTRATION MANUAL

Date Details

26 May 2017 Draft following Fact Finding Mission

21 September 2017 Revisions based on agreements at the Loan Negotiations

30 Appendix 1

TRANCHE DESCRIPTION A. The Background

1. Over the last decade, Pakistan suffered substantial energy shortages. There was insufficient new generation to keep in pace with growing energy demand resulting in significant setbacks to Pakistan’s economy and the living conditions of the people. Recently, the Government of Islamic Republic of Pakistan has made significant efforts in addressing the situation and many new generation plants are in the construction phase or awaiting final approvals to proceed. The availability of new generation would in turn put substantial pressures on the transmission and distribution systems which until now were supplying only a portion of the potential load demand due to generation supply constraints. Thus, it is imperative to remove all constraints and bottlenecks in the transmission system and the distribution system before the generation is available. 2. The National Transmission and Despatch Company Limited (NTDC) is planning the development of the transmission network to cope with the expected load additions that are expected to materialize shortly. The Second Power Transmission Enhancement Investment Program (MFF II) funded by Asian Development Bank (ADB) is a major effort in addressing the constraints in the transmission system. The 1,600 mega volt amp (MVA) of substation capacity and 390 kilometer (km) of transmission lines are being added to the system under the Tranche 1 of the MFF II. The Tranche 2 will continue the program to remove various transmission network bottlenecks in the system and to enable the network’s capability in feeding the expected future loads in accordance with technical requirements and economic guidelines. Its supervisory control and data acquisition (SCADA) upgrade subproject will enable the transmission system operator, NTDC, to secure more stable and reliable power supply and will enable the market operator, Central Power Purchasing Agency (Guarantee) Limited (CPPA-G), to secure more efficient and transparent market operation, hence transforming the country’s electricity sector to more advanced level. B. Project Activities 3. The following Table summarized the subprojects to be included in Tranche 2.

Subproject Technical Justification

Subproject 1: 220 kV Mirpur Khas Substation with associated Transmission Lines

To meet growing demand in HESCO customers, uprate existing system voltage profile to acceptable conditions, improve system reliability and voltage profile, and reduce transmission loss.

Subproject 2: D. I. Khan-Zhob 220 kV Transmission Line with Zhob Substation

To eliminate load shredding and transmission loss, increase power supply at northeastern Balochistan, uprate existing system voltage profile to acceptable conditions, and improve system reliability and electricity quality.

Subproject 3: Construction of New 220 kV Guddu – Shikarpur – Uch - Sibbi Transmission Line

Because existing PC pole line is unserviceable and beyond economic repair, new 220 kV transmission line will be developed to increase its capacity from 374 MW to 748 MW, facilitate utilization of full generation capacity of Uch Power Plants particularly at N-1 conditions, improve system reliability and voltage profile in Balochistan & Sindh provinces, and reduce transmission loss.

Subproject 4: SCADA Phase 3 and Revenue Metering System (RMS) for NTDC

To enable the Pakistan grid operator to monitor and control the grid in real-time and prevent or reduce the duration of outages in the network. The SCADA Phase 3

Appendix 1 31

Subproject Technical Justification

and RMS component will give the needed command and control to NPCC thus greatly increasing system reliability and stability.

HESCO = Hyderabad Electric Supply Company, kV = kilovolt, MW = megawatt, NPCC = National Power Control

Center, RMS – revenue metering system, SCADA = supervisory control and data acquisition.

1. Subproject 1: 220 kV Mirpur Khas Substation with associated Transmission

Lines

4. At present, power supply to areas around Mirpur Khas including Sanghar, Samaro and Umar Kot in the Sindh province are facing low voltage problems which prevent the supply of the full load potential to this area, particularly during the summer months. The 2018 summer load flow simulation gives the lowest 132 kilovolts (kV) network voltage as low as 115.3 kV (at Uma Kot, compared with 125 kV required to maintain a statutory voltage margin of 5%). The supply to this area is from a 132 kV transmission line fed from the Hala Road 220/132 kV substation via Tando Adam and Tando Allah Yar (T. A. Yar). Although a second circuit is available also from the Hala Road 220/132 kV substation (currently feeding substations at Nawabshar, Shahpurc and Sanghar, etc.), the system voltages are so low that the alternative source cannot be utilized during emergencies when one of the lines are outage. In future years, the situation will be further compounded with more substations in the area fed from both transmission lines experiencing low voltages requiring extensive load shedding. Furthermore, in a few years, it is expected that both 132 kV transmission line would soon become overloaded requiring further load shedding measures. 5. Through examination of the network in the area, it is clear that a 220 kV injection point is needed to strengthen the existing 132 kV network. The optimum location for this 220 kV injection is at Mirpur Khas which contains the largest load (37 MW) in the affected area and is centrally situated to feed the other adjacent load centers. The supply to the new 220/132 kV substation will be by a in/out looping arrangement of one circuit of the existing Hala Road - Jamshoro 220kV double circuit transmission line involving a length of 70 km. Twin bundled rail conductor will be used for the Mirpur Khas 220 kV supply line. A 132 kV strengthening arrangement was considered as an alternative by a new line at 132 kV connecting Hala Road and Mirpur Khas substations but was rejected as it did not offer much voltage support to the affected substations. Hence, it is clear that the optimum choice lies with the 220 kV development as planned above.

6. This development will improve the voltage profile of 132 kV substations including Mirpur Khas, Samaro, Umarkot, Mir Wahg, Sultanabad, Tando Adam, Jamnawaz, Kandari, Sanghar, Shahpur Chakar, Jam Nawaz, and Mir Wah Gorchani. It will also provide alternative feeding possibilities to the 132 kV network by the two 220/132 kV substations – Hala Road and Mirpur Khas.

7. A further problem in the transmission lines in the area is that the supply to Hala road substation comes only from the double circuit 220 kV transmission line Jamshoro - Hala Road. The lines are already substantially loaded and if one circuit trips the other will be unable to carry the full load and the system would probably become unstable. Thus, an additional supply at 220 kV to Hala road is considered necessary. This can be arranged by connecting Hala Road to the T. M. Khan - Jamshoro line with an In/Out looping arrangement.

8. Load flow studies conducted with the proposed development indicate a good voltage profile for the area and the possibility of meeting a number of N-1 contingencies will

32 Appendix 1

substantially help in achieving a more reliable supply. With the new system arrangement, the transmission system losses for the 2018 summer loads will reduce by 23.3 MW.

9. The work to be carried out in this sub project consists of:

(i) a new 220 kV Mirpur Khas new substation with 220/132 kV, 2 x 250 MVA transformers with allied equipment and accessories;

(ii) extension of two line bays at 220 kV Hala Road substation; (iii) a 220 kV double circuit twin bundle rail conductor transmission line for looping

In/Out of proposed Hala Road - Jamshoro 220 kV single circuit (S/C) transmission line at Mirpur Khas new substation (70 km); and

(iv) a 220 kV double circuit twin bundled rail conductor transmission line for looping In/Out of one circuit of the existing Jamshoro – T. M. Khan Road 220 kV double circuit transmission line at Hala Road (10 km).

10. In addition, the following works will be undertaken by HESCO for the efficient evacuation from this substation:

(i) two 132 kV double circuit transmission lines on Lynx conductor for looping In/Out of the Mirpur Khas – Jam Nawaz/Kandiari 132 kV double circuit transmission line at M. P. Khas New (02 km);

(ii) a new 132 kV single circuit double circuit tower (SDT) transmission line on rail conductor from Mirpur Khas New to Mirpur Khas (7 km); and

(iii) a new 132 kV SDT transmission line on rail conductor from Mirpur Khas New to Kandiari (42 km).

