technical assistance consultant’s report · pdf file6.6 account billing ... table 4.10:...

Technical Assistance Consultant’s Report

This consultant’s report does not necessarily reflect the views of ADB or the Government concerned, and ADB and the Government cannot be held liable for its contents. (For project preparatory technical assistance: All the views expressed herein may not be incorporated into the proposed project’s design.

Project Number: 34039 March 2008

Bangladesh: Corporatisation of the Dhaka Electric Supply Authority (Financed by the ADB's Technical Assistance Special Fund)

Prepared by

British power International Limited

United Kingdom

For Ministry of Energy and Mineral Resources Dhaka Electricity Supply Authority

DESA-TA3978 BAN/DL/GEN002

Corporatisation of the Dhaka Electric Supply Authority ____________________________________________________

FINAL REPORT Submitted to: Asian Development Bank and Dhaka Power Distribution Company Submitted by: British Power International Limited The Octagon Middleborough Colchester Essex United Kingdom CO1 1TG March 2008 This document has been prepared for the titled project or named part thereof and should not be relied upon or used for any other project without an independent check being carried out as to its suitability and the prior written authority of British Power International Limited. British Power International Limited accepts no responsibility or liability for the consequences of this document being used for a purpose other than the purpose for which it was commissioned. Any person using or relying on the document for such other purposes agrees, and will by such use or reliance be taken to confirm his agreement, to indemnify British Power International Limited for all loss or damage resulting therefrom. British Power International Limited accepts no responsibility or liability for this document to any party other than the person by whom it was commissioned. Please note that the information or data prepared by parties other than British Power International Limited, which has been reviewed in the preparation of this document, has not been independently checked or verified for accuracy by British Power International Limited.

Corporatisation of the Dhaka Electric Supply Authority (DESA)

Final Report v1.0.doc ii

Document Status

Title : Corporatisation of the Dhaka Electric Supply Authority (DESA)

Reference : Final Report

Issue : Final Version 1.0

Date : 23 July 2008

Electronic Doc Ref : BPI_DESA-TA3978 BAN_DL/GEN002

Authorisation

Name Position Signed Date

Neside Tas Anvaripour ADB Project Officer

Bill Slegg BPI Team Leader

History

Issue Date Originator(s) Reviewer(s) Description

1.0 23 July 2008 BPI’s Team Gary Stokes

Final Report issued at the request of the ADB following no comments

on draft version 0.2

0.2 03 April 2008 BPI’s Team Gary Stokes Draft Final Report

issued to ADB and GoB for comment

0.1 31 March 2008 BPI’s Team Gary Stokes Draft raised from template


Final Report v1.0.doc iii

Table of Contents Glossary of Terms and Abbreviations..................................................................................... iii 1. EXECUTIVE SUMMARY........................................................................ 3 1.1 Finance................................................................................................... 3 1.2 Human Resources.................................................................................. 3 1.3 Customer Service ................................................................................... 3 1.4 Management Information Systems......................................................... 3 2. LIST OF RECOMMENDATIONS ........................................................... 3 2.1 Finance................................................................................................... 3 2.2 Human Resources.................................................................................. 3 2.3 Customer Service ................................................................................... 3 2.4 Management Information Systems......................................................... 3 3. INTRODUCTION .................................................................................... 3 3.1 Purpose .................................................................................................. 3 3.2 Background ............................................................................................ 3 3.3 Work in 2005 .......................................................................................... 3 3.4 2007 Restart ........................................................................................... 3 3.5 Resources .............................................................................................. 3 3.6 Logistics.................................................................................................. 3 3.7 Acknowledgments .................................................................................. 3 4. FINANCIAL AND BUSINESS REVIEW................................................. 3 4.1 Workplan ................................................................................................ 3 4.2 BPI’s Approach....................................................................................... 3 4.3 Introduction............................................................................................. 3 4.4 DESA Performance ................................................................................ 3 4.5 Profit and Loss Account.......................................................................... 3 4.6 Balance Sheet ........................................................................................ 3 4.7 Restructuring the Balance Sheet ............................................................ 3 4.8 Recommended Adjustments to Balance Sheet ...................................... 3 4.9 Financial Projections .............................................................................. 3 5. HUMAN RESOURCES AND ORGANISATION..................................... 3 5.1 Workplan ................................................................................................ 3 5.2 Approach ................................................................................................ 3 5.3 Organisation and Staff Deployment........................................................ 3 5.4 Employee Profile .................................................................................... 3 5.5 Corporate Governance ........................................................................... 3 5.6 The New Organisation............................................................................ 3 5.7 Migration of Staff to DPDC ..................................................................... 3 5.8 Service Rules ......................................................................................... 3 6. CUSTOMER SERVICE .......................................................................... 3 6.1 Introduction............................................................................................. 3 6.2 Bulk Energy Metering ............................................................................. 3 6.3 Customer Service Activities.................................................................... 3 6.4 Service Connection ................................................................................ 3 6.5 Meter Reading ........................................................................................ 3 6.6 Account Billing ........................................................................................ 3


Final Report v1.0.doc iv

6.7 Account Collection.................................................................................. 3 6.8 Disconnection and Reconnection ........................................................... 3 6.9 Complaint Handling for Customer Service Activities .............................. 3 6.10 Organisational Structure within DESA’s S&D Divisions.......................... 3 7. MANAGEMENT INFORMATION SYSTEMS......................................... 3 7.1 Introduction............................................................................................. 3 7.2 Workplan ................................................................................................ 3 7.3 BPI’s Approach....................................................................................... 3 7.4 Review.................................................................................................... 3 7.5 Analysis .................................................................................................. 3 7.6 Procurement Methodology ..................................................................... 3 7.7 Overview of Proposed Computerised System........................................ 3 7.8 Estimated Costs ..................................................................................... 3 7.9 Expected Procurement and Construction Period.................................... 3 Tables Table 3.1: BPI’s Revised Team ............................................................................... 3 Table 4.1: Finance Workplan................................................................................... 3 Table 4.2: DESA Performance Indicators................................................................ 3 Table 4.3: DESA’s Profit and Loss Account ............................................................ 3 Table 4.4: Reconciliation of DESA net profit for years ended 30 June 2006 &

2007........................................................................................................ 3 Table 4.5: DESA Distribution Expenses .................................................................. 3 Table 4.6: DESA’s Balance Sheet........................................................................... 3 Table 4.7: DESA Balance Sheet Reformatted......................................................... 3 Table 4.8: DESA Capital Work in Progress ............................................................. 3 Table 4.9: DESA Investments ................................................................................. 3 Table 4.10: DESA Accounts Receivable ................................................................... 3 Table 4.11: DESA Accounts Receivable - Other ....................................................... 3 Table 4.12: Analysis of DESA Grants........................................................................ 3 Table 4.13: DESA Foreign Loans as at 30 June 2007 .............................................. 3 Table 4.14: DESA Government Loans (long term portion) June 2007 ...................... 3 Table 4.15: DESA Total Loans June 2007 ................................................................ 3 Table 4.16: DESA Current Portion of Long Term Loans 30 June 2007 .................... 3 Table 4.17: Under Deduction made by Government on DSL and RPA June

2007........................................................................................................ 3 Table 4.18: DESA Other Liabilities 30 June 2007 ..................................................... 3 Table 4.19: DESA Accounts Payable to BPBD and PGCB ....................................... 3 Table 4.20: Power Sector Master Plan Sales Growth Projections for

DESA/DPDC........................................................................................... 3 Table 4.21: Projected Total System Losses .............................................................. 3 Table 4.22: Projects in Progress as at 30 June 2007................................................ 3 Table 4.23: Additional Expenditure Required on Existing Projects in Progress ........ 3 Table 4.24: Capital Projects Proposed by DESA ...................................................... 3 Table 4.25: DPDC Capital Expenditure Programme (TK mill) ................................... 3 Table 4.26: DPDC Operating Cost Forecast ............................................................. 3 Table 4.27: Sensitivity to Key Assumptions. PBT (TK mill) ...................................... 3 Table 4.28: Sensitivities to key assumptions. ............................................................ 3


Final Report v1.0.doc v

Table 5.1: Human Resources Workplan.................................................................. 3 Table 5.2: Current Staffing within DESA ................................................................. 3 Table 5.3: Comparison of Employees versus Customers Served ........................... 3 Table 5.4: Staff Currently Employed in DESA ......................................................... 3 Table 5.5: The Number of Permanent DESA Employees by Grade &

Designation............................................................................................. 3 Table 5.6: Principal Options for Employee Transfer ................................................ 3 Table 6.1: Existing Import Meters by Voltage Level ................................................ 3 Table 7.1: MIS Project Work Plan ........................................................................... 3 Table 7.2: Cost Estimation for Major Components for the Computerised

System.................................................................................................... 3 Figures Figure 4.1: Projected Staff Numbers ........................................................................ 3 Figure 4.2: DPDC Operating Costs Forecast ........................................................... 3 Figure 4.3: Projected Depreciation Charge (on historic cost basis).......................... 3 Figure 4.4: DPDC Profitability (1) – 6% per annum sales growth............................. 3 Figure 4.5: DPDC Profitability (2) – 6% per annum sales growth............................. 3 Figure 4.6: DPDC Projected Cash Flows – 6% per annum sales growth ................. 3 Figure 4.7: DPDC Funding – 6% per annum sales growth ....................................... 3 Figure 4.8: DPDC Profitability (1) – High Sales Growth............................................ 3 Figure 4.9: DPDC Profitability (2) – High Sales Growth............................................ 3 Figure 4.10: DPDC Projected Cash Flows – High Sales Growth................................ 3 Figure 4.11: DPDC Funding – High Sales Growth ..................................................... 3 Figure 4.12: Profitability – Low Sales Growth............................................................. 3 Figure 4.13: Profitability (2) – Low Sales Growth ....................................................... 3 Figure 4.14: DPDC Projected Cash Flows – Low Sales Growth ................................ 3 Figure 4.15: DPDC Funding – Low Sales Growth ...................................................... 3 Figure 4.16: DPDC Sensitivity to Sales Growth – Profit Before Tax........................... 3 Figure 5.1: Approach to Delivering the HR Workplan............................................... 3 Figure 5.2: Simplified Representation of DESA’s Current Organisation ................... 3 Figure 5.3: Simplified Organogram of DESA - Typical S & D Division...................... 3 Figure 5.4: Key Steps for Transferring Staff ............................................................. 3 Figure 6.1: Flowchart of the Existing New Service Connection Element of

DESA’s Customer Service Activities ...................................................... 3 Figure 6.2: Flowchart of the Existing Meter Reading Element of DESA’s

Customer Service Activities.................................................................... 3 Figure 6.3: Flowchart of the Existing Billing Element of DESA’s Customer

Service Activities .................................................................................... 3 Figure 6.4: Flowchart of the Existing Account Collection Element of DESA’s

Customer Service Activities.................................................................... 3 Figure 6.5: Flowchart of the Existing Disconnection and Reconnection Process

for a Panel Bill ........................................................................................ 3 Figure 6.6: Flowchart of the Existing Disconnection and Reconnection Process

for an Arrears Bill.................................................................................... 3 Figure 6.7: DESA’s Existing S&D Divisional Organisation........................................ 3 Figure 7.1: High-level Procurement Programme ...................................................... 3 Figure 7.2: High-level Outline Implementation Plan ................................................. 3


Final Report v1.0.doc vi

Appendices Appendix 4.1: Financial Management Assessment....................................................... 3 Appendix 4.2 Restructuring DESA Balance Sheet ....................................................... 3 Appendix 4.3 DPDC Projections Summary – at 6% per annum sales growth............. 3 Appendix 4.4 DPDC Projected Profit and Loss Accounts (TK mill) – at 6% per

annum sales growth ............................................................................... 3 Appendix 4.5 DPDC Projected Balance Sheets (TK mill) – at 6% per annum

sales growth ........................................................................................... 3 Appendix 4.6 DPDC Projected Cash Flow (TK mill) – at 6% per annum sales

growth..................................................................................................... 3 Appendix 4.7 DPDC Projections Summary – using Power System Master Plan

sales growth ........................................................................................... 3 Appendix 4.8 DPDC Projected Profit and Loss Accounts (TK mill) – using Power

System Master Plan sales growth .......................................................... 3 Appendix 4.9 DPDC Projected Balance Sheet (TK mill) – using Power System