2. Subproject 2: D. I. Khan - Zhob 220 kV Transmission Line with Zhob

Substation

11. The Balochistan province has been without a stable power system for many years depending primarily on the double circuit transmission line Guddu - Sibbi - Quetta. This has resulted in extensive low voltages at the 132 kV substations requiring load shedding due to network constraints. Recently, another feed to the province was provided by the 220 kV Dera Ghazi Khan - Loralai double circuit line and the 220/132 kV Loralai Grid Station to address the low voltage problems in that region. However, further improvements to the networks in the northeastern section of Balochistan is needed due to the existing low voltage problems and inability to meet the growing power requirements of the area. The key affected areas include Qila Saifullah, G. H. Zai, Musafir Pur, Zhob, Sherani, Mekhtar, and Duki. 12. Supporting the network with additional 132 kV lines from existing 220/132 kV substations have been tried and it was found that this alternative cannot maintain a satisfactory voltage profile. Therefore, a 220 kV injection to the affected area is needed. There are two alternatives of building a 220 kV line: (i) an extension from the newly constructed Loralai substation or (ii) an extension from D. I. Khan which is fed from the north western section of the national transmission network. It was concluded that the connection from D. I. Khan is preferable as it is of lower cost. This will also enable the future possibility of linking the new 220 kV Zhob substation with Quetta and Loralai creating a firm 220 kV network for the QESCO’s northern supply area.

13. Load flow studies conducted indicate that the proposed network with a DC line from D. I. Khan to Zhob and the new 220 kV Zhob substation will provide a robust 132 kV system for the northern areas of Balochistan and will meet all single line outage contingencies on the 132 kV and 220 kV systems for the years 2019 and 2022. The resulting transmission loss reduction

Appendix 1 33

from the new development for the summer 2018 loads is 14.7 MW and all network low voltage conditions will be resolved. System capacity will also be substantially improved thus enabling the addition of new loads over the coming years.

14. The work to be carried out in this sub project consists of:

(i) 220 kV double circuit single rail conductor transmission line from D.I. Khan to Zhob substation (220 km);

(ii) 220 kV Zhob substation consisting of two 220 kV transformer bays for 220/132 kV, 2 x 160 MVA transformers, two 220 kV line bays and six 132 kV line bays along with allied equipment and accessories; and

(iii) extension of two line bays at 220 kV D. I. Khan grid station.

15. In addition, the following works will be undertaken by QESCO for the efficient evacuation from this substation:

(i) 132 kV single circuit transmission line on Lynx conductor from 132 kV Qila Saifullah to 220/132 kV Zhob New substation via G.H. Zai. (154km); and

(ii) 132kV single circuit transmission line on Rail conductor from 132 kV Zhob New to existing 132 kV Zhob substation (5km).

3. Subproject 3: Construction of New 220 kV Guddu – Shikarpur – Uch - Sibbi

Transmission line

16. This subproject is necessitated by the poor condition of the existing Guddu – Shikarpur – Uch - Sibbi PC pole line which is in a dilapidated condition and beyond economic repair. The line was constructed in 1997 for 132 kV (later upgraded to 220 kV with replaced cross arms) and has now served its economic lifetime. Concrete supports are corroded at many places and a number of failures have been experienced in the recent past. To ensure public safety and avoid uneconomical repeated repairs to this line, the entire PC pole line needs to be taken out of service and removed. By installing a new steel tower structure line in place of the dilapidated line the same system functions can be maintained. Furthermore, it is beneficial to have this new line constructed with twin bundle rail conductor which will increase its capacity from the existing 337 MW to 674 MW. The enhanced capacity line will facilitate the full utilization of the Uch Power Plants under all conditions including single circuit outages of the alternative lines to Sibbi. Ensuring full dispatch from the Uch power plants are important as they operate on natural gas from the Uch gas fields and is thus one of the lowest cost power plants in Pakistan. The new line with increased capacity will also improve system reliability and voltage profile in Balochistan and Sindh provinces, and reduce transmission losses. 17. The work to be carried out by NTDC in this subproject consists of construction of new 220 kV Guddu – Uch - Sibbi single circuit steel tower transmission line on twin bundle rail conductor with the provision of interconnection of Guddu - Sibbi section with existing 220 kV double circuit transmission line for In/Out of 220 kV Shikarpur grid station (total line length: 360 km).

4. Subproject 4: Supervisory control and data acquisition (SCADA) Phase 3

and Revenue Metering System (RMS)

18. This subproject will install a complete SCADA/EMS system pertaining to the Pakistan electricity grid. This project will complete the effort to monitor and control the grid in real-time and prevent or reduce the duration of outages in the network. This subproject will give the needed command and control to NTDC dispatchers, thus greatly increasing system reliability

34 Appendix 1

and stability. Dispatch must be able to have “electronic” visibility of the electric network through SCADA to operate the grid. A component of this subproject will collect, in real-time, the common delivery points (CDP) data from all generation and distribution company (DISCO). This will allow real-time visibility of the generation online and each DISCO draw from the grid giving dispatchers valuable information to make operational decisions. The CDP data will also feed into the SFS for accurate incorruptible data for the settlements. The SFS will streamline the revenue collection and the billing and payment processes and create a foundation for a future energy trading platform.

Ap

pe

nd

ix 1

35

PROCUREMENT AND IMPLEMENTATION SCHEDULE FOR TRANCHE 2

Desig

n

Erectio

n

Strin

gin

g

Installatio

n

ADB-200 Procurement of Plant-Design, Supply,

Installation, Testing and Commissioning of

220kV Substations

10 7 5 7 60 32 15 7 2 5 14 7 7 15 5 180 30 10 45

Lot-I Mirpur Khas & Etxnesion at Hala

Contract

(days)

900 22-Sep-17 02-Oct-17 09-Oct-17 14-Oct-17 21-Oct-17 20-Dec-17 21-Jan-18 05-Feb-18 12-Feb-18 14-Feb-18 19-Feb-18 05-Mar-18 12-Mar-18 19-Mar-18 03-Apr-18 08-Apr-18 05-Oct-18 08-May-18 18-May-18 02-Jul-18 18-Dec-20

Lot-II Zhob S/S & Extension at DI Khan

Contract

(days)

900 22-Sep-17 02-Oct-17 09-Oct-17 14-Oct-17 21-Oct-17 20-Dec-17 21-Jan-18 05-Feb-18 12-Feb-18 14-Feb-18 19-Feb-18 05-Mar-18 12-Mar-18 19-Mar-18 03-Apr-18 08-Apr-18 18-Jun-18 08-May-18 18-May-18 02-Jul-18 18-Dec-20

ADB-201 Procurement of Plant-Design, Supply,

Installation, Testing and Commissioning

of 220kV Transmissoion Lines

10 7 5 7 60 32 15 7 2 5 14 7 7 15 5 180 30 10 45

Lot-I T/Line associated with Mirpur Khas (80km)

Contract

(days)

730 22-Sep-17 02-Oct-17 09-Oct-17 14-Oct-17 21-Oct-17 20-Dec-17 21-Jan-18 05-Feb-18 12-Feb-18 14-Feb-18 19-Feb-18 05-Mar-18 12-Mar-18 19-Mar-18 03-Apr-18 08-Apr-18 18-Jun-18 08-May-18 18-May-18 22-Jun-18 21-Jun-20

Lot-II T/Line DI Khan Zhob (220km)

Contract

(days)

730 22-Sep-17 02-Oct-17 09-Oct-17 14-Oct-17 21-Oct-17 20-Dec-17 21-Jan-18 05-Feb-18 12-Feb-18 14-Feb-18 19-Feb-18 05-Mar-18 12-Mar-18 19-Mar-18 03-Apr-18 08-Apr-18 18-Jun-18 08-May-18 18-May-18 22-Jun-18 21-Jun-20

Lot-III Guddu Shikarpur (150km)

Contract

(days)

730 22-Sep-17 02-Oct-17 09-Oct-17 14-Oct-17 21-Oct-17 20-Dec-17 21-Jan-18 05-Feb-18 12-Feb-18 14-Feb-18 19-Feb-18 05-Mar-18 12-Mar-18 19-Mar-18 03-Apr-18 08-Apr-18 18-Jun-18 08-May-18 18-May-18 22-Jun-18 21-Jun-20