Master Plan sales growth ....................................................................... 3 Appendix 4.10 DPDC Projected Cash Flow (TK mill) – using Power System

Master Plan sales growth ....................................................................... 3 Appendix 4.11 DPDC Projections Summary – at 3% per annum sales growth.............. 3 Appendix 4.12 DPDC Projected Profit and Loss Account – at 3% per annum

sales growth ........................................................................................... 3 Appendix 4.13 DPDC Projected Balance Sheet – at 3% per annum sales growth ........ 3 Appendix 4.14 DPDC Projected Cash Flow (TK mill) – at 3% per annum sales

growth..................................................................................................... 3 Appendix 4.15: DPDC Draft Business Plan..................................................................... 3 Appendix 5.1: DESA - Existing Organogram................................................................. 3 Appendix 5.2: Permanent Employees - Listed by Designation...................................... 3 Appendix 5.3: Permanent Employees - Listed by Pay (according to national

scale) ...................................................................................................... 3 Appendix 5.4: Allocation of Permanent Employees by Department or

Organisational Unit ................................................................................. 3 Appendix 5.5: Permanent Employees - Age.................................................................. 3 Appendix 5.6: Permanent Employees - Length of Service ............................................ 3 Appendix 5.7: Permanent Employees - Pattern of Retirements .................................... 3 Appendix 5.8: Permanent Employees - Education and Qualifications........................... 3 Appendix 5.9: Proposed Organisation - Board and Head Office Functions................... 3 Appendix 5.10: Proposed Organisation - Field Activities................................................. 3 Appendix 5.11: Job Descriptions Appendix 5.12: Proposed Service Rules - Managers Appendix 5.13: Proposed Service Rules - Officers Appendix 5.14: Proposed Service Rules - Graded Staff Appendix 6.1: Bulk Metering and Customer Service Terms of Reference (ToR) .......... 3 Appendix 6.2: DESA’s Customer Service Initiatives...................................................... 3 Appendix 6.3: Notes of Visit to Azimpur S & D Division ................................................ 3 Appendix 6.4: Notes of Visit to Narayangonj (East) S & D Division............................... 3 Appendix 6.5: Notes of Visit to Shatmasjid S & D Division............................................ 3 Appendix 6.6: Notes of Visit to Shiddirgonj S & D Division............................................ 3 Appendix 7.1: High-Level MIS Work Plan ..................................................................... 3


Final Report v1.0.doc vii

Appendix 7.2: Brief History of the Financial Management Upgrade (FMU) Project....... 3 Appendix 7.3: Typical Distribution Utility Performance Monitoring Indicators................ 3 Appendix 7.4: Examples of Departmental Information Key Performance

Indicators and Measurements ................................................................ 3 Appendix 7.5: Illustration of Performance Targets ........................................................ 3 Appendix 7.6: A Typical Reporting Regime................................................................... 3 Appendix 7.7: Information and Communications Technology (ICT) Governance

and Strategy ........................................................................................... 3 Appendix 7.8: Developing an Information and Communication Technology

Department............................................................................................. 3 Appendix 7.9: DPDC Computerised Systems Statement of Requirements................... 3 Appendix 7.10: Estimation of Costs (Excluding Tax and VAT)........................................ 3 Appendix 7.11: Project Management .............................................................................. 3 Attachments Attachment 7.7.1: Examples of an ICT Committee and Sub-Committee Structure ............. 3 Attachment 7.7.2: Example of an ICT Mission Statement ................................................... 3 Attachment 7.7.3: Examples of ICT Vision - Statements of Intent ....................................... 3 Attachment 7.7.4: Training Schemes................................................................................... 3 Attachment 7.7.5: Information Technology Infrastructure Library (ITIL) .............................. 3 Attachment 7.8.1: Emerging Major Roles of ICT Management ........................................... 3 Attachment 7.8.2: Examples of Roles & Responsibilities in a Model ICT Department ........ 3 Attachment 7.8.3: A List of Elements in a Typical ICT Technical Environment ................... 3 Attachment 7.8.4: FMU Application Modules and Implementation Status ........................... 3 Attachment 7.8.5: Schematic of the Current DESA IT Facilities Providing the Billing &

Customer Account Service ..................................................................... 3 Attachment 7.9.1: Map of Dhaka showing the DESA/ DPDC Distribution Area................... 3 Attachment 7.9.2: List of all DPDC Office Locations ........................................................... 3 Attachment 7.9.3: DPDC Head Office Proposed Organogram............................................ 3 Attachment 7.9.4: DPDC Circle proposed Organogram ...................................................... 3 Attachment 7.9.5: DPDC HQ Engineering, Business and Support Function

Accountabilities....................................................................................... 3 Attachment 7.9.6: Integrated Financial Management Block Diagram.................................. 3 Attachment 7.9.7: Schematic of the current DESA IT facilities providing the billing

and customer account service................................................................ 3 Attachment 7.9.8: List#1 of Hardware currently used within DESA ...................................... 3 Attachment 7.9.9: Financial Management Upgrade Project List of Modules and

Status ..................................................................................................... 3 Attachment 7.9.10: Estimation of IT Equipment (Refer to Attachment 8 for type of

some existing IT equipment) .................................................................. 3 Attachment 7.9.11: Conceptual Topology of a Future Corporate Data Network.................... 3


Final Report v1.0.doc viii

GLOSSARY OF TERMS AND ABBREVIATIONS

Abbreviation Full Description

ADB Asian Development Bank

AE Assistant Engineer

APSCL Ashuganj Power Station Company Limited

BERC Bangladesh Energy Regulatory Commission

BPDB Bangladesh Power Development Board

BPI British Power International

BPRE Business Process Re-engineering

BSEC Bangladesh Stock Exchange Commission

CPF Contributory Provident Fund

DCS Daily Collection Sheet

DESA Dhaka Electric Supply Authority

DESCO Dhaka Electricity Supply Company

DPDC Dhaka Power Distribution Company

DSCR Debt Service Cover Ratio

DSL Debt Service Liability

EBIT Earnings Before Interest and Tax

EBITDA Earnings Before Tax, Depreciation and Amortisation

ED Engineering Director

EMS Energy Management System

FD Finance Director

FDR Fixed Deposit Receipt

FMIS Financial Management Information System

FMU Financial Management Upgrade

FY Financial Year

GDP Gross Domestic Product

GoB Government of Bangladesh

GPF General Provident Fund

GM General Manager

HR Human Resources

IAS International Accounting Standard

ICT Information and Communication Technology

IDC Interest During Construction


Final Report v1.0.doc ix


IEE Institute of Electrical and Electronic Engineers

IPP Independent Power Producer

IS Information Systems

IT Information Technology

ITT Invitation to Tender

kV Kilovolt (of electrical potential or ‘pressure')

kW Kilowatt (of electrical power)

LAN Local Area Network

M&MoA Memorandum and Articles of Association

MD Managing Director

MIS Management Information System

MOD Monthly Operating Data

MPEMR Ministry of Power, Energy and Mineral Resources

NMC Network Management Centre

O&M Operation and Maintenance

OD Operations Director

PAT Profit After Tax

PBS Palli Bidyut Samities

PBT Profit Before Tax

PC Personal Computer

PGCB Power Grid Company of Bangladesh

PI Performance Indicators

PPA Power Purchase Agreement

REB Rural Electrification Board

RFP Request for Proposal

RPA Reimbursable Project Aid

S&D Sales and Distribution

SAE Sub Assistant Engineer

SBU Strategic Business Unit

SCADA Supervisory Control and Data Acquisition

SDE Sub Divisional Engineer

SE Superintending Engineer

SLA Service Level Agreement

SODA Scheme of Delegated Authority


Final Report v1.0.doc x


SoR Statement of Requirements

SPI Standard Practice Instructions

TA Technical Assistance

TD Technical Director

ToR Terms of Reference

WZPDCL West Zone Power Distribution Company Limited

XEN Executive Engineer


Final Report v1.0.doc 1

1. EXECUTIVE SUMMARY

1. For ease of reference the Executive Summary is presented under the various work areas.

2. BPI would like to acknowledge the assistance and cooperation which was received from the assigned DESA counterpart, the DESA Computer Centre Management Team, and from all other DESA staff with whom discussions were held.

1.1 Finance

3. DESA1 has suffered from a poor financial performance over several years. Up to the end of June 2003 it operated at a gross loss on electricity, i.e. the revenue received from the sales of electricity was less than the cost of purchasing the power and the associated transmission wheeling charges.

4. The situation has improved over the last two years, principally as a result of a tariff increase and a reduction in system losses which, nevertheless, continue to exceed 25%.

5. During the year ended June 2006 the authority reported a small profit and for the year ended June 2007 a profit of TK 1,039.5 million was earned. A significant amount of this profit resulted from DESA ownership of DESCO shares. DESA’s profit after excluding the contribution from DESCO in terms of dividends and profit on the sale of shares was TK 339.4 million which was 2.5% of revenue.

6. After years of accumulated losses DESA’s Balance Sheet shows a negative net worth with liabilities exceeding the value of its assets.

7. The Balance Sheet contains asset values which may not be realisable, and liabilities that DESA is unable to meet. It also omits other liabilities, such as unfunded pension liabilities. On the other hand, the book value of DESA’s holding of DESCO shares may be significantly less than the tradeable value.

8. Current Liabilities, at almost three times current assets, include a large balance due to BPDB and PGCB for electricity purchases (TK 28,493 million) and unpaid debt repayments in excess of TK 6,300 million. It is unlikely that DESA/DPDC will ever be in a position to clear these obligations from normal operations.

9. A number of recommendations are made as to how the balance sheet of DESA/DPDC should be restructured to provide DPDC with a realistic foundation on which to develop its operations. Essentially this would require the Government of Bangladesh to write off (or convert into equity) an amount in the order of TK 26 billion.

10. BPI has developed a financial model of DPDC’s activities that takes account of investment, operating costs, debt service and projected revenues. The model provides cash flows, balance sheet and financial projections for DPDC and includes sensitivity analysis of DPDC’s financial performance.

11. Modelling has been undertaken on three main scenarios:

High sales growth (in line with the Power Sector Master Plan Update);

Medium sales growth of 6% per annum; and 1 Please see Glossary of Terms and Abbreviations for a list of acronyms and abbreviations.



Low sales growth of 3% per annum.

12. Under the medium sales growth scenario DPDC is expected to make a net loss for the financial years ending 2009 to 2012. This is explained by several key factors:

A substantial proportion of DESA’s profit for the year ended 30 June 2007 resulted from its shareholding in DESCO in the form of dividends and profit on the sale of shares. It has been assumed that DPDC will not continue to receive the benefit from this shareholding;

The annual depreciation charge increases substantially because of the assumed conversion of current capital work in progress to fixed assets and the additional depreciation arising from the additional capital expenditure expected;

Interest expense increases because of the additional borrowing requirements resulting from the capital expenditure programme;

An initial step change in salary levels means a large real increase in staff costs, even allowing for the staff reduction programme; and

An annual provision has been allowed for bad and doubtful debts.

1.2 Human Resources

13. Established by the Dhaka Electricity Authority Act 1990, DESA has followed the approach common to much of the BPDB’s distribution operations. There have been changes during the last 16 years but it has retained this initial structure in all essential respects. As at November 2007, the Authority operated with a workforce of 3057 permanent employees, supplemented by a master roll of 1578 daily paid workers.

14. As an autonomous authority, unlike other distribution zones that are being corporatised, it does not rely on BPDB for specialist services. Indeed, it provides network control and makes available certain specialist technical support to DESCO and that part of REB covering greater Dhaka. Nonetheless, it will require a range of new skills and expertise if it is to operate successfully as a commercial and financially self sustaining entity.

15. The productivity of DESA has not been impressive and the sources of DESA’s relative underperformance are reviewed in detail.

16. The implementation of power sector reforms has had important consequences for DESA, not all of which appear to have been referred to in the papers reviewing reform. The transfer of assets - and the responsibility for their operation - from DESA to REB and DESCO were not accompanied by transfers of the staff who were working on them, meaning that large numbers of staff were retained by DESA when their work migrated to DESCO. In terms of preserving employment, the policy has been successful in achieving its aim. In terms of giving DESCO a completely fresh start and enabling it to use a new business model, it was also a success. However, in terms of the most efficient allocation of staff within DESA (and between DESA and DESCO) it was less successful. DESA was left with stranded staff who were absorbed into the DESA organisation; some were added to existing Departments / Divisions and the boundaries of some Divisions were adjusted to create more local units. Although customer numbers were increasing in DESA through growth, the legacy of ‘additional’ staff go a long way to explaining why DESA failed to make



significant productivity improvements. For DPDC, this problem can no longer be covered up.

17. Financial modelling reveals that moving to what have become ‘market rates’ for newly corporatised power sector bodies will depress profitability unless relative overstaffing/ underperformance can be addressed.

18. A profile of DESA employees has been developed as an aid to workforce planning and the evaluation of organisational and migration options. The age distribution is skewed towards older employees. This means that firstly, there is a relative shortage of young talent in DESA; and secondly, that there may well be succession problems as older staff approach retirement en bloc. Most employees join DESA and stay with the organisation until retirement (or until some other external event compels the employee to leave). Historically, staff turnover has been in the region of 5-6% pa and the pattern of retirement suggests this will continue into the future. Therefore, providing there is only very limited recruitment from outside the new company, the target staff reductions assumed in the financial forecasts (to achieve an overall staffing in the region of 2,500 full time equivalents) are realistic.

19. By international comparison with other electricity utilities DESA appears to have a relatively high proportion of unskilled, relatively poorly qualified and relatively poorly educated staff. This hierarchical, stratified organisation of work has deep economic and cultural roots but there will be longer term technological and commercial pressures for this to change, not least through the progressive introduction of computerisation, newer distribution engineering technologies and alternative working methods. The new organisation must facilitate this change.

20. DESA operates with a sizable Master Roll. For the future DPDC will continue to depend on many on these people for its effective operation – at least in the short term. The focus of attention until now has been on permanent staff. The reality is that Master Roll employees tend to be younger, often with shorter service, and have experience of working elsewhere. They make an important contribution to DESA, some performing core functions, and their work cannot be ignored.

21. DPDC has been formed as a limited company and the Board has approved an initial set up, pay and service rules, and delegated authorities. The Consultant has developed a range of detailed (and practical) recommendations on how the governance of the new company might be enhanced, thereby maximising the likelihood of improved economic performance and meeting the good practice standards of the donor community. Significant steps have been taken by the Power Secretary to improve governance although there is, in the Consultant’s opinion, more that could be done.

22. A new organisation is proposed, together with target staffing levels to be achieved by 2016. The proposed structure is based on sound principles of organisation and draws on the practice of other power sector utilities/distributors. A rationale is presented for a two tier, ‘functional’ organisation structure; with Executive Directors as full members of the Board; the separation of the Technical Director’s role into two (the posts of Operations and Engineering Directors); and the representation of HR at Board level. The proposals are supported by organograms and detailed job descriptions for 32 of the more senior roles.

23. Managing the transition to the new company was the subject of an earlier report by the Consultant, submitted in November 2007, which evaluated the principal



options (and the main steps involved in each). Whilst, at that time, progress on the transition was stayed by the High Court, the Consultant nonetheless recommended, and continues to favour, an approach based on inviting DESA employees to express a preference (or more accurately preferences); DPDC then reviews all employees and makes appointments from among DESA people in so far as this is practical and efficient; where there are not suitable candidates available, posts are to be advertised externally and appointments made. Those from DESA not appointed to substantive roles would be offered work on special projects. A carefully controlled early separation/golden handshake scheme could be considered to accelerate the rate at which target staffing levels can be achieved and productivity improvements delivered.

24. The low risk approach to pay is to follow what has become the ‘market rate’ among the new companies (e.g. those parts that have been corporatised following the decision to unbundle the power sector) and indeed, the initial decision of the Board of DPDC reflects this. The financial consequences of what amounts to almost a doubling of basic pay are however, significant, as shown by the outputs from the financial model.

25. The same, low risk approach can be made to the form of service rules that the new company adopts. It has become the practice to offer term contracts, with benefits in line with those of the pioneer companies (like DESCO and PGCB). However, the Consultant has looked to what might be learned from among the more innovative parts of the private sector in Bangladesh and drafted three sets of service rules – for managers, for officers and for graded staff – for the new company to consider.

1.3 Customer Service

26. All metering elements of the original ToR for this TA are now being progressed by Power Cell as a separate activity supported by the World Bank. However, for completeness and to provide some surety as to the arrangements, an overview of the existing bulk metering provisions is included within this final report.

27. Between the suspension of the TA in 2005 and its restart in September 2007, DESA has embarked upon several initiatives that are aimed at improving the level of service it provides to its customers.

28. In noting DESA’s initiatives in its customer service activities, BPI considers that the principal activities where most improvement can now be gained are those regarding the meter reading, account billing and account collection elements of the overall energy accounting process, replacing the currently labour-intensive, manual system with a more automated approach.

1.4 Management Information Systems

29. A major contribution to the corporatisation of DESA and to the successful development of DPDC is the provision of a computerised system to enable all the current and future business processes to be carried out more efficiently and effectively. In line with the DPDC Vision2 and one key Mission Statement,3 the purpose of this report is to propose a common corporate-wide computerised system for the collecting, collating and processing of data. This will provide relevant information, in the form of specific reports, to enable managers to

2 “The vision of this new organisation is to work under corporate culture, using state-of-the-art technology and provide

standard power supply at an affordable price to the customers within the major part of Dhaka Metropolitan City and Narayanganj District”

3 “Developed with the state-of-the-art technology to work in the power distribution system”



assess the performance of the various functions for which they hold responsibility, especially in those areas relating to financial activities.

30. The work undertaken by BPI during 2005 under this TA produced a workplan, based on the ToR, for the Financial Management Information System. The original objectives provided a framework for the new BPI Team to develop a high-level workplan to ensure that all the elements of the ToR could be delivered. However, due to the elapsed time of 14 months, the tasks associated with the implementation part of the ToR could not be completed before March 2008.

31. Although the ToR refers mainly to the provision of an FMIS the majority of the underlying data and information is currently created and exists in the daily transactions carried out in the various business processes. For the purpose of this report the terms FMIS and computerised systems, in general, can be considered inter-changeable.

32. The Consultant reviewed the information systems and the associated business functions undertaken within DESA. The Consultant also reviewed the information systems already operating, or proposed, for use in other Government owned utilities within the power sector. The key observation was that the current information systems originate from the Financial Management Upgrade project, and within DESA only two processes (Billing and Customer Accounting, and Tongi Stores systems) operated computerised systems, the remaining “non-billing” processes relying on paper-based and standalone PCs. The FMU project had the facilities to accommodate these non-billing processes but, due to lack of finance, was never fully implemented. It was also noted that there are five Divisions which have introduced their own computerised systems including billing and customer accounting. Although the original FMU project only provided Billing and Customer Accounting facilities for one Division, the initiative to de-centralise the computer work has been continued providing the facilities to 14 Divisions by 2007 with plans to include all DPDC Divisions by the end of 2008. In addition, the Computer Centre management has proposed adding bar-codes to identify each bill to improve accuracy and speed up the bank-based processes.

33. The analysis stage reviewed all the information acquired and considered those business needs and associated key processes which can, with the appropriate computerised systems, enable DPDC to operate more effectively. To encourage DPDC management to appreciate the importance and value of computerised systems, and the dependency on business information in modern organisations, two papers - “Information and Communications Technology (ICT) Governance and Strategy” and “Developing an Information and Communication Technology Department” - have been submitted for approval. These papers set down the guidelines by which to establish the technical environment and organisation for delivering the appropriate ICT systems and services, and for providing effective ongoing support.

34. To ensure all aspects were considered, especially in the areas of corporate governance, financial management and organisational changes, close cooperation was maintained with each member of BPI’s Team. This approach resulted in identifying three distinct processes which the computerised system must provide – management processes, functional processes, and supporting processes. On completion of this stage, an FMIS Statement of Requirements has been drafted in preparation for inclusion into the two stage bidding documentation, in line with the ADB Procurement Guidelines for the design,



supply and implementation of such an ICT project. It is estimated that this procurement process could take about a year from the pre-qualification stage to contract placement.

35. The proposed computerised systems, supported by a corporate-wide intranet, will provide for some 390 terminals. This will include those currently in service, thereby protecting DESA’s previous investment. Authorised users of these terminals will have access to those applications or databases which are applicable to those specific daily activities within their particular business function. Some users may only require access to one application for only one particular activity, (e.g. data entry operatives), whilst others (e.g. managers) may only require information, gathered from various data sources, and presented in a particular report format to be available at specific times (e.g. weekly report). Other users may require access to particular data and information as and when required. To provide such a variety of requirements an important aspect of the computerised system will be an intranet providing data communications to all DPDC’s 48 office locations. Such a “network” will be exploited to establish the facilities for internal communications, including a corporate e-mail system.

36. In line with the DESA initiative to de-centralise the billing and customer accounting processes, it has been assumed that on completion of the roll-out programme there will be a data connection between the Computer Centre and each S&D Office (32 in total) and that each office will be equipped with a minimum of two PCs, a printer and an appropriate heavy duty line printer to print customer bills locally.

37. The estimated cost, excluding Tax, VAT, communication and annual on-going charges, for the design, supply and implementation of the computerised system, incorporating the existing IT systems, will be in the order of USD 4.6 Million. The project should be programmed to be completed in 12 months with a 6 month ongoing support period following full operational acceptance. It must be recognised that the figure is indicative and must be revised following the confirmation of the number of terminals (existing and additional) to be assigned at each office and the total number of users to be trained. This work must be completed as it is essential information for specifying the final quantity, size and capacity of the system.



2. LIST OF RECOMMENDATIONS

38. Again, for ease of reference this List of Recommendations is presented under the various work areas.

2.1 Finance

39. The balance sheet of DESA/DPDC should be restructured to create an opening balance sheet which provides DPDC with the opportunity for future financial sustainability.

40. DPDC will not be in a position to clear the amount owing to BPBD and PGCB for electricity purchases and it is recommended that a large proportion of this, in the order of TK 20 billion is not taken over by DPDC. This will require commitment from the Government to either take over this obligation for settlement, or write off, or conversion into equity in DPDC.

41. Similarly, a large proportion of the outstanding debt service liability, in the order of TK 6 billion, should not be taken over by DPDC.

42. It is recommended that the true value of DESCO shares currently owned by DESA is recognised and used to partly “offset” the obligations that are not to be assumed by DPDC.

43. Other recommended adjustments include:

The transfer of completed projects from projects in progress to fixed assets;

The write-off of various investments;

The write-off of uncollectable receivables;

Stock values should be adjusted for obsolete, unuseable and untraceable items; and

DPDC should recognise the full liability of pensions due to staff.

44. DPDC should adopt the financial model for its financial planning purposes and adapt it in line with its own assumptions and plans. It should continue to monitor actual performance against its plan.

2.2 Human Resources

45. The implementation of power sector reforms has had important – and possibly unintended consequences for staffing at DESA. This ‘bigger picture’ of power sector staffing needs to be recognised in future policy statements on the sector.

46. The target staffing levels set in the business and financial forecasts are achievable but will require dedicated management, thorough succession planning and a range of supporting policies if they are to be delivered successfully.

47. Workforce planning must take into account the sizeable master roll workforce. The target for staffing does, and should continue to, reflect all people resources used (i.e. including master roll and any staff that may be outsourced).

48. Skills must be developed and new areas of expertise introduced if DPDC is to succeed as a commercially focussed, financially self sustainable corporate entity.



49. The analysis of DPDC’s underperformance, the proposed business plan targets for the new company, and the allocation of responsibilities in the new job descriptions should, over time, be translated into individual level action plans/targets.

50. The recommended organisation (2 tier, functionally led, with reconfigured and clarified executive responsibilities) should be reviewed in detail and implemented as appropriate.

51. Improvements to governance in the power sector have been made but further enhancements should be made – practical and straightforward proposals are made in the main body of the report.

52. Migration to the new structure may have been stayed in the High Court, but this should not have prevented decisions in principle on the form of transfer, or detailed planning of the next steps, being made.

53. There is a low risk, and easy to implement approach to pay and benefits in that DPDC can adopt what has become the ‘market’ practice among the newly corporatised power sector bodies. However, there is scope for innovation and it is recommended that the draft rules attached as appendices should be reviewed and implemented as appropriate.