Lot-IV Shikarpur-Uch (100km)

Contract

(days)

730 22-Sep-17 02-Oct-17 09-Oct-17 14-Oct-17 21-Oct-17 20-Dec-17 21-Jan-18 05-Feb-18 12-Feb-18 14-Feb-18 19-Feb-18 05-Mar-18 12-Mar-18 19-Mar-18 03-Apr-18 08-Apr-18 18-Jun-18 08-May-18 18-May-18 22-Jun-18 21-Jun-20

Lot-V Uch-Sibbi (110)

Contract 730 22-Sep-17 02-Oct-17 09-Oct-17 14-Oct-17 21-Oct-17 20-Dec-17 21-Jan-18 05-Feb-18 12-Feb-18 14-Feb-18 19-Feb-18 05-Mar-18 12-Mar-18 19-Mar-18 03-Apr-18 08-Apr-18 18-Jun-18 08-May-18 18-May-18 22-Jun-18 21-Jun-20

ADB-202 Procurement of Plant-Design, Supply,

Installation, Testing and Commissioning

of SCADA & RMS for NTDC

10 7 5 7 60 32 15 7 2 5 14 7 7 15 5 180 30 10 45

Contract 1080 20-Jun-17 13-Jul-17 20-Jul-17 25-Jul-17 01-Aug-17 30-Sep-17 01-Nov-17 16-Nov-17 23-Nov-17 25-Nov-17 30-Nov-17 14-Dec-17 21-Dec-17 28-Dec-17 12-Jan-18 17-Jan-18 29-Mar-18 16-Feb-18 26-Feb-18 02-Apr-18 17-Mar-21

Co

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36 Appendix 3

OUTLINE TERMS OF REFERENCE FOR SCADA SUPERVISION CONSULTANT

FOR PROJECT MANAGEMENT AND SUPERVISION CONSULTANT FOR REHABILITATION AND UPGRADATION OF SCADA/EMS SYSTEM

AND REVENUE METERING SYSTEM

A. INTRODUCTION 1. The objective of the supervisory control and data acquisition (SCADA) Phase 3 project (the Project) is to procure, install, and commission the required components of a modern SCADA system on the National Transmission and Despatch Company Limited (NTDC) electric grid. The outcome is to have a fully functioning SCADA and energy management system (EMS) installed and functional by completion. This project will include completing past SCADA projects like the Japan International Cooperation Agency (JICA)-funded Load Despatch System Upgrading Project (LDSUP) to have a complete functional SCADA system and communication links/meters at every revenue recording point in the NTDC grid.

2. The NTDC is the primary grid operator of Pakistan. Established by National Electric Power Regulator Authority (NEPRA) through the Grid Code, the objective of the NTDC is to provide safe, reliable power to the distribution companies (DISCOs), and bulk power consumers (BPCs) at affordable rates and to improve the commercial viability of the power sector. The NTDC is the backbone of Pakistan’s power system, and its vision is to provide and maintain a fault free high voltage system with minimum possible losses and expenditure.

3. The NTDC electric network is expanding continuously to meet the increasing demand for electricity in Pakistan. As part of the expansion, new generation and grid stations are added to the electric network but existing facilities at National Power Control Center (NPCC) are insufficient to interface some existing and new facilities with the SCADA system. The NPCC has no “visibility” of many independent power producers (IPPs), generation companies (GENCOs), hydel and grid stations and no real-time data for monitoring and control of the electric system.

4. An extensive transmission network consisting of 500 and 220 kV transmission lines and grid stations has been built by NTDC for transfer of power from power plants of GENCOs, WAPDA, and IPPs to the networks of DISCOs and BPCs. There is common delivery points (CDPs) located at every revenue metering point on the electric network where energy enters and exits the grid. These data points are required to send real-time data for operations and revenue data collection for financial accounting.

B. BACKGROUND 5. The NPCC was established in 1991 in Islamabad to control the 500 and 220 kV transmission network throughout the country. It consisted of an ABB SCADA system installed at the NPCC and communications media consisted of analogue power line carrier (PLC) and microwave connections. This system allowed many grid stations to be monitored and controlled from the NPCC. The passage of time, poor maintenance and technology changes, rendered this system obsolete and its capability was not sufficient to control the expanding power grid system.

6. In the late 1990’s to early 2000’s the rapid national grid expansion had left many deficiencies in the SCADA system. Facilities for monitoring and controlling the grid were not

Appendix 3 37

installed in new locations and those that had them were unable to communicate with the NPCC in Islamabad. Most of the ABB equipment installed used proprietary protocols and were not compatible with modern equipment. Advances in technology and standardized communication protocols left the NTDC’s SCADA system outdated and difficult to expand or upgrade. The decision was made to start from scratch and install new facilities with new technologies that could communicate between different vendors and stay current for years to come.

7. In 2005, JICA provided financial assistance in upgrading the SCADA system (LDSUP) to newer technologies. The project was aimed at modernization and upgrading of Load Despatch Center at NPCC Islamabad. Main components installed were digital processing system (DPS), SCADA, EMS, 49 remote terminal units (RTUs), connection of 14 IPPs with SCADA, and telecom system: Optical Fiber Ground Wire (OPGW) and 40 Private Automatic Branch Exchanges (PABX), 48 volts DC systems, and equipment for 9 DISCOs. Project highlights were: data processing system upgraded with latest servers, workstations and local area network to ensure proper functioning of SCADA for real time power network operation, a new EMS for automated frequency control, load forecast, unit commitment, economic, optimal power flow, etc.

8. RTUs were installed at all 500 kV and 220 kV grid stations, all GENCO thermal power stations, and some WAPDA-owned hydropower stations. In telecommunication system, the backbone telecommunication system was replaced by laying OPGW on existing 500, 220, and 132 kV transmission lines. The existing NTDC’s old telephone system was to be replaced by a new system to meet the requirements of traffic, quality, redundancy, and reliability. For regional control centers (RCCs), painted mimic boards with hotline telephone link with NPCC were also to be provided.

9. Currently, the JICA-funded project is not complete and there are several NTDC grid stations, IPP’s, and CDP’s that are not connected to the SCADA system.

10. The collection of revenue through the billing department of CPPA-G was also affected by overgrown facilities. The systems for reading megawatt hour (MWh) values was difficult and not automated. Projects were undertaken to remedy this issue. Revenue quality metering was installed at common delivery points. These are points where energy comes onto the network from generators and where energy drops off the network. There was a college outreach where UET Lahore created the software to read the meters and collect the MWh data. But there were no settlement functions in this software. For that reason, billing was cumbersome and often inaccurate.

11. NTDC has prepared a scheme for upgrading of Load Despatch System (Phase 3) along with revamping of NTDC’s telecom system to interface remaining and upcoming power plants and grid stations with existing SCADA system and enhance telecommunication with grid station telephones over PABX facilities.

C. OBJECTIVES 12. The prime objective of the proposed consulting services is to support NTDC (the Client) in management, construction, supervision, and implementation of the project. The consultant shall aim to achieve technically viable, optimal, and cost effective development and implementation of the project keeping in view environmental and social aspects of the project. NTDC will recruit the consulting firm using the quality- and cost-based selection method using

38 Appendix 3

90:10 quality-cost ratio. The consultant is expected to be mobilized in Q1 2018, and the assignment will be for approximately 4 years.