2.3 Customer Service

54. The Consultant’s overview of the existing bulk energy import metering shows that it is adequate and fit for purpose and that the work being carried out under Power Cell’s management will also be adequate to accurately provide for the bulk energy metering at the interfaces of the various distribution entities.

55. If DPDC elects to provide pre-payment facilities for its customers, BPI recommends that DPDC should provide the pre-payment meters at no purchase cost to the customer.

56. DESA / DPDC should move towards a more systematic approach for a meter recertification process, establishing a centralised test station for the purpose. The time recertification programme should be arranged to align with the on-circuit life of each individual meter type.

57. DESA / DPDC should carry out a cost-benefit analysis on the existing system of carrying out meter readings and rendering energy accounts against the income generated from the payment of those accounts.

58. The rotation of meter readers from one walk-order to another would help to obviate the risk of corruption.

59. DESA / DPDC should consider moving towards a less labour-intensive meter reading process, where the clarity of a person’s handwriting is not critical to the accuracy of the activity, for example the installation of so-called smart meters that can be read by automatic means, either by hand-held device or remotely by telemetry. This would remove the need for manual data input and subsequent transcription with potential for error.

60. Another variation would be for DESA / DPDC to provide pre-payment meters for the most modest of its energy customers and to adopt a quarterly meter reading to ensure that the customer is properly paying for the energy used.

61. DESA / DPDC should investigate alternative approaches to the meters installed at the premises of the most modest of energy users to ensure that there is a



justifiable business case for the type of meter in use, commensurate with delivering an efficient and cost-effective service to its customers.

62. The Consultant recognises that DESA’s customers are being better served by virtue of the decentralised computerisation of its energy accounts.

63. A centralised database is virtually an essential requirement when the needs of a corporatised entity are concerned and the communication links between the S&D Divisional offices and the centralised computer should be maintained to facilitate the associated data flows.

64. The Consultant’s recommendations for a Management Information System (MIS) will elaborate on this aspect of DESA’s / DPDC’s customer service activities.

65. DESA / DPDC should consider the longer term provision of payment booths.

66. DESA / DPDC should investigate methods of automating payment of energy accounts, thus obviating the need for customers to pay by cash. One such possibility is the use of direct debiting payment facilities.

67. DESA / DPDC should review its debt recovery procedures, in particular the inclusion in the process of two consecutive three monthly periods of grace before court proceedings are instigated.

68. DESA / DPDC should investigate its legal rights to continue with the process of seizing electricity meters that belong to customers in the event of permanent disconnection.

69. DESA / DPDC should consider extending the opening hours of the customer service centres in the light of feedback from customers and further operational experience in running the centres.

2.4 Management Information Systems

70. DPDC’s Board should approve the proposed ICT Governance and Strategy.

71. The current DESA IT facilities should be maintained and supported by DPDC until the new / replacement systems have been fully accepted.

72. DPDC should accept the proposed methodology for development of the ICT Department to establish effective delivery and support services in the medium and long-term.

73. The Statement of Requirements should be accepted to provide DPDC with the ICT systems, services and user facilities which will deliver the information, applications, organisation and technical environment to enable DPDC business functions to perform and operate effectively. It is important to stress the need to combine this recommendation with the requirement to establish the appropriate business functional model and to undertake those business process improvements necessary to ensure that the “tools” provided by the ICT services are fully optimised.

74. The DESA IT equipment survey should be completed and the “Estimation of IT Equipment” spreadsheet (SoR - Appendix 7.10) accordingly populated to enable a revised estimation of costs to be calculated (Appendix 7.10 of this report).

75. All divisions should be incorporated into the companywide ICT system. Where applicable the hardware and software associated with those Divisions, whose S&D offices operate standalone systems, must be integrated into the proposed solution.



76. A two-stage procurement should be adopted for a single (turnkey) contact for the design, supply and implementation of an IT system. The first-stage of this procurement process can be viewed as a “request-for-proposals” and is intended to provide pre-qualified suppliers the opportunity to offer solutions which fulfil the functional requirements without imposing strict technical specifications.

77. DPDC should undertake the introduction of the MIS by adopting a formal project management approach. Two key elements of this approach are the establishment of a Project Board and the assigning of a Project Manager with the appropriate skills and experience to deliver a successful project.

78. For the future MIS implementation to progress smoothly, DPDC IT staff should be assigned to be closely involved in the key project workgroups:

Business Applications;

Database Management & Development;

Change Management;

Configuration Management; and

Security and Audit.

79. To ensure business continuity all existing business processes and IT services should be operationally available for a period beyond the time that the new ICT system and services are fully accepted.



3. INTRODUCTION

3.1 Purpose

80. This report is submitted by British Power International (BPI) in fulfilment of the Terms of Reference (ToR) under the Technical Assistance (TA) that require the Consultant to produce a final report.

3.2 Background

81. BPI was appointed to provide technical assistance in the corporatisation of Dhaka Electric Supply Authority (DESA) and was awarded contract COCS/05-289 on 21 April 2005. A notice to proceed was issued by the Asian Development Bank (ADB) on 25 April. The Consultant’s team leader made a preliminary visit to DESA on 16/17 May and the full team was mobilised and working in Dhaka by 20 May 2005.

3.3 Work in 2005

82. Initially work proceeded well, as the Consultant was able to utilise published data and information gathered from focus groups and one-to-one interviews with officers from DESA and other organisations within the power sector. Productive meetings were held with officers from the Dhaka Electricity Supply Company (DESCO), the Power Grid Company of Bangladesh (PGCB) and qualitative information gathered during visits to DESA operating units.

83. An Inception Report was drafted and presented to a stakeholder workshop, and then to the first tripartite meeting (these two events were held consecutively on Sunday, 29 May 2005).

84. Following this, a revised version of the Inception Report was prepared and issued (via the formal procedure agreed with DESA) for consultation. To help ensure that DESA was able to respond, a committee was formed by the Chairman of DESA with a specific remit to review the report and feedback comments. At the request of the ADB, the revised version of the Inception Report is included at Attachment X to this report.

85. Although there had been signs of unease among those from DESA with whom we had worked, it was not until the third week that it became clear there was concerted opposition to corporatisation in general and the work of the Consultant in particular. BPI made several requests – at first informally, and then more formally - for comments on the Inception Report but none were forthcoming. Data gathering ground to a halt. It became apparent that counterpart staff had received threats and been told not to cooperate with the Consultant’s work or to disclose management information. Work on a financial model and a draft business plan could not therefore be taken forward. The campaign of opposition also involved posters being displayed which included slogans such as ‘Consultants go home’. There were regular walkouts by staff and protests at the head office. DESA management adopted a neutral stance – there were no attempts to remove posters and no sign of efforts to dissuade staff from stopping work.

86. In accordance with the resourcing schedule (TECH 2), International Consultants left Dhaka after the inception phase. Domestic Consultants persisted at their tasks for a further few weeks, though much of their effort to collect data was abortive. The intention had been for international Consultants to work



intermittently from their home office but, in the absence of a flow of data, this did not prove practical.

87. After consulting the ADB Project Officer, the international team did not return to Dhaka. The domestic team was disbanded early in October 2005.

3.4 2007 Restart

88. After consideration of the situation in country and a review between the ADB Project Officer and the Consultant’s team leader, the revised team was mobilised and the TA restarted in September 2007. Before work restarted a contract variation was prepared. Early visits were made by the international members of the team and links with local team members were re-established.

89. A workshop to kick start the process with all stakeholders present was planned but due to student unrest in the country this was unavoidably cancelled. As a result of this further delay, work started in a piecemeal way with all international team members, other than legal, delivering work in the field from September and October 2007. The legal input remains an issue during the military government rule in Bangladesh. Some normal legal processes are temporarily suspended leaving the legal advisors offering professional advice (see Inception Report) that cannot be taken on board in the current period. This will require subsequent resolution.

90. It became apparent during the 2007 restart that the ToR needed further modifications in addition to those expected from 2005. Other than a check on the bulk metering arrangements, the commercial aspects of the ToR (interface metering) appeared now to be surplus to requirements since a meeting with Power Cell confirmed that it is handling all interface metering under a project funded by the World Bank. The Customer Service aspect of the work considered by the Consultant to be essential in 2005 remains important but, due to what was expected to be a short time available for the transfer of staff from DESA and the business to DPDC, the human resources (HR) aspects became much more urgent between September and December 2007. Consequently, time allocated to commercial aspects and customer service was diverted to supporting the human resources team during the critical period.

91. On mobilisation in September 2007, the Consultant was presented with a clear set of requirements from the Power Secretary, including the need for the migration from DESA to the new corporate entity, Dhaka Power Distribution Company (DPDC), to be completed by 31 December 2007. This drove the need for a revised reporting arrangement, whereby the Mid Term Report was replaced by a Report on the Urgent Issues to achieve the migration target.

92. Consequently, following the restart the emphasis was on enabling a transfer of DESA business to DPDC on 1 January 2008. The Consultant, in conjunction with ADB, met with the Power Secretary, Chairman DESA and DPDC’s Executive Directors during week commencing 15 October. By 24 October (ready for a DPDC board meeting that day) the Consultant presented to the Power Secretary sufficient proposals for the key enabling steps to achieve the required transfer date to be achieved. These proposals were accompanied by the qualification that there was no time to be lost and that the date was only achievable if decisions were taken in accordance with the migration plan that the Consultant had been produced as part of the proposals.

93. In fulfilment of the reporting requirement a report (BPI’s immediate recommendations for DPDC - Reference DESA-TA3978 BAN/DL/001) was



delivered in November 2007. This report set out a migration plan, with a particular focus on the HR issues. This included a proposed organogram for the new company, criteria for the selection of senior staff for DPDC and job descriptions for key roles. To support the Government, DESA and DPDC through the process the Consultant also prepared a communication plan including a staff announcement, a set of predicted questions from staff with draft answers and a staff preference form. Most of the content of this report had already been presented to the Power Secretary in advance of this report to enable timely decisions to be made.

94. The Consultant took the clear view that whilst it was always an ambitious target, had all actions and decisions been taken when recommendations were originally presented, the migration could have been achieved by 31 December 2007. However, the migration from DESA to DPDC has been delayed for a number of reasons, not least of which was the High Court action taken by a number of DESA engineers. Following the determination of this action, the Consultant understands that the transfer date was rescheduled to 01 July 2008. Notwithstanding the delays, the Consultant was asked to complete all essential elements of the TA by 31 March 2008 and the Draft Final Report was issued on 03 April 2008. On 18 July 2008, following the lack of comments on the draft version of this report, the ADB requested that the Consultant issue the Final Report, which is hereby submitted.

3.5 Resources

95. Restarting the TA involved team changes. Experience during the inception phase led the ADB to indicate preferred changes to the international team. Restarting enabled these changes to be made smoothly. Based on the bank’s approval a revised team was put together as indicated in Table 3.1 below:

Area of Expertise Name In Original Team

Commercialisation and technical (to include team leadership)

Bill Slegg

Finance and accounting roles (originally two roles) Glen Chapman x

Legal Ejaz Khan

MIS Brian Wales x

HR and organisation Simon Faiers

Customer service Geoff Stott x

Domestic HR Specialist Monower Ahmed

Domestic Commercialisation Specialist Mollah, Md Uddin

Domestic Management Accountant Moudud, Tareque

Domestic Financial Management Specialist Hussain, Masud

Domestic Lawyer Nihad Kabir

Domestic MIS Specialist Naim x Table 3.1: BPI’s Revised Team



3.6 Logistics

96. Restarting the TA in 2007 was a positive move. That part of Dhaka served by DESA/DPDC desperately deserves an efficient and well managed electricity utility that can deliver more available, accessible and affordable supplies. The TA is an important part of bringing this about.

97. However, given that two years had elapsed since work commenced on this TA it was more appropriate to begin again, rather than attempt to resurrect the project from the post-inception phase. This was for several reasons. Firstly, much of the data was now two years out of date. (This is particularly true for revenue, costs and employee information). Utility good practice has moved on (for example, in the area of corporate governance standards). Secondly, an important element of the TA was to build the capacity of the Board, executive team and senior professionals in the new company. Many key personnel have changed since 2005. The Power Minister is no longer in post, a new Chairman DESA has been appointed and three new Executive Directors have been appointed to lead DPDC in its new role. Work, therefore, had to start again with the new team.

3.7 Acknowledgments

98. BPI’s method of working has always been inclusive and where open discussions on findings and recommendations are the norm.

99. Unfortunately, due to factors beyond BPI’s control, this has not proved wholly possible during the course of this TA and discussions with people outside of BPI’s immediate team and their DESA counterparts have, of necessity, been limited to fact finding and factual correction of BPI’s draft reports.

100. BPI gratefully acknowledges the help it has received, both from its designated counterparts in DESA, and from those other members of DESA’s team with whom discussions have been held.

101. The help of DPDC’s appointed Directors and the other members of DPDC’s team is also gratefully acknowledged.



4. FINANCIAL AND BUSINESS REVIEW

4.1 Workplan

102. The finance aspects of the project workplan are set out in Table 4.1.

Project

Ref Source Work Area/Task

Resp’ble Team

F1 ToR 2 (i) and 5(i)

Define financial structure of DESA and specifically; Asset and liability, valuation and structure Investment needs Starting financial statements Working capital and source(s) of funds Debt/equity ratio.

F, Com (S)

F2 ToR 5(ii) Recommend any adjustments to these factors/ratios for future operation of DESA.

F (P)

F3 ToR (5v) Prepare financial projections for DESA for the next five years. F (P), (S) F4 CN 8.1 Identify training needs to ensure key staff are familiar with

financial structure. F

F5

ToR 2 (i) and 5(i)

Prepare Terms of Reference for asset identification and valuation study.

TL(P)

F6 Prepare a high level business plan for DESA, including high level objectives for the Board and management team (include output from F3).

F (P), all (S)

F7 ToR 6(i) Review existing financial management arrangements of DESA (using ADB questionnaire)

F (P) MIS (S)

Table 4.1: Finance Workplan

4.2 BPI’s Approach

103. The finance workplan essentially consists of two major areas of work: Defining a finance structure (financial restructuring); and preparing financial projections and a high level business plan.

104. Work on financial restructuring had originally commenced in 2005 and despite problems with gathering data at that time a draft report was produced. See The Financial Restructuring of DESA; An Overview (Reference: DESA_DL_FIN40 issued on 8 July 2005).

105. Work recommenced in September 2007 with the early focus on information gathering and fact finding. At that time the accounts for the year ended June 2007 had not been finalised but the Consultant’s work included reviewing several draft versions and the final audited accounts that were ultimately available in January 2008.

106. The accounts and supporting information were examined in detail to compare the value of the underlying asset or liability with its balance sheet value.

107. Further background to the accounting information was obtained from a number of useful meetings with DESA counterpart staff.

108. Visits were also made to the development stores and the revenue stores to review the stock processes and valuation.

109. On the basis of the information available an approach to restructuring the balance sheet has been suggested which gives DPDC the opportunity for future financial sustainability.

110. This report includes a review of DESA’s financial performance and makes a number of recommendations to restructure the balance sheet.



111. One issue arising from the balance sheet review was the identification and valuation of fixed assets and a specific requirement under the TA was for the Consultant to prepare terms of reference for asset identification and valuation. This was fulfilled under the initial work under the TA and outline documentation was included as an appendix to the Inception Report (Reference DESA_DL_GEN10_1.0 issued 6 June 2005).

112. High level financial projections had previously been produced in 2005 based on information available at that time. However, in view of the time lapse before the recommencement of the project in 2007 work on financial projections started afresh.

113. Future revenues of DPDC are dependent to a great extent upon future sales growth and so projections were prepared under three scenarios: low sales growth; medium sales growth; and high sales growth.

114. The starting point for the projections was DESA’s balance sheet as at 30 June 2007, adjusted in accordance with the financial restructuring recommendations made. Projections will have to be amended to the extent that any of those recommendations are not adopted and to the extent that transactions since 30 June 2007 significantly affect DESA’s balance sheet.

115. A financial model was constructed to give financial projections from years ending June 2008 to 2016. This included a full profit and loss account, balance sheet and cashflow statement for each year.

116. A set of modelling assumptions was built up through an extensive data gathering exercise and discussions with DESA staff, the DPDC management team and BPI’s team of experts.

117. Three workshops were held in Dhaka with DPDC’s management team and BPI’s international experts to discuss the high level business plan. During these workshops the intention was to develop business objectives and agree underlying assumptions for the financial projections. A draft business plan was refined during this process.

118. The financial management arrangements of DESA were reviewed using the ADB Financial Management Questionnaire, which is attached as Appendix 4.1. Shortcomings identified are addressed throughout this report, for example corporate governance issue are discussed in the Human Resources section and reporting systems and controls within the MIS section.

119. BPI gratefully acknowledges the help it has received both from its designated counterparts in DESA and those other members of DESA’s team with whom discussions were held.

4.3 Introduction

120. A review of DESA’s financial performance was initially undertaken during October 2007 using draft accounts for the year ended June 2007 as the basis for the review. Discussions were held with finance counterpart staff in DESA, who were found to be very knowledgeable, competent and helpful. Nevertheless the quality of some of the underlying accounting information was in many cases severely limited. During the Consultant’s work the accounts were revised several times and the final audited accounts were not available until the New Year.

121. Whilst the accounts were audited, the auditor’s statement that the accounts exhibited a true and fair view of the state of affairs of DESA was subject to a



number of significant comments regarding the accuracy of accounting information. In addition, the final profit and loss account for the year ended 2007 contained a major adjustment for previous year’s expenses of TK 5.4 billion.4 To put this in context, the annual revenue for DESA was TK 13.8 million.

4.4 DESA Performance

122. During the twelve months ended 30th June 2007 DESA supplied electricity to approximately 610,000 customers in Dhaka. During that year the Authority sold 3,915 GWhs of electricity with total system losses of 25.2%. A net profit of TK 1,039 million was recorded on operating revenue of TK 13,766 million. The profit included a gain on the sale of shares in DESCO of TK 449 million.

123. Table 4.2 sets out some key performance indicators for the years ended June 2003 to June 2007.

2003 2004 2005 2006 2007

Operational Indicators

Electricity retail sales (GWHs) 3,470 3,178 3,589 3,871 3,915

Bulk sales to DESCO & REB (GWhs) 3,136 1,356 0 0 0

Total electricity sales (GWHs) 6,606 4,534 3,589 3,871 3,915

Growth in retail sales (%) 1.8% (8.4%) 12.9% 7.8% 1.1%

No customers at year end (000) 468 504 557 601 610

System Losses (%) 20.5% 26.2% 28.8% 27.0% 25.2%

Billing and Collection

Billing collection rate5 (%) 92% 108% 103% 103% 113%

Collection/import ratio 75.1% 82.1% 99.9% 103.8% 109.8%

Days in receivables 332 338 328 352 257

Days in accounts payable 630 853 1,034 1,013 893

Financial Indicators

Electricity Revenue (TK mill) 15,974 12,945 11,922 13,040 13,600

Electricity Gross Profit (TK mill) (842.7) 54.0 1,221.3 1,803.3 2,119.7

Gross Profit (%) (5.3) 0.4% 10.2% 13.8% 15.6%

Operating Margin (%)6 (15.0%) (11.7%) (1.0%) 1.2% 4.7%

Net Margin/Revenue (%) (15.8%) (13.4%) (2.8%) 0.4% 7.6%

4 Principally related to previous over charging of interest to the profit and loss account 5 Net amount collected/net amount billed 6 Operating profit/Revenue



2003 2004 2005 2006 2007

Average revenue per kWh sold (TK) 2.42 2.86 3.32 3.37 3.47

Average power purchase cost per kWh sold (TK)

2.55 2.84 2.98 2.90 2.93

Return (EBIT)7/Fixed Assets (23.3%) (14.7%) (0.4%) 3.0% 8.7%

Net Assets TK mill (13,744) (14,585) (15,563) (13,841) (6,842)

Net Current Assets TK mill (24,382) (26,408) (27,891) (26,085) (21,980)

Current Ratio (current assets/current liabilities)

0.47 0.41 0.38 0.43 0.42

Debt/(debt + equity) (448%) (706%) (788%) 2570% 203%

Table 4.2: DESA Performance Indicators

124. Up to December 2003 DESA provided bulk power supplies to DESCO and REB. Revenue and associated power purchase costs were, therefore, included in DESA’s financial accounts. Since January 2004 BPDB has supplied bulk power directly to DESCO and REB. The effect of this arrangement needs to be allowed in year on year comparisons. In addition, DESA transferred ownership of the Gulshan service area to DESCO during 2003, resulting in a reduction in retail sales between the years ended June 2003 and June 2004.

125. Whilst current system losses are high, at over 25% for the year ended June 2007, there has been some improvement over the last three years from a peak of over 28% during 2005. Losses include technical losses, i.e. units lost in the process of distributing units to customers; and non-technical losses, e.g. inaccurate metering of usage or illegal abstraction of electricity.

126. DESA has suffered from a poor financial performance over several years. Up to the end of June 2003 it operated at a negative gross profit on electricity, e.g. the revenue received from the sales of electricity was less than the cost of purchasing the power and the associated transmission wheeling charges. This was the result of low end user tariffs exacerbated by the high level of losses. The situation has improved over the last two years, principally as a result of a reduction in system losses and a tariff increase in March 2007.

127. During the year ended June 2006 the authority reported a small profit and for the year ended June 2007 a profit of TK 1,039.5 million was earned. The profit included a large premium on the sale of 25% of DESA’s holding of DESCO shares and a significant foreign exchange rate gain. The profit before these exceptional items was TK 579.6 million. This, however, also included dividend income from DESCO shares of TK 190.8 million, which was paid for the first time during the year.

128. After years of accumulated losses DESA’s balance sheet shows a negative net worth with liabilities (particularly unpaid electricity costs and debt service) exceeding the value of its assets.

7 Earnings before Interest and Tax



4.5 Profit and Loss Account

129. DESA’s profit and loss accounts for the three years ended June 2005, 2006 and 2007 are shown in Table 4.3.

30 June

2005 30 June

2006 30 June

2007 TK mill TK mill TK mill Operating Revenue Energy Sale 11,922.2 13,040.3 13,600.3 Operating Revenue 206.8 209.1 165.6 12,129.0 13,249.4 13,765.9 Operating Expenses Cost of Energy 10,701. 11,237.0 11,480.6 Distribution Expenses 771.2 1,364.9 1,102.8 Consumer Account Expenses - - - General Administrative & Maintenance Expenses 278.3 172.9 201.9 Depreciation 501.7 312.2 327.9 Provision for Bad & Doubtful Expenses 12,252.2 13,087.1 13,113.2 Operating Margin ( 123.2) 162.4 652.6 Non Operating Income 85.5 182.7 142.4 Dividend Income - - 190.8 Total Margin Before Financing & Other Charges (37.7) 345.1 985.8 Interest Expenses 278.6 279.7 406.2 Margin Before Extra Ordinary Item ( 316.2) 65.4 579.6 Extra Ordinary Item Exchange Rate Gain/Loss ( 20.9) ( 16.3) 10.6 Gain on Sale of Shares (DESCO) - - 449.2

Net Margin for Year (337.2) 49.1 1,039.5

Table 4.3: DESA’s Profit and Loss Account



130. The increase in net margin over the previous year is analysed in Table 4.4.

Category TK mill Notes

Net Margin year ended June 2006 49.1

Additional revenue 516.4 Small increase in volume of sales from lower losses. 5% Increase in tariffs March 2007.

Reduction in total cost of energy (243.6) Increased number of units purchased due to increased sales. 10% Increased cost of

purchase March 2007

Reduced expenses 217.4 TK 376 million decrease in materials for maintenance

Reduction in non operating income (40.2) Includes reduction in interest earned of TK 57 mill

Dividends received 190.8 Dividends distributed from DESCO for 1st time in 2006/7

Increased interest charge (126.5) Increased interest

Exchange rate gain 26.9 Exchange rate gain on foreign loans

Profit on sale of DESCO shares 449.2 A premium from a sale of 25% of holding of DESCO shares.

Net Margin year ended June 2007 1,039.5

Table 4.4: Reconciliation of DESA net profit for years ended 30 June 2006 & 2007

4.5.1 Revenue

131. Revenue during the year ended June 2007 increased over the previous year by 3.9%, (9.2% between 2005 and 2006). The increase resulted from an increase in electricity unit sales of 1.1% (7.8% between 2005 and 2006) and an increase in revenue per kWh sold of 3.0% (1.4% between 2005 and 2006), following an increase in end user tariffs of 5% in March 2007.