13. These works will be carried out accordingly to international standards and good engineering practices which will form the basis for project appraisal by the Government of Pakistan, the Asian Development Bank (ADB), and/or other international financial institutions. D. METHODOLOGY 14. The consultant will work closely with the NTDC (and its consultants) to have data from NTDC grid stations, IPP, BPC, and DISCO tie required for SCADA system at NPCC. 15. When completed, this project will allow the NTDC visibility of all energy coming onto the NTDC grid as well as all energy dropping off the NTDC grid to DISCOs and BPCs. The intent is to include every possible connection between now and close of turnkey contract. This inclusion will also allow for new CDP/SFS points which as well will help the revenue metering of sites added to the system after contract award, but before closeout. This should avoid any real-time gaps in the data streams for both the NTDC and CPPA-G as new data is brought online from the respective sites.

16. The consultants will also make recommendations as to how the NTDC should proceed after end of the SCADA Phase 3 contract to connect new sites to the SCADA system and SFS. The consultant’s recommendations should help NTDC make a comprehensive plan to ensure that upcoming stations are added immediately to the SCADA system. The consultant shall also recommend relevant changes in the NEPRA Grid Code to ensure that all new grid stations or power plants that come onto the system provide all facilities and equipment so that they are integrated into the SCADA system.

E. SCOPE OF WORK 17. This scope of work covers the following broad activities that will be undertaken by the consultant. Activities undertaken must be closely coordinated with NTDC and ADB, and any other relevant stakeholders. All work products must meet NTDC’s and ADB’s satisfaction. Any other activities or services not specifically mentioned in this statement of work, but are deemed essential for the successful completion of the assignment, will be performed by the consultant unless otherwise agreed to by ADB and NTDC. The main tasks include:

1. Task A: Supervision of Implementation: (i) Assist NTDC on project management and contract management. (ii) Support on implementation of Environmental Mitigation Plan (EMP) and Land

Acquisition and Resettlement Plan (LARP), if applicable. (iii) Assist on program for post construction services. (iv) Provide technical and professional assistance. (v) Develop framework for and assist in monitoring and evaluation of project

implementation performance, mechanisms for feedback to the implementing agencies, mechanisms for ensuring that the lessons learned are accounted for, and for development of management information systems to monitor the project performance effectively.

(vi) Assess the impact of the project on the physical, economic and other environmental and social aspects, monitor indicators, and establish baseline for the indicators.

Appendix 3 39

(vii) Monitor and supervise the environment, social, and resettlement action plans, wherever applicable.

2. Task B: Environmental Management. (i) The consultant shell review and, in coordination with PIU, approve the site-

specific EMP prepared by the contractor prior to construction. (ii) The consultant will review and supervise implementation of environmental

management plan. (iii) In case of nonconformities in the implementation of the EMP the consultant will

prepare a non-compliance notice, will assist the contractor in preparing a corrective action plan, and will monitor its implementation.

(iv) The consultant shall report to the PIU on the status of the EMP implementation.

3. Task C: Review and Approval of Contractor’s Detailed Design (i) The consultant shall provide professional services as required to review the

contractor's drawings and detailed designs for compliance with all specified contract requirements and technical specifications, industry standards, and good engineering practice.

(ii) The consultant shall review and approve the contractor’s detailed design and drawings, technical data/schedules, plan, methodologies and procedures, equipment and material specifications/ drawings, etc., covering all the aspects of the construction/installation & commissioning of SCADA Phase 3 project to ensure conformance with applicable codes, standards, manuals, work requirements, and provisions of the contract.

(iii) Review and approve equipment/materials design & drawings, data, schedules plan and profile drawings, design & drawings of associated civil works for the project.

(iv) If the consultant is not satisfied with the design proposed by the contractor(s), it may recommend changes necessary to meet the project’s overall requirements and provide designs for implementation of the project.

4. Task D: Supervise Procurement of Equipment and Material (i) As far as practicable, quality of materials, workmanship, and performance of

the major items of the work and equipment to be furnished by contractor shall be inspected at the places of manufacturers. The consultant shall carry out the joint inspections with the client in the manufacturer’s premises before delivery, assigning experts for these services who are conversant with the job, and cognizant in the relevant codes and standards as well as acquainted with international practices for testing. The compliance of the materials, workmanship and erection methods with the specifications will be checked and any deviations will be recorded. Decisions will be made in co-ordination with the client whether to accept or reject the deviations.

(ii) In addition to the quality and production tests, assembly work and tests shall be made to check measurements, fittings, and functioning. As far as possible, equipment to be furnished shall be factory assembled sufficient to prove that the design and workmanship have been executed in accordance with the specifications, that the delivery is complete, and that no work remains to be done at site which reasonably can or should be done in the manufacturer’s premises. Where applicable, each item of the equipment shall be assembled completely prior to shipment.

(iii) Before shipment, tests will be performed by the contractors as may be required

40 Appendix 3

to demonstrate the adequacy of the equipment and its component parts to the satisfaction of the specifications. All tests will be simulated to normal operating conditions. Tests at the manufacturer’s premises will be performed in accordance with the requirements of the specifications and approved test procedure. The consultant will witness inspections and tests at the manufacturer’s shops on major equipment. The consultant will prepare the respective Inspection Certificates and Inspection Reports for above activities.

5. Task E: Supervision of Construction/Installation Work (i) The consultant shall supervise the construction of the project and shall make a

diligent effort to ensure the expeditious and economical construction thereof in accordance with the plans and specifications and the terms of the contract or contracts and ensure that all specified environmental and social criteria are followed. The consultant shall carefully inspect all materials and equipment/plants prior to their incorporation in the project and shall promptly reject those not in compliance with the specifications. The consultant shall also supervise and inspect the incorporation of the materials in the project and the workmanship with which such materials are incorporated. The consultant, as representative of the executing agency, shall have sole responsibility for requiring the contractor to perform the construction/installation work in accordance with its terms and the plans and specifications; and, in performing the duties incident to such responsibility. The consultant shall issue to the contractor such directives and impose such restrictions as may be required to obtain reasonable and proper compliance by the contractor with the terms of the turnkey contract(s) and the plans and specifications, in implementation of the project.

(ii) The consultant shall maintain at the site of the project during the entire period of construction a competent resident consultant with full authority to act for the consultant, unless specifically directed otherwise by the client in writing. When necessary to assure adequate inspection, one or more competent inspectors shall also be maintained when construction/installation or corrective work is being performed. The consultant shall report, in writing, defects in workmanship or materials to the contractor and the client and shall instruct the contractor to correct such defects immediately, in accordance with the terms of the turnkey contract. A resident consultant shall be present during the final inspection of completed works.

(iii) For substation, supervision by the consultant will encompass civil works, structures, plant installation, cabling and wiring, metering, monitoring, telecommunication systems, testing and commissioning of plant and systems provided under the contract.

(iv) In case of more than one contractor the consultant will play a leading role to coordinate the work schedule among various contractors to ensure timely completion of the project.

6. Task F: Verification/Certification of Contractor’s Invoices (i) The consultant shall measure and determine quantities for certification or

progress payments due to the contractor in accordance with the provisions of the respective contract documents.

(ii) The consultant shall review and check contractor’s monthly statements and issue interim payment certificates to the client for payments to the contractor.

(iii) The consultant shall scrutinize contractor’s progress, bills and claims and

Appendix 3 41

submit recommendations to the client. The claims will also be checked and countersigned by the client.

(iv) The consultant shall measure final quantities and prepare final statement of payments due to the contractors.

(v) The consultant shall also assist in liaison and final settlements of the claims between the client and the contractor.

7. Task G: Testing, Pre-commissioning & Commissioning/Completion of the Project

(i) The consultant shall supervise testing, pre-commissioning and commissioning of the equipment supplied by the contractor(s).

(ii) The consultant shall further review test and initial operation procedures and recommend acceptance of or changes to them. The consultant will particularly witness tests (electrical, mechanical, instrumentation, and civil works, if applicable) of contractors to verify that components and systems are ready for initial operation; provide assistance to the client personnel in the initial operation and maintain close contact with the contractors' personnel to resolve problems which may arise during initial operation; review the training program and plant operation manuals, prepared by the contractors in English, for adequacy; witness and review performance testing to all equipment and systems in order to verify test results.