132. Other operating revenue, which accounted for less than 2% of energy sales comprised late payment charges, meter rents and connection/disconnection fees.

4.5.2 Operating Costs

133. Energy costs were more than 87% of total operating costs in 2007. The accounts show that the average cost per kWh of energy purchased, including transmission wheeling charges, was TK 2.12 throughout financial years ended June 2005 and June 2006 and TK 2.19 for 2007. The increase in 2007 resulted from an increase of the energy charge (e.g. before transmission charge) per kWh from TK 1.89 to TK 2.11 in March 2007.

134. However, because of the slight reduction in losses the average cost per kWh sold has reduced from TK 2.98 in 2004/5 to TK 2.93 in 2006/7. Over the last three years electricity gross profit as a percentage of revenue has increased from 10.2% to 15.4%, and as a consequence the overall financial performance of DESA has improved considerably. Prior to 2004 revenue from electricity sales was insufficient to even cover the cost of the energy it purchased.



135. Remaining operating expenses are classified in the accounts as either distribution expenses; general administrative expenses, depreciation; or provision for bad debts. Distribution and general administration expenses are summarised in Table 4.5 below:

Distribution

TK mill

General Admin

TK mill

Total

TK mill Expenses

2007 2006 2007 2006 2007 2006

Staff costs8 718.4 621.1 107.6 123.4 826.0 744.5

Other costs 143.8 124.5 85.9 43.2 229.7 167.7

Total operating expenses 862.2 745.6 193.5 166.6 1,055.6 912.2

Maintenance 240.6 619.4 8.4 6.2 249.0 625.6

Total expenses 1,102.8 1,364.9 201.9 172.9 1,304.7 1,537.8

Table 4.5: DESA Distribution Expenses

136. During the year ended June 2007 overall expenses decreased by TK 233.2 million (15%) from the previous year level. Analysis of the detailed cost information shows that the major differences between expenses for the year ended June 2007 and year ended June 2006 relate to materials consumed. Under the maintenance category material consumed was TK 516 million in 2006 but decreased to TK 139 million in 2007 (a decrease of 73%). DESA accounting staff explained that the reason for this was increased efficiency and overall improved administrative control. It is not, however, possible to examine detailed transactions within the accounting system as the charge to materials is a balancing figure used to reconcile the opening stores valuation with the closing stores valuation (from the stores system).

137. After allowing for the decrease in material costs, other costs increased by TK 144 million over the previous year (12% of previous year’s level).

TK million

Total expenses 2006 1,537.8

Decrease in Materials consumed (377.1)

Other differences 144.0

Total expenses 2007 1,304.7

138. Staff costs accounted for over 63% of expenses in year ended June 2007. It is understood that the last general salary increase was during 2005. In line with other parts of the Bangladesh electricity sector, salary awards are determined by the Government.9

139. The depreciation charge for the year ended June 2007 was TK 202 million. Depreciation is charged on fixed assets under the reducing balance method at 3.2% on the opening balance and 1.6% on additions during the year, except for vehicles which are depreciated at 9% on the opening balance and 4.5% on additions during the year.

8 Including pension contributions 9 This is discussed in more detail in the section dealing with HR and Organisation



140. The authority used straight line depreciation until 2005 when it changed to the reducing balance method. The rates used, however, under the reducing balance approach are the same as when the straight line approach was used. The change in method means that assets are depreciated over a longer period than previously. Under the straight line method an asset will be fully depreciated after 30 years at 3.5% per annum, but under the reducing balance method assets will never be fully depreciated (after 30 years only 65% of the original asset value will have been charged to depreciation).

141. Depreciation rates should reflect the useful lives of assets. It is doubtful whether the rates and approach currently used by DESA adequately reflect expected asset lives. Operational assets would normally be expected to be fully depreciated after 50 years.

142. The depreciation charge will depend on the gross value of assets. This is based on the historic value of assets but there is currently no asset register maintained within DESA and it is, therefore, not possible to verify the accuracy of the valuation used in the accounts. This is discussed further in the Balance Sheet section of this report.

143. No deduction has been made for bad debt provision for several years and no write-offs have been made against the provision held in the balance sheet.

4.5.3 Non Operating Income

144. Non operating income was TK 142.4 million in year ended June 2007 and TK 182.7 million the previous year. The three main components of non operating income are interest, miscellaneous income and other income. The distinction between miscellaneous income and other income is not clear.

4.5.4 Dividend Income

145. The authority received TK 190.8 million in dividend income during the year ended June 2007 from its holding in DESCO shares. This was the first year that a dividend had been paid by DESCO.

4.5.5 Interest Expenses

146. Interest expense for the year ended June 2007 was TK 406.2 million (TK 279.7 million for 2006). Interest during construction (IDC) is separately charged to projects in progress.

4.5.6 Extraordinary Items

147. The accounts show that an exchange rate gain of TK 10.6 million was made in 2007 compared with a loss in 2006 of TK 16.3 million. This arises from the difference in exchange rates at the start and end of the year when applied against the loans in foreign currency.

148. An extraordinary gain of TK 449.2 million on the sale of shares in DESCO was also recorded in 2007. During the year DESA sold 25% of its shares in DESCO at a profit over the nominal value of the shares. DESA continues to own 75% of DESCO shares.

4.6 Balance Sheet

149. DESA’s Balance Sheets as at 30 June 2005, 30 June 2006 and 30 June 2007 are set out in Table 4.6.



30 June 2005 30 June 2006 30 June 2007

TK mill TK mill TK mill Fixed Assets Utility Plant-in-Service 16,513.3 18,778.1 18,920.1 Accumulated Depreciation ( 7,076.3) ( 7,251.5) ( 7,579.5)

9,437.05 11,526.59 11,340.7 Project in Progress 16,034.5 14,380.5 16,971.8 Investment 2,232.2 2,431.9 2,183.1 Current Assets Cash 2,259.4 2,644.2 2,701.0 Accounts receivable - Consumers 8,566.1 9,687.0 6,545.4 Accounts receivable - Other 2,303.0 3,094.0 3,152.2 Accounts receivable - VAT 1,039.4 1,064.3 988.7 Provision for Bad & Doubtful Debts ( 1,478.1) ( 1,478.1) ( 1,478.1) Advances to Contractors & Suppliers 656.5 893.5 953.1 Prepaid & Other Expenses 391.1 406.3 406.2 Advance Income Tax - - 28.6 Advances to Employees 220.2 215.7 217.3 Stock & Stores 1,158.1 1,214.8 1,069.6 Other Assets 2,232.6 2,264.9 1,401.0

17,348.45 20,006.6 15.985.1 TOTAL ASSETS 45,052.2 48,345.7 46,480.6 Capital & Reserves Equity 11,340.2 11,803.9 12,272.1 Net Surplus/(Deficit) ( 33,387.4) ( 32,155.7) ( 25,673.3) Appraisal Surplus 5,994.6 5,994.6 5,994.6 Grants 14.1 14.1 14.1 Deposit Works Fund 475.7 502.0 549.9

(15,562.7) (13,841.1) (6,842.5) Long Term Liabilities Government Loan 6,746.1 7,055.2 5,702.8 Foreign Loan 7,063.3 7,346.2 7,814.9

13,809.4 14,401.4 13,517.7 Medium Term Liabilities Security Deposit - Consumers 1,369.3 1,487.4 1,593.5 GPF/CPF 93.4 96.7 123.8 Pension Fund 103.7 109.9 123.4

1,566.3 1,694.0 1,840.6 Current Liabilities Security Deposit - Contractors & Suppliers 260.0 251.7 241.5 Taxes and Duties 530.9 530.9 530.8 Current Portion of Long Term Liabilities 828.6 1,140.7 682.9 Bank Loan 9.7 9.7 9.7 Accounts Payable - BPDB & PGCB 30,745.9 31,613.0 28,493.5 Accounts Payable - Others 9.5 2.7 4.1 Accounts Payable - Contractors & Suppliers 660.6 655.1 656.2 Uncollected VAT 1,021.2 1,046.2 970.6 Other Liabilities 8,527.6 9,101.5 5367.1 Under Deduction made by Govt on DSL and reimbursable Project Aid

2,645.1 1,740.0 1,008.5

45,239.1 46,091.4 37,964.8 45,052.2 48,345.7 46,480.5

Table 4.6: DESA’s Balance Sheet



4.6.1 Overview

150. When presented in a more conventional way, as summarised in Table 4.7, the Balance Sheets show that DESA continues to have a negative net worth resulting from several years reported losses, i.e. it is an insolvent company. The turnaround into profitability over the last two years has, however, meant that the negative value has reduced.

151. The Balance Sheet contains asset values which may not be realisable, and liabilities that DESA is unable to meet. It also omits other liabilities, such as unfunded pension liabilities. On the other hand, the book value of DESA’s holding of DESCO shares may be significantly less than the tradeable value.

152. Many of the asset and liability balances shown in the current balance sheet were created when DESA was formed in 1991 and were based on a firm of accountant’s recommendations as to the split of balance sheet items between Bangladesh Power Development Board (BPDB) and DESA. In many cases, such as fixed assets, there were no records in existence to identify values to specific assets or liabilities and balances were split on a proportionate basis. Consequently, within DESA’s balance sheet there are now many items that cannot be recognised, either assets that cannot be realised or liabilities that do not exist.

153. Current Liabilities, at almost three times current assets, include a large balance due to BPDB and PGCB for electricity purchases (28,493 million) and unpaid debt repayments in excess of TK 6,300 million. It is unlikely that DESA/DPDC will ever be in a position to clear these obligations from normal operations.

30 June 2005 30 June 2006 30 June 2007

TK mill TK mill TK mill

Fixed Assets 27,703.7 28,339.1 30,485.5

Current Assets 17,348.5 20,006.6 15,985.1

Current Liabilities (45,239.1) (46,091.4) (37,964.8)

Net Current Liabilities (27,890.7) (26,084.8) (27,464.1)

Long Term Liabilities (13,809.4) (14,401.4) (13,517.7)

Medium Term Liabilities (1,566.3) (1,694.0) (1,840.6)

Net Assets (15,562.7) (13,841.1) (6,842.5)

Capital and Reserves (15,562.7 (13,841.1) (6,842.5)

Table 4.7: DESA Balance Sheet Reformatted

4.6.2 Fixed Assets

154. As at June 2007 the gross value of plant in service was TK 18,920 million with accumulated depreciation TK 7,579 million giving a value of net assets of TK 11,341 million.



155. In addition there is a very large amount of capital work in progress of TK 16,972 million.

156. DESA was formed in 1991 out of BPDB and at that time the value of fixed assets in operation allocated to DESA was based on an agreed division of 9.11% of the total value of BPDBs assets. This was accepted by BPDB, DESA, and GoB. The agreement identified the physical extent of the DESA area and the voltage at which assets would fall to DESA ownership. However, at that time individual assets being transferred were not identified, the transfer simply being a proportionate transfer of BPDB’s ledger. It was stated, at that time, that a full list of the assets transferred should subsequently be made, but this has never been done.

157. The valuation was based on Ewbank Preece’s valuation as at 30 June, 1990, which was corrected by the Asset Valuation Committee for the additions made up to 30 September 1991. On 30 September 1991 DESA’s share of fixed assets was TK 10,158.52 million (book value).

158. In 1991 a share of BPDB’s revaluation reserve was also transferred to DESA. A Revaluation Reserve had been created every year since 1981/82 equivalent to 10% of the cost of assets in operation on the opening day of the year concerned. On 1 October 1991, the amount of reserve transferred to DESA was TK 5,994.1 million which is 9.11% of the total amount of TK 65,714 million.

159. During 2003 assets relating to the Gulshan area were transferred from DESA to DESCO. The valuation in DESA’s accounts was TK 4 billion, but DESCO has only recognised TK 1,999 million in its accounts. BPI understands that a Consultant has been employed to determine the correct valuation.

160. In March 2007 assets in the Tongi region were transferred to DESCO from DESA, but this transfer has yet to be reflected in DESA’s accounts.

161. A Fixed Assets Register has never been created. It is, therefore, impossible to identify how the current valuation relates to specific assets. As a matter of urgency a comprehensive asset register needs to be compiled and a “bottom up” valuation exercise undertaken.

162. There are several possible methods that can be used to value a company’s assets:

Historic cost, adjusted for depreciation over the assets useful lives;

Inflation or indexing of historic cost;

Replacement cost;

Flow of benefits; and

Realisable value.