(iii) The consultant shall assist the client in performing final inspection and testing of facilities and in determining final acceptability of them, and provide the same assistance regarding the civil, renovation of site modification works.

8. Task H: Review of Contractor’s as Built Manuals/Drawings

18. The Consultants shall review, comment and finally approve the drawings, which include revisions made during execution of the project. These drawings will be prepared by the contractor upon completion of the project. The as-built documents will include the following:

(i) As-built drawings for tower structures, towers or buildings. (ii) Towards the end of the all works of the project, the consultant shall prepare a

punch list recording all works and installations which may require completion or remedial measures for incorrect execution/defects, and will monitor the completion of all incomplete or defect works and installations to ensure that a fully completed project of high quality is achieved.

(iii) Operation and maintenance manuals, as-built data and drawings and project completion reports for substations.

(iv) The as-built drawings shall be prepared in four set of hard and soft copies, three of them to be handed over to the client, and another one for the consultant’s files. While equipment manuals and documents shall be provided with each piece of equipment at all sites. The consultant will store one complete set of the as-built drawings and documents as a hard copy and a soft copy in a safe manner in his files.

9. Task I: Assist Client on Project and Contract Management

19. This task comprises, but is not limited to the following activities:

42 Appendix 3

(i) Monitoring of project progress a) The consultant shall assist the client on the preparation of the reports

required for ADB, in so far as they are directly linked to progress in implementing and in administrating the Project.

b) The consultants shall prepare and update the procurement, implementation, delivery and disbursement schedules for the contractors employed on site, to be used as basis for reporting on the progress of project implementation;

c) The consultants shall prepare appropriate progress reports and cost reports and assist the client in the preparation of those reports necessary to comply with the reporting requirements of ADB.

(ii) Quality Control and Quality Assurance. For the quality control and quality assurance, the consultants will carry out, but not limited to the following activities: a) The consultants shall prepare Quality Assurance Plan including a

detailed description of the contractor’s required organization, procedures and facilities proposed to ensure that the construction is carried out in accordance with the contract, specifications and drawings.

b) The plan shall include a system to ensure that the documentation necessary to attest completion of any phase of the works, use of correct materials, completion of required inspections and tests, and acceptability of results generated, reviewed, maintained and submitted by the contractor to the consultant. contractor’s test program shall be suitably documented and address pertinent test pre-requisites, such as test instrument selection and calibration, acceptance criteria, documentation of test results and evaluation of test results by qualified personnel.

(iii) Monitoring of Project Budgets and Development of Financial Management system a) The consultant shall maintain a computerized cost control system within

the project management system (PMS) for budget monitoring and cash flow forecasting. The system will be linked with the MS Project CPM network to provide information on project costs for the periodic reports required by client.

b) Payments to be made to the contractor will either be based on monthly invoicing for the construction works or linked to relevant milestones for delivery of equipment or a combination of various construction/installation activities.

c) The consultant will develop a computerized project and financial management system which is appropriate for the size and scope of the project. The computerized project financial management system should generate periodic progress reports required for project management. The financial management system would be documented in a Project Financial Management Manual which would include the following: (1) flow of funds process; (2) accounting system including internal controls; (3) financial and accounting policies; (4) planning and budgeting system; (5) financial forecasting system; (6) procurement and control of administration monitoring system; (7) financial reporting (quarterly reports and annual financial statements); (8) auditing arrangements; and (9) organization, staffing, training, and

Appendix 3 43

technical support for financial management. (iv) Project Coordination and Communication

a) The consultant shall establish and coordinate communication between the various entities involved in the Project as there are: 1) Employer/Owner 2) Consultants head office 3) Consultant’s supervision team 4) Consultants EMP and LARP team 5) Contractors 6) Government Authorities

b) Consultant will play a leading role to coordinate the work schedule among various contracts to ensure timely completion of the Project.

c) The consultant shall oversee the coordination of all communication of the project team (NTDC Project Manager, ADB team leader, contractor’s representative, other similar key stakeholders), i.e., defining the responsibilities of each project unit. A database comprising the contact data, such as telephone numbers, e-mail addresses, fax numbers etc. of each project party and their concurring key personnel will be established, regularly updated and made available to all project parties.

d) The consultant shall organize and document regular project meetings with all involved parties to assure a good working communication between the project parties and to assure that everyone works based on the latest information. The consultant will prepare respective minutes of meeting of all meetings and subsequent agendas which will be distributed to the parties involved. All protocols, minutes of meetings, agendas and so on will be filed accordingly to the filing system introduced through the quality management system.

e) Review and Reporting. At the start and during construction, the contractor will submit detailed working methods, equipment, plant and temporary works design details in shop drawing before the start of construction /installation of the relevant part of the works. These revised methods and equipment/plant will be checked for conformance with the design concepts, the technical specifications and applicable national and international standards to ensure quality and safe working methods. The consultant shall check the contractor operations against the approved revised method statements.

10. Task J: Provide support to Client on implementation of EMP and LARP (if applicable)

20. The consultant shall make sure that appropriate measures are taken to ensure adequate health, safety and environmental standards during construction and commissioning and will monitor the compliance of all construction activities with the EMP and LARP (if applicable). Furthermore, the consultant shall elaborate the detailed and final EMP for the operation stage of the project and shall prepare and submit the respective report. This task comprises, but is not limited to the following activities:

(i) The consultant would provide support in the implementation of the EMP. The EMP activities would be incorporated in the main construction contracts to the extent possible. The EMP activities which cannot be included in the main construction contract would be implemented through additional construction

44 Appendix 3

contracts, management, institutional, or technical assistance. The consultant would carry out the designs of such program and help, monitor and supervise their implementation.

(ii) Provide support in implementation of LARP (if applicable) activities during the project implementation, including support to purchase of properties, for that purpose, preparation of documentation to help in negotiations with the affected, in obtaining of local permits, etc. This may also include identification of alternative sites for resettling people and related assets and cultural properties, development of the sites for resettlement, including planning, infrastructure, utilities, and replacement houses etc.

11. Task K: Assist on Program for Post-Construction Services

21. The work program for post-construction services will refer to: monitoring, reporting, claims management, monitoring during the defect liability period (DLP). This task comprises, but is not limited to the following activities:

(i) The consultant shall co-ordinate the post-construction services to be carried out by the contractors during the guarantee period.

(ii) The consultant shall recommend to the client the procedure to ensure a satisfactory management and operation of the project during the entire life time. Advise the client on the staffing pattern and organization of the operation and maintenance (O&M) teams.

(iii) The consultant shall advise the client to establish maintenance, repair works and operation procedures to ensure safe and reliable operation of the SCADA hardware/software during their life time, including the setting-up of maintenance services. The consultant will advise the client on any additional training programs for the client’s staff which are necessary to ensure successful operation of the project and outline those requirements (i.e., prepare terms of reference).

(iv) The consultant shall prepare a detailed O&M manual reflecting the above; and identify equipment, office and other facilities required for O&M of the project facilities.

(v) During the 3-month period of trial runs and initial operation, the consultant will update the program and prepare a manual for post construction services to be provided by the contractors during the guarantee period. Included will be a program for regular monitoring of efficiency, security and maintenance/repair requirements of operation of the equipment and sites during the guarantee period. A program for final acceptance at the end of the guarantee period will be proposed to Client.

(vi) The consultant shall also recommend relevant changes in the NEPRA Grid Code to ensure that all new grid stations or power plants that come onto the system provide all facilities and equipment so that they are integrated into the SCADA system.

12. Task M: Provide Technical & Professional Assistance and Training to Client’s Staff

22. This task comprises, but is not limited to the following activities:

(i) The consultant shall assist the client in establishing suitable procedures and in the capacity building for contract management, monitoring and administration, including monitoring of costs, accounting and certification of contractors'

Appendix 3 45

invoices and statements; detailed engineering activities; environmental and social management procedures; quality assurance and effective communication lines between the client and the contractors operating on site.