163. In view of the difficulty of identifying original cost to specific assets and lack of a proper market to identify the realisable value of distribution assets it would seem that the most appropriate method would be either replacement cost (adjusted for depreciation to reflect the age and condition of assets) or flow of benefits method which converts the revenue stream derived from an asset into a present value.

164. It is not clear whether any revaluation exercise would result in a higher or lower valuation than the current book valuation and the accounting treatment cannot be determined until this is known. The revaluation reserve currently shown on



DESA’s balance sheet is TK 5,994.6 million which could be utilised to offset any reduction in asset valuation resulting from a revaluation exercise.

165. Depreciation used to be based on a straight-line basis. However, apparently as a result of auditors concerns that there was no asset register and that the straight line method would result in the value of the assets becoming zero after a specified time, DESA changed to the reducing balance method. Since financial year ending June 2006 DESA has used the reducing balance method but with the same depreciation rate that was used under the straight line method. As discussed in the Profit and Loss Account section the cumulative depreciation charge against assets needs to be validated to ensure that it is sufficient.

166. Capital Work in Progress as at 30 June 2007 is summarised in Table 4.8.

Project Balance as at 1 July 2006

Additions During Year

Capitalised During Year

Total as at 30 June 2007

TK mill TK mill TK mill TK mill

PDP East (transferred from split of predecessor balance sheet in 1991)

4.4 4.4

Outside Dhaki Metropolitan Area 1,812.5 1,812.5

Emergency Rehabilitation of Dhamondi 132/33 kV

342.0 342.0

Greater Dhaka Power Distribution Project Phase IV

12,563.6 2,149.9 14,713.5

Horipur-Ullon 99.0 99.0

Other 0.4 0.4

Total 14,380.5 2,591.2 0 16,971.8

Table 4.8: DESA Capital Work in Progress

167. There appears to be a serious delay between the completion of capital works and the transfer from ‘work in progress’ to ‘fixed assets’, pending the receipt of completion certificates by finance staff. No assets were capitalised from work in progress during the year to 30 June 2007. Two projects, “Outside Dhaka Metropolitan Area” and “PDP East” have had a total balance of TK 1,816 million sitting in work in progress for at least seven years! It can be assumed that these projects were completed some time ago.

168. In addition, although expenditure continues to be incurred on the Greater Dhaka Distribution Project, parts of this scheme have been in operation for some time and have been revenue earning. These parts should clearly have been capitalised.

169. The impact of this is that depreciation is not charged on assets from the time they are brought into use.

170. The accounting policy adopted by DESA appears to be to capitalise expenditure related to new projects but to charge replacement of assets such as transformers, poles and lines to revenue. This issue, in isolation, would mean that assets could be over-valued as depreciation is only charged on the original asset, not the replacement.



4.6.3 Investments

171. The value of assets as at 30 June 2007 was TK 2,183.1 million is analysed in Table 4.9.

Particulars TK mill

FDR10 (Against GPF/CPF) 9.3

Savings Certificates (Against GPF11/CPF12) 2.4

Investments in FDR (Miscellaneous Fund) 1,133.4

FDR (Against Security Deposit-Contractors & Suppliers) 2.7

Investment in DESCO Shares 1,028.8

Investment in BCI Bank 6.4

Total 2,183.1

Table 4.9: DESA Investments

172. The three smaller balances, (FDR Against GPF/CPF, Savings Certificates against GPF/CPF, and FDR against security deposit - contractors and suppliers) have not moved for several years. These investments were originally allocated to DESA on a proportionate basis at the inception of DESA, but the investment documentation is not available and the ability to realise these investments must be in doubt.

173. The major investment is in DESCO shares which stood at TK 1,029 million at 30 June 2007. During the year 25% of the holding was sold for a premium of TK 449 million over face value. The profit was recognised as an extraordinary item. Whilst the investment in DESCO provided a useful source of income for DESA there is no clear operational reason why DESCO should be owned by DESA. Indeed, DESA and DESCO are run entirely as separate entities. The remaining share ownership by DESA is not reflected in the accounts at its true value and represents an undervalued asset. The shares are shown at their nominal value of TK 100, but on 3 February 2008 the shares were trading at TK 1,032 per share. The current value of the share holding would, therefore be TK 9,757,22513 million, a premium of TK 8,728,440 million over the book value.

174. The investment held in BCI bank does appear to be a realisable investment. The auditors’ comment in the report for the year ended June 2006 provides an understanding of the background to this account: - “…a sum of 8M was lying in FDR with Bangladesh Commerce and Investment Bank, a non-scheduled bank which ceased its operations in 1993. Subsequently the bank was permitted by the Government to operate as Bangladesh Commerce Bank as a scheduled bank. During the financial year 2001/2002 the bank informed DESA that in accordance with a Government notification an equivalent share certificate for a sum of TK 6.4 million was issued and the balance amount is lying with the bank which will be paid in instalment to DESA”. The balance amount of TK 1.6 million

10 Fixed Deposit Receipt 11 General Provident Fund 12 Contributory Provident Fund 13 9,537,855 at TK 1,032



has been kept under Accounts Receivable – Others. It is understood that an amount of TK 0.6 million has now been received against this debt.

175. The balance under Investment in FDR (miscellaneous fund) is also valid as the securities are available and can be verified.

4.6.4 Cash in Hand and at Bank

176. At 30 June 2007 the balance sheet shows a balance of cash in hand and at the bank of TK 2,701 million. This appears to be an excessive amount for DESA to hold and represents more than two month’s electricity revenue. The cash is, however, held in various accounts throughout the authority, with over 400 separate accounts (including petty cash funds). Over TK 1.7 billion is held in Local Collection Accounts.

177. The audit report for year ended 30 June 2007 reported that there were problems with inter-office transactions in that amounts paid by one office did not agree with the amount received by another.14

4.6.5 Accounts Receivables

178. The movement in accounts receivable from customers during the year ended June 2007 is summarised in Table 4.10.

Customers DESCO Total


Balance as at 01 July 2006 8,666.4 1,020.6 9,687.0

Sales during the year 13,600.3 13,600.3

Collections during the year 16,282.0 460 16,742

Balance as at 30 June 2007 5,984.7 560.6 6,545.3

Table 4.10: DESA Accounts Receivable

179. Accounts receivable from customers at 30 June 2007 was TK 6,545 million. This suggests that, on average, accounts remain unpaid for 173 days. However, this is an improvement on the balance at 30 June 2006 when the balance was TK 9,687 million, which represented 201 days. There appears to have been a concentrated effort to reduce receivables, part of which has been achieved by offsetting debts by government agencies against a portion of DESA’s outstanding debt service obligations to GoB. Clearly there are a number of very old debts included in the balance which will never be recovered.

180. It is understood that manual customer account data was not always available when the balances were transferred into the computerised customer accounting system. In some cases the balance was entered as zero. However, the original manual balances are still carried in DESA’s books of account. The receivables schedules on the accounting system have subsequently been updated only with the gross amounts for billed and paid electricity. Consequently, the receivables

14 “For example, Remittances sent by local collection accounts to central accounts did not match with the actual amount

collected by TK 49.8 million. Miscellaneous collections transferred to central accounts did not match the amount collected by central miscellaneous accounts by TK 4.8 million. Money sent to RAO did not match with the amount received by RAO by TK 2,2 million.”



account is overstated not only because some of the outstanding amounts are unrecoverable, but because they have never been entered into the billing system and are no longer followed up by DESA. It appears that some of the amounts which have not been entered into the billing system have been collected but have been recorded as “other income” and not credited to accounts receivable (in effect recognising the income twice).

181. There has been no reconciliation of the receivables between the computerised system and the accounting system but in 2004/2005 DESA commissioned a study on Accounts Receivable by Til Denico. Their report, however, appeared to have caused some confusion. In the accounts for the year ended June 2005 DESA passed an adjustment entry for TK 1,212 million – reducing the balance and adjusting retained earnings as ‘prior periods’ adjustment. This could have been set off against the provision for bad debts. There may have been some misunderstanding between that Consultant and DESA because subsequently, in the year ended 30 June 2006, TK 1,179 million was added back to receivables, the adjustment passing through retained earnings. This shows that the actual bad debt write-off amounted to only TK 33 million (1,212 – 1,179).

182. Of the TK 5.98 billion balance relating to customers other than DESCO it is understood that approximately TK 1 billion is outside the computerised customer accounting system. If (optimistically) it is assumed that 35% of this amount is collectable then approximately TK 650 million could be written off. In addition if it is assumed that 10% of the remaining debt is uncollectable then a further TK 500 million could be written off, making a total write off from this section of TK 1,150 million. This would be adequately accommodated within the bad debt provision which currently stands at TK 1,478 million in the balance sheet.

183. The balance reported as due from DESCO covers outstanding charges raised prior to 2004 when DESCO purchased its power requirements from DESA. DESCO’s published accounts for the year ended June 2006 report TK 459 million as owing to DESA, compared with TK 1,020 million shown in DESA’s accounts at the same date. The actual balance should be agreed between the two parties and any uncollectable debt should be written off.

184. The movement in “accounts receivable – others” during the year ended June 2007 is summarised in Table 4.11.

Accounts Receivable to DESCO and REB on handed

over customers

Others Total


Balance as at 01 July 2006 2,182.6 911.4 3,094.0

Billed during year 230.6 230.6

Collection/Adjustment during year 7.5 164.9 172.4

Balance as at 30 June 2007 2,175.1 977.1 3,152.2

Table 4.11: DESA Accounts Receivable - Other



185. The balance of TK 2,175 million shown as due from DESCO and REB for customers handed over must be questionable as there does not appear to be a system in place to ensure that payments are passed on to DESA when collected from customers. Only TK 7.5 million has been collected against these debts during the last two years. Again, actual balances should be agreed with DESCO and REB and any uncollectable debt should be written off. The Consultant anticipates that the major part of this balance could be written off.

186. The “others” category includes sundry energy bills, penalty payments, reconnection fees etc and also the amount due from BCI bank (see Investments above).

4.6.6 Accounts Receivable Government Duty

187. Government duty of 5% is paid on electricity bills and the uncollected government duty liability should be adjusted accordingly with any write-off of receivables.

4.6.7 Provision for Bad Debts

188. The provision for bad and doubtful debts at 30 June 2007 was TK 1,478 million. This balance has not changed for seven years with no write-offs having been made against it. The provision currently represents 23% of accounts receivables.

4.6.8 Advance to Contractors and Suppliers

189. This account represents advances made to contractors for mobilisation which should be deducted when paying contractors’ invoices for work completed. On any particular contract the balance on this account should return to zero over time. It is likely that the balance is overstated because accounting adjustments have not been properly completed, but requires a comprehensive reconciliation.15

190. The account includes TK 31 million “advance to DPDC”. It is assumed that upon take-over this will be set off against a corresponding credit balance on DPDC’s balance sheet.

4.6.9 Prepaid and Other Assets

191. At 30 June 2007 the balance of prepaid expenses and other assets was TK 404.1 million. It would appear that most of this balance, with the exception of a small balance for rent, has been carried forward for a number of years.

4.6.10 Advance Income Tax

192. The balance on this account was TK 28.6 million at 30 June 2007. This relates to tax deducted on the sale of DESCO shares. As DESA does not pay tax it was expected that DESA would receive a refund of this amount. It is far from clear as to whether this will happen and the amount should not be recognised as an asset of DPDC.

15 The Audit report to 30 June 2007 states “ Advance to contractors is not adjusted with accounts payable to contractors. As

a result a huge amount as much as TK 953 million is being shown as advance balance and TK 656 million as accounts payable to contractors and suppliers.”



4.6.11 Advance to Employees

193. The balance on this account represents advances to employees for numerous reasons which should attract interest. TK 10.43 million of the balance of TK 217.3 million was allocated to DESA in 1991 and cannot be identified.

4.6.12 Stocks and Stores

194. The value of stocks and stores at 30 June 2007 shown on the balance sheet was TK 1,068 million. The stock is identified as either;

a) stock for operation and maintenance; or

b) stock for development works (i.e. capital projects).

195. The financial records are maintained independently of the stores records and are adjusted once a year for the end of year accounts. The balance sheet stock valuation is taken as the valuation from the stock system (after adjusting for some items which, although physically in the stores, have already been charged to specific development jobs). The balancing figure between the previous year’s closing balance and the current balance after allowing for the value of stock purchases is charged to the income statement as materials consumed or to capital projects in progress. These values do not necessarily agree with the value of issues from stock within the stores system.