(ii) The consultant shall provide and/or recommend training to this effect. A training program for the on-the-job training will be established for the client personnel integrated in the design and construction management teams.

(iii) The consultants will write terms of reference for any additional work that should be carried out under the project for which additional services will be required and identified during project implementation.

F. QUALIFICATIONS OF CONSULTANT 23. A well-qualified consulting firm with international experience is a must.

24. The consultant must have at least 10 years of relevant past performance. Specific experience on recent assignments of a similar nature and scope should accompany the technical proposal.

25. The consultant must have undertaken, at a minimum, 5 assignments of similar scope, complexity, and magnitude in the last 20 years. A reference list of assignments already executed by the consultant with the names of the clients, description of the assignments, year of award and completion, a proof of contract and the value of assignment must be furnished with the technical proposal. Letters of acceptance and accreditation of the work performed by the consultancy firm from the clients must be preferably be attached.

26. The consultant must have specialized expertise and skills in the field of telecommunication and SCADA systems, EMS, EHV transmission in a large and complex network; and must have experience leveraging advanced tools and techniques. Relevant experience in SCADA system business case development, feasibility studies, preparation of scope and bidding documents, and implementation of SCADA and telecommunication systems is a must.

27. The consultants must have well-qualified, experienced and competent personnel on its team.

28. The technical proposal must include complete resumes/CVs of the key personnel to be deployed for performing the assignment.

29. The consultant shall propose a team-leader who shall be responsible for the overall supervision and management of the contract. The team leader must have 15 years of experience leading similar assignments of a similar scope and magnitude.

30. The proposed team structure should be provided with the technical proposal.

31. The consultant must not remove or replace any key personnel without prior written approval of the NTDC. Any substitute personnel must be equally qualified for the duties of the position as the person for whom they are substituted.

32. NTDC is entitled to direct removal of any person proposed in the bid documents if, in the NTDC’s reasonable opinion, that person’s qualifications are not up to the mark required for executing the tasks proposed for him to perform. Upon this, the firm must then promptly

46 Appendix 3

remove, or arrange to be removed, the person specified and appoint a suitable replacement at its sole expense.

33. The consultant must provide a detailed approach and methodology to undertake the tasks.

34. The consultant must not be sanctioned by any government or multilateral financial agency.

35. It is desirable that the consultant not be involved in any litigation or arbitration.

G. DELIVERABLES

Review and Approval of Contractor’s Detailed Design 36. The consultant shall provide professional services as required to review the winning tenderer's drawings and detailed designs for compliance with all specified contract requirements and technical specifications, industry standards and good engineering practice.

37. The consultant shall review and approve the contractor’s detailed design and drawings, technical data/schedules, plans, drawings, construction methodologies and procedures, covering all the aspects of the construction/installation and commissioning of the SCADA, EMS, and RMS systems to ensure conformance with applicable codes, standards, manuals, work requirements and provisions of the contract.

38. Review and approve equipment/materials design and drawings, data, schedules plan and profile drawings, design and drawings of associated civil works under the purview of the project implementation contractor.

39. If the consultant is not satisfied with the design proposed by the contractor(s), it may recommend changes necessary to meet the project’s overall requirements and provide designs for implementation of the project.

40. Progress reports as required and outlined in this TOR.

H. COMPLETION OF ASSIGNMENT

Supervision of Implementation 41. The period of performance for the supervision of implementation contract will not exceed 36 months and 12 months of defects liability period after award of contract. Specific time driven assignments include:

Sr. No. Description Calendar

Days

1 Submission of the inception report, schedule and methodology for completion of activities outlined in the Scope of Work

10

2 Review of inception report and comments by NTDCL 15

Appendix 3 47

I. IMPLEMENTATION ARRANGEMENTS

1. Implementation Arrangements 42. The consultant shall be responsible for preparation/updating and finalization of the design and other studies and for construction supervision of all contracts under the Project. The project manager of SCADA Phase 3 and RMS of NTDC will oversee the execution of these consultancy services. The consultant will work closely with the office of SCADA Phase 3 and RMS PMU and coordinate with other relevant units of NTDC, local administration, relevant ministries and agencies and WAPDA and its consultants. 43. The consultant’s team leader will be the principal contact and will be expected to be readily available in person during the assignment period. The consultant will be responsible for all aspects of performance of services set forth in the TORs. The client will be responsible for providing the existing data and information and supporting arrangement for the necessary field investigations. Immediately after mobilization and commencement of consultancy services, the consultants shall prepare a detailed schedule and task flow diagram, which depicts the interrelationship of various tasks in the assignment which lead to the completion works and mechanism of coordination with the client and other related entities. This will be kept updated throughout the duration of the assignment.

2. Duration of the Assignment/Consultancy Services

44. The assignment will be completed in 48 months from the date of commencement of services though the turnkey contract would be signed for a period of 60 months to cater for any delays in implementation.

3. Baseline Schedule

45. The baseline schedule shall be prepared by the consultant for the assignment. A critical path schedule for the project from contract date to the completion date shall be prepared using Microsoft Project or any other suitable scheduling software. The project schedule shall provide basis for determining status of the work. The said baseline schedule shall be submitted showing ‘S’ curve to NTDC duly vetted by the consultant.

4. Method Statements

46. Prior to commencing any section of the work, the consultant shall submit method statement in accordance with the requirement of the consulting services. When requested by the client, the consultant shall provide additional method statements related to specific item of work.

5. Progress Meetings

47. The consultant shall hold periodic progress meetings with the client, at a minimum of monthly and following receipt of the client comments on the submission of the consultant. Additional meetings shall be scheduled as required by the consultant. The intent of these meetings will be for the client to provide input and to discuss options for addressing the client comments. The consultant shall fully cooperate with the client in scheduling and attending such meetings as requested by the client. The minutes of meetings will be prepared by the consultant and distributed to participants for review and comment. The minutes of meetings

48 Appendix 3

will, however, be issued by the client. 6. Monthly/Quarterly Progress Reports

48. The consultant shall furnish the client with a written monthly/quarterly physical and financial progress reports that summarize all aspects of the completed month/quarter and cumulative work progress. All progress reports shall be in English and the format/contents of progress reports should be acceptable to NTDC and the ADB. The objectives of the monthly/quarterly progress reports are to:

(i) Provide a reliable and readily accessible summary record of the Project activities and progress during the just completed month/quarter.

(ii) Provide a detailed description of all work completed to date and revision to the Project schedule required, which shall reflect changes in the critical path since the date of the last revision.

(iii) Identify issues and problems requiring action by the Client or Consultant, including issues of conflicting priorities.

(iv) Provide a forecast of the work to be accomplished in the next month/quarter. (v) Provide information to help substantiate Consultant’s pay request.

7. Submittal Protocol

49. No later than thirty (30) days after the contract date, the consultant shall submit a submittal protocol for the consulting services. The submittal protocol shall identify the submittal packages to be prepared by the consultant, including a detailed listing of the content, the expected dates of the submittals, number of copies, and distribution of the submittals by the consultant based on distribution information provided by the client. The submittal protocol shall include the time allowed for the client’s review, which at a minimum shall be twenty (20) days. For large or complex submittals, the client may require a submittal review period longer and the consultant shall coordinate with the client inclusion of these review periods in the submittal protocol. The submittal protocol shall avoid the simultaneous submittal of many deliverables for concurrent client review.

8. Consultant’s Obligations

50. The consultant shall provide submittals for review consistent with the submittal dates. The consultant shall acknowledge that the client’s review will often involve input from, or consultation with, several individuals. Therefore, should submittal dates to the client be delayed, the consultant shall provide prompt notice to the client of the delay. In no case shall this notice be given less than ten (10) calendar days prior to the scheduled submittal date for that submittal. The submittals shall identify any proposed change to the requirements, or the design concept, project delivery approach, or the project schedule provided in the consultant’s proposal, accompanied by the rationale behind the proposed change. No changes shall be implemented without client’s acceptance. Such acceptance shall not, however, relieve the consultant of any of its obligations under the contract.

9. Form of Submittals

51. Each submittal shall be transmitted electronically and in hard copy, unless otherwise required by other sections of the contract, with a cover letter. Unless otherwise specified in the contract, the consultant shall prepare hard (5) and soft copies of each submittal for distribution. The consultant is responsible for distribution of submittals to reviewers based on

Appendix 3 49

distribution information provided by the client. Electronic submittals shall be an editable original file format. The consultant is responsible for the accuracy and completeness of the information submitted.

52. The consultant shall make submittals far enough in advance of subsequent activities to allow time for reviews, consultations with other entities, for securing necessary acceptance, for possible revisions and re-submittals. The client intends to process consultant’s submittals as quickly as practical.

10. Client’s Review

53. The client will review submittals from the consultant’s comments on the review of the detailed design proposed by the contractor in accordance with the employers’ requirements and the provisions of the turnkey contract. Following receipt of any comments from the client, the consultant shall review and communicate to the contractor to incorporate clients and consultants’ comments into the detailed design. Following incorporation of consolidated comments by the contractor, the consultant shall approve the detailed design. The primary purpose of the client’s review is to satisfy itself that the submittals generally conform to the intent of the contract. The client’s review shall not relieve the consultant of the sole risk and responsibility for all defects, errors or omissions, or of sole responsibility for meeting all requirements of the contract. The consultant shall not proceed with implementation of any work affected by a submittal until review by the client is complete and the submittal is returned with review comments.

11. Indicative Staff Requirements

54. The consultants are required to propose a staffing plan and skill mix necessary to meet the objectives and scope of services accordingly to the best practices and international standards. They would detail the staffing plan and staff months required as well as timing of the development. They would list all the professional and support staff required for the consultancy services. The consultants would also provide estimates in their proposals and plans for any studies and investigations required for the assignment as well as all the logistic costs and any other costs that may be required ensuring security of the personnel. If all the required skills are not available within the consulting firms, they are encouraged to make joint ventures with other firms.

12. Staffing Plan

55. The following is an indicative list of personnel and skills required for carrying out the of consultancy services:

50 Appendix 3

COST ESTIMATE - SCADA Phase 3/RMS Implementing

Consultant

Inputs (pm)

International National

1 Project Manager/Team Leader 36

2 Testing and Inspection Expert 20 20

3 SCADA Design, Engineering & Integration 7 5

4 SCADA & RMS Commissioning Expert 5

5 Microwave Expert 6

6 Procurement/Contract management Expert 2

7 Civil Engineering Expert 2

8 Financial Management Expert 2

9 Construction Supervision Telecomm 20

10 Construction Supervision Expert GS 20

11 Construction Supervision Civil Works 12

12 Environmental Safeguards Expert 3

14 Human Health and Safety Expert 3

15 Monitoring and Evaluation Expert 3

16 Sub Engineers 216

Total 68 314

56. In addition to the above-mentioned personnel, other technical and professional personnel as well as support staff required for carrying out the consultancy services may also be included in the proposals.

13. Qualifications of Key Personnel

57. Project Manager/Team Lead (International). The project manager should have a bachelor’s degree in an engineering discipline. The project manager must be certified in project management with a PMP® or PRINCE2 certification or a degree in management sciences. The project manager should have lead and executed at least one assignment of similar scope and magnitude; and have executed at least three projects of similar magnitude. The project manager must have 15 years of professional project management experience internationally. The project manager should preferably have some experience of working in developing countries and some user experience on SCADA systems. He/she will be responsible for the overall execution and outcome of the project. He/she will also be the main point of contract for the NTDCL and turnkey contractor throughout the execution of the project.

58. Testing and Inspection Expert (International). The expert should have a bachelor’s degree in electrical/electronics, telecommunications, or a relevant field. The expert must have testing and commissioning experience of SCADA systems on at least one project of similar scope. The expert must have 8 years of professional experience. Experience in grid station, power station, transmission line projects is desirable. The expert should preferably have some experience of working in developing countries and some user experience on SCADA systems. The expert will be responsible for the inspection, testing and quality control aspects of the project.

Appendix 3 51

59. SCADA Design, Engineering, and Integration Expert (International). The expert should have a bachelor’s degree in electrical/electronics, telecommunications, or a relevant field. The expert must have testing and commissioning experience of SCADA and telecommunication systems on at least one project of similar scope. The expert must have 8 years of professional experience. Experience in grid station, power station, transmission line projects is desirable. The expert should preferably have some experience of working in developing countries and some user experience on SCADA systems. The expert will be responsible for the integration of all points on the SCADA system and the end-to-end testing of system components.

60. SCADA & RMS Commissioning Expert (International). The expert should have a bachelor’s degree in electrical/electronics, telecommunications, or a relevant engineering discipline. The expert must have testing and commissioning experience of SCADA and telecommunication systems on at least one project of similar scope. Experience in working with revenue metering systems and integration in SCADA systems is desirable. Experience in grid station, power station, transmission line commissioning projects is desirable. The expert should preferably have some experience of working in developing countries and some user experience on SCADA systems. The expert will be responsible for the coordination, execution, monitoring and evaluation of all testing, pre-commissioning and commissioning activities for the SCADA/EMS system.

61. Microwave Expert (National). The expert should have a bachelor’s degree in electrical/electronics, telecommunications, or a relevant field. The expert must have testing and commissioning experience of digital microwave telecommunication systems on at least one project of similar scope. The expert must have 5 years of relevant professional experience. The expert should preferably have some experience of working in developing countries and some experience with work on SCADA systems. The expert will be responsible for successful completion and commissioning of the backup digital microwave network of the SCADA Phase 3 project.

14. Non-Key Personnel Qualifications

62. Procurement/Contract Management Expert. The expert must have a bachelor’s or master’s degree in management sciences. Experience in management of contracts of similar scope is necessary. The expert must have 5 years of relevant professional experience. Experience in working in developing countries in preferable. The expert should preferably have some experience managing contracts on ADB projects. The expert will be responsible for the overall contract management of the turnkey SCADA Phase 3 contract.

63. Civil Engineering Expert. The expert must have a bachelor’s degree in an engineering discipline. A degree in civil engineering is preferable. The expert must have at least 10 years of professional experience in working on large-scale construction projects. Experience of work in power projects is desirable. The expert will be responsible for reviewing and approving design data and drawings for all civil works to be undertaken for the project. The expert will also be supervising the turnkey contractor’s civil works teams in the field.

64. Environmental Safeguards Expert. The expert must have a bachelor’s degree in environmental sciences or relevant field. The expert must have 15 years of work experience in environmental assessment and safeguard work; some of it preferably on ADB-funded projects. The expert will be responsible for making sure all environmental safeguard and

52 Appendix 3

impact guidelines and procedures are followed.

65. Monitoring and Evaluation Expert. The expert must have a bachelor’s degree and professional experience of at least 10 years. Experience performing monitoring and evaluation on large-scale donor funded projects is necessary. The expert will be responsible for preparing the project closure monitoring and evaluation report. Note: CV’s of Non-Key Personnel shall be submitted to the Client for approval at least two weeks prior to their appointment.

15. Deliverables and Submission of Reports

66. Below is the tentative list of reports that the consultants will prepare is given. In addition to these, other reports may have to be prepared as needed by the investor, project authorities or based on needs.

Sr. No.

Deliverable Timeline/Frequency

1. Review report of the existing design, bidding documents and other studies

Within one month of the start of Assignment

2. Preparation of special reports/memoranda to elicit Client’s consent/approval on specific issues

As and when required

3. Construction reports, monthly, quarterly reports, annual work plans

Within 15 working days of the end of the reporting period.

4. Project implementation status reports quarterly, annually

Within 30 days at the end of each period

5. Implementation status report for EMP,and work plans etc.

On regular basis

6. Minutes of Weekly/biweekly/monthly meetings held with Contractors

Within 5 working days of end of meeting

7. Correction/Amendment in Drawing submitted by Contractor

8. As built drawings

9. Testing & commissioning report Within two weeks of the commissioning

10. Maintenance and operation manual

11 Project completion reports Within one month of the close out of SCADA Phase 3 contract

12. Responses to any queries in the defect liability period

13. Any special report relevant to the project as requested by the client

16. Housing and Office Facilities for the Consultant

67. The consultant shall establish their primary office close to the client’s office in Lahore.

Appendix 3 53

The consultant will make their own arrangements to furnish their offices. However, they will provide cost estimates and details of their equipment in this respect under Direct Costs in their proposal. The client, through the contractor, shall make arrangement to provide office space for field staff at relevant site offices of the contractor.

17. Procurement of Goods

68. Purchase of equipment/tools & plants (T&P) will be carried out accordingly if needed in the assignment. The consultants shall maintain inventory list of all purchased equipment, vehicles and other T&P items etc. and submit details in quarterly reports. All these items shall be returned to NTDC upon completion of the contract with fair wear and tear condition.

18. Transport

69. The consultant will arrange transport for carrying out the consultancy services themselves and the cost will be included in the direct cost operation and maintenance of the vehicles will also be covered under direct cost of the consultant. The consultant would be responsible for basic requirements that can be supplemented by the vehicles that would be included in the bidding documents to be provided by the contractor(s) including the O&M of such vehicles.

19. Client’s Input and Counterpart Personnel (i) Services, facilities, and property to be made available to the consultant by the

client. The client will provide the consultant team with the required contractual documentation and other project related design and specification documents to allow the consultant to perform its functions adequately. The client will also provide adequate office space for two of the consultant’s personnel in their operational headquarters.

(ii) Professional and support counterpart personnel to be assigned by the client to the consultant’s team. The client will provide the Consultant access and communication to the key project members of the SCADA Phase 3 project team. This list will include, but not be limited to, the Chief Engineer Telecom, NTDC project manager, and NPCC’s SCADA/EMS project lead.

54 Appendix 4

PROCUREMENT PLAN FOR TRANCHE 2

Basic Data

Project Name: MFF Second Power Transmission Enhancement Investment Program - Tranche 2

Project Number: 48078-004 Approval Number:

Country: Pakistan Executing Agency: National Transmission & Despatch Company Limited

Project Procurement Classification: Category B Implementing Agency: N/A

Project Procurement Risk: High

Project Financing Amount: US$ 345,000,000 ADB Financing: US$ 260,000,000 Cofinancing (ADB Administered): Non-ADB Financing: US$ 85,000,000

Project Closing Date: 31 December 2022

Date of First Procurement Plan: 06 April 2016 Date of this Procurement Plan: 21 September 2017

A. Methods, Thresholds, Review and 18-Month Procurement Plan

1. Procurement and Consulting Methods and Thresholds

Except as the Asian Development Bank (ADB) may otherwise agree, the following process thresholds shall apply to procurement of goods and works.

Procurement of Goods and Works

Method Threshold Comments

International Competitive Bidding for Goods

US$ 1,000,000 and Above

National Competitive Bidding for Goods Between US$ 100,001 and US$ 999,999 The first NCB is subject to prior review, thereafter post review.

Shopping for Goods Up to US$ 100,000

International Competitive Bidding for Works

US$ 1,000,000 and Above

National Competitive Bidding for Works Between US$ 100,001 and US$ 999,999 The first NCB is subject to prior review, thereafter post review.

Shopping for Works Up to US$ 100,000

Consulting Services

Method Comments

Quality- and Cost-Based Selection for Consulting Firm 90:10

Individual Consultants Selection for Individual Consultant

2. Goods and Works Contracts Estimated to Cost $1 Million or More

The following table lists goods and works contracts for which the procurement activity is either ongoing or expected to commence within the next 18 months.

Package Number General Description Estimated

Value Procurement

Method Review (Prior/ Post)

Bidding Procedure

Advertisement Date

(quarter/year) Comments

ADB-200 Procurement of plant-design, supply, installation, testing and commissioning of 220 kV substations Lot 1: Mirpur Khas S/S and extension at Hala Road S/S

24,000,000 12,000,000.00 12,000,000.00

ICB Prior 1S2E Q4 / 2017 Prequalification of Bidders: N Domestic Preference Applicable: Y Advance Contracting: Y

Appendix 4 55

Package Number General Description Estimated

Value Procurement

Method Review (Prior/ Post)

Bidding Procedure

Advertisement Date

(quarter/year) Comments

Lot 2: Zhob S/S and extension at D.I. Khan S/S

Bidding Document: Plant

ADB-201 Procurement of plant-design, supply, installation, testing and commissioning of 220 kV transmission line: Lot 1: T/L associated with Mirpur Khas S/S (80 km) Lot 2: T/L D.I. Khan- Zhob (220 km) Lot 3: T/L Guddu- Shikarpur (150 km) Lot 4: T/L Shikarpur- Uch (100 km) Lot 5: T/L Uch-Sibbi (110 km)

111,000,000.00 15,000,000.00 36,000,000.00 25,000,000.00 17,000,000.00 18,000,000.00

ICB Prior 1S2E Q4 / 2017 Prequalification of Bidders: N Domestic Preference Applicable: Y Advance Contracting: Y Bidding Document: Plant

ADB-202 Procurement of plant-design, supply, installation, testing and commissioning of SCADA Phase 3 and Revenue Metering System (RMS) for NTDC

83,000,000.00

ICB Prior 1S2E Q3 / 2017 Prequalification of Bidders: N Domestic Preference Applicable: Y Advance Contracting: Y Bidding Document: Plant

3. Consulting Services Contracts Estimated to Cost $100,000 or More

The following table lists consulting services contracts for which the recruitment activity is either ongoing or expected to commence within the next 18 months.

Package Number General Description Estimated

Value Recruitment

Method Review (Prior/ Post)

Advertisement Date

(quarter/year) Type of

Proposal Comments

CON-1 Project Management and Supervision Consultant for the Rehabilitation and Upgradation of SCADA/EMS System and Revenue Metering System

3,700,000.00 QCBS Prior Q2 / 2017 FTP

Assignment: International Quality-Cost Ratio: 90:10 Advance Contracting: Y Comments: 90:10 quality-cost ratio helps ensure highly competent consultant needed for this specific assignment

CON-2 Project Management consultants

1,302,000.00 Individual Consultant Selections

Prior Q4/ 2017 N/A SCADA advisor, and other individual consultants to be decided later.

4. Goods and Works Contracts Estimated to Cost Less than $1 Million and Consulting Services Contracts Less than $100,000 (Smaller Value Contracts)

56 Appendix 4

The following table lists smaller-value goods, works and consulting services contracts for which the activity is either ongoing or expected to commence within the next 18 months.

Goods and Works

Package Number

General Description

Estimated Value

Number of Contracts

Procurement Method

Review (Prior/ Post)

Bidding Procedure

Advertisement Date (quarter/year) Comments

Consulting Services

Package Number

General Description

Estimated Value

Number of Contracts

Recruitment Method

Review (Prior/ Post)

Advertisement Date

(quarter/year) Type of

Proposal Comments

None

B. Indicative List of Packages Required Under the Project

The following table provides an indicative list of goods, works and consulting services contracts over the life of the project, other than those mentioned in previous sections (i.e., those expected beyond the current period).

Goods and Works

Package Number

General Description

Estimated Value

(cumulative)

Estimated Number of Contracts

Procurement Method

Review (Prior/Po

st) Bidding Procedure Comments

None

Consulting Services

Package Number

General Description

Estimated Value

(cumulative)

Estimated Number of Contracts

Recruitment Method

Review (Prior/Po

st) Type of Proposal Comments

None