196. Although DESA made a physical count of a sample of stores items at the end of the year, the ledger was not adjusted for the differences, which amounted to a net shortage of TK 41 million. The ledger should be periodically adjusted to reflect differences between the records and physical stock and differences written off against the income statement. Any stock transferred to DPDC should be checked against the ledger and obsolete, unusable or missing stock should be written off.

197. During October 2007 the Consultant visited the four separate locations which form DESA’s Central Development and Operation and Maintenance stores.

198. Whilst stores were found to be well organised with items of stock segregated and properly identified, all stores contained a large amount of scrap and unserviceable items that have accumulated over a number of years. These items have no value attributed to them in the stores system but they reduce the amount of space available for storage of useable stock (it may be possible to combine the revenue stores and the development stores into one location if scrap materials were disposed of). In the Consultant’s opinion the sale of scrap could attract a significant amount as a “one off” source of revenue for the business. In addition, it was noted that vast amounts of scrap were kept locked undercover whilst useable stock was stored in the open.

199. Throughout the stores there was a large amount of serviceable underground cable, some of which (judging by the faded appearance and the vegetation growing over it) had been in the stores for a considerable amount of time.

200. The “worst” example was 11 kV 3 core 300mm2 XPLE underground cable (item code 0401100300NF). The Monthly Stock Report for the month of September 2007 showed that the stores held 199 km of this cable, which was valued at TK 928 million ($15.5 million). Most of this cable was for the GIETC job, a turnkey project which, BPI understands, has been completed and involved the laying of 137 km of underground cable. It is surprising that there is nearly 200 km of cable left over, but one reason may be that further work was to be



carried out on distribution assets that were subsequently handed over to DESCO and the work was never completed by DESA.

201. It is accepted that a certain amount of cable must be held for maintenance and repair purposes but it is unlikely that the amount held will be used in the normal course of business for many years and represents a seriously inefficient use of capital. It does not appear any steps have been taken to explore options to dispose of the excess stock, such as discuss with DESCO, or other utilities the possibility of a sale.

202. It also appears that the value of the cable was charged to projects in progress rather than stock when it was received as it formed part of the turnkey contract. Examination of the stock report for the month of September 2007 shows that the stores contain stock to the value of TK 1,040 million ($17million) allocated to the GIETC job. If the stock is surplus to requirements and cannot be returned to the supplier then it should be transferred from projects in progress to stock, making the true value of stock in excess of TK 2 billion.

203. There were many other examples of stock holdings appearing excessive when compared with their recorded usage.

4.6.13 Other Assets

204. The Balance Sheet at 30 June 2007 shows TK 1,401 million under “other assets”. This is a large amount which appears to relate to un-reconciled balances between the various operating units and head office. The balance on the first draft of the year end accounts was TK 2,200 million and there had been no significant movement on this asset category for several years. Following our initial enquiries DESA staff have made some accounting corrections to the revised level. It must, however, be extremely doubtful as to whether the residual balance represents an actual asset. Indeed, the audit report to 30 June 2007 suggests that it is a balancing item in the balance sheet.16

4.6.14 Capital and Reserve

205. The overall situation for capital and reserves at 30 June 2007 was a negative balance of TK 6,842.5 million, due to the build up over several years of a net deficit of TK 25,673.3 million.

206. The value of paid up capital (equity) was TK 12,272.1 million which, in addition to cash received in the form of equity included some TK 1.8 million of Government and other loans and debt service liabilities and government grants previously converted into equity.

207. The Appraisal Surplus of TK 5,995 million is the amount that was allocated to DESA in 1991 from BPDB.

208. The Deposit Works Fund amounted to TK 550 million at June 2007. This should be a temporary balance and represents advance payments from customers which are subsequently transferred to pay contractors for work undertaken. TK 169 million of this balance was transferred to DESA from BPDB in 1991 and it is likely that this represents a nonexistent asset which could be written off.

209. The same value of Grants has been carried since 1991, and is in Table 4.12.

16 “The discrepancies in inter-transfers along with differences in clearing accounts and previous balances give rise to a

material amount of TK 1,401 million of other assets shown in the balance sheet. Other assets indicates that amount for which the balance sheet would not have otherwise.”



Country Grant TK Mill

Canada Lineman Training Programme 0.4

Consultancy Service 0.7

Power System Rehabilitation Project 3.2

Power Distribution Project 2.7

Control Room Despatch Centre 0.1

7.0

India Grants 0.2

West Germany Electrification 0.8

East Zone Power Replacement 0.0

0.9

Japan Electrical Equipment Pool 6.0

Total 14.1

Table 4.12: Analysis of DESA Grants

210. The fact this balance has remained unchanged over 15 years does not accord with International Accounting Standards (IAS). The normal convention is that grants should be recognised in the income statement on a systematic and rational basis over the periods necessary to match them with the related costs for which they are intended to compensate.

211. Grants related to assets should either be offset against the carrying amount of the relevant asset or presented as deferred income in the balance sheet. If offset against the carrying amount of the relevant asset, the grant is effectively recognised as income over the life of the depreciable asset by way of a reduced depreciation charge. If recorded as deferred income in the balance sheet, the amount of deferred income should be recognised in income systematically over the estimated useful life.

212. This balance could, therefore, be written back to marginally reduce the Net Deficit.

4.6.15 Long Term Liabilities

213. A summary of the long term portion of DESA’s foreign loans as set out in the accounts for the year ended June 2007 is set out in Table 4.13.



Project Donor Long Term Loan O/S

TK mill

GDPDP - Phase 111 ODA 2,202.0

Loss Reduction pilot project OECF JA 220.1

GDPDP-Phase IV ADB 1505 1,642.9

GDPDP-Phase IV ADB 1730 1,161.7

GIETC GIETC 2,588.3

Total 7,814.9

Table 4.13: DESA Foreign Loans as at 30 June 2007

214. Amounts due to GIETC are paid directly to GIETC but in all other cases the foreign lender has lent to GoB and GoB has then entered into a subsidiary loan agreement with DESA.

215. A summary of the long term portion of Government loans is set out in Table 4.14.

Project Balance

01 July 2006

Loan received

during the year

Loan refunded during the

year/ transferred to

current portion

Balance 30 June

2007


Greater Dhaka Power Distribution Project Phase - II

429.3 343.4 85.9

Greater Dhaka Power Distribution Project Phase - III

1,269.0 761.4 507.6

Greater Dhaka Power Distribution Project Phase - 4

2,602.0 230.0 180.1 2,651.9

16 - Town Power Dist. Project 7.2 0.3 6.9

Augmentation of Grid sub-station 3.6 0.2 3.4

Kabirpur - Manikgonj Project 3.6 1.4 2.2

Flood rehabilitation Scheme 281.4 26.2 255.2

Outside Dhaka Metropolitan City 838.3 316.6 521.7

Financial Upgradation of DESA 18.7 0.9 17.8

Emergency Rehabilitation Project 2 439.9 153.8 286.1

Emergency Rehabilitation Project 3 937.5 937.5

Loss Reduction Pilot Project 19.2 6.3 12.9



Project Balance

01 July 2006

Loan received

during the year

Loan refunded during the

year/ transferred to

current portion

Balance 30 June

2007


Material Collection For Rehabilitation & Replacement

125.5 12.6 112.9

Tongi-Ulon 132 kv 2nd circuit turn in to Bosundhora

19.7 1.0 18.7

Siddhitgonj - Maniknagar 132 kv Transmission Line

34.1 34.1

Emergency Maintenance & Rehabilitation

9.7 180.6 190.3

of Dhanmond 250/75 MVA 132/33 kV Sub Station

11 kV Live Line 8.7 7.1 15.8

Horipur-Ullan 132 KV Trans. Line 7.9 50.8 16.8 41.9

Siddhirganj 33/11 KV S/S & sw/st - 0.3 0.3 -

Total 7,055.2 468.9 1,821.3 5,702.8

Table 4.14: DESA Government Loans (long term portion) June 2007

216. The GoB has funded recent projects by contributing 60% as equity and 40% as debt. Loans are generally for a period of 25 years including a grace period of five years with interest charged at 5%.

217. The balances for loans shown under long term liabilities in the balance sheet does not show the complete indebtedness as further indebtedness for government and foreign loans is shown under: i) current liabilities for the current portion of long term loans due, ii) overdue interest on these loans (shown under other liabilities); and iii) under deduction of debt service liability (DSL).

218. The total liability for government and foreign loans exceeds TK 20 billion and is summarised in Table 4.15. DESA /DPDC will clearly not be in a position to clear the overdue portion of these loans for many years.

Long term liabilities

Current portion of

loans

Other liabilities - Overdue interest

Under deduction

on DSL Total

TK mill TK mill TK mill TK mill TK mill Government loan 5,702.8 212.0 342.4 626.9 6,884.1

Foreign Loan 7,814.9 335.1 4,896.7 13,046.7 Debenture 135.8 83.2 219.0

Reimbursable Project Aid 381.6 381.6 Total 13,517.7 682.9 5,322.5 1,008.3 20,531.4

Table 4.15: DESA Total Loans June 2007



4.6.16 Medium Term Liabilities

219. Security Deposit for customers represents collections from new customers as security against failure to settle electricity accounts. The balance at 30 June 2007 was TK 1,593 million, TK 261 million of which was allocated to DESA in 1991 and cannot be identified to specific customers.

220. CPF/GPF balances refer to the Contributory Provident Fund (CPF) and the General Provident Fund (GPF). BPI understands that no DESA employees currently contribute to the CPF (since 1986 when staff were given the option of contributing to either CPF or GPF). Under GPF, staff contribute 10% of their basic pay and DESA pays interest on the balance. The balance sheet account represents the account balance carried forward from the previous year adjusted for added interest and payments made from the fund to employees.

221. The pension scheme available to DESA employees provides for employees to elect for either a lump sum payment or a lump sum payment plus an annual pension upon retirement. The maximum pension entitlement is achieved after 24 years service at which time those electing for lump sum only receive an amount equal to 80% of their monthly salary multiplied by 150. Those electing for a lump sum plus pension receive a lump sum amount equal to 40% of their monthly salary multiplied by 200 and a monthly pension equal to half their monthly salary.

222. The pension fund liability in the balance sheet simply shows the amount contributed by the authority towards the fund less final payments made to employees during the year.

223. As at 30 June 2007 the balance sheet liability for CPF/GPF fund was TK 102 million and the liability for pensions was TK 123 million. These liabilities bear no relationship to the total liability which DPDC will face as staff retire or leave DESA/DPDC as part of the corporatisation process.

224. The Consultant estimates that, at existing salary levels, the total amount of terminal payments would be in the order of TK 2.3 billion (TK 1.8 billion pension, TK 0.5 billion provident fund). This estimate was based on a detailed analysis of staff details taking into consideration the number of staff in each job category, annual salaries and length of service. The GoB has indicated that it will fund the pension obligation.

225. International Accounting Standard 26 “Accounting and Reporting by Retirement Benefit Plans” states that “The financial statements of a defined contribution plan shall contain a statement of net assets available for benefits and a description of the funding policy. The financial statements of a defined benefit plan shall contain either:

a) a statement that shows:

i) the net assets available for benefits;

ii) the actuarial present value of promised retirement benefits, distinguishing between vested benefits and non-vested benefits; and

iii) the resulting excess or deficit; or

b) a statement of net assets available for benefits including either:

i) a note disclosing the actuarial present value of promised retirement benefits, distinguishing between vested benefits and non-vested benefits; or



ii) a reference to this information in an accompanying actuarial report. If an actuarial valuation has not been prepared at the date of the financial statements, the most recent valuation shall be used as a base and the date of the valuation disclosed.”

226. In summary, the balance sheet liability should show the present value of the expected payments to existing and past employees to the service already rendered, ideally derived by an independent actuarial valuation.

4.6.17 Current Liabilities

227. The balance on security deposits for contractors and suppliers at TK 241 million appears high and represents approximately 10 times the annual level of deposits taken. The balance allocated to DESA in 1991 of TK 23 million cannot be identified to specific contractors or suppliers and it is unlikely that a significant amount of the remainder could be identified as currently valid.

228. The balance on taxes and duties at TK 531 million is the same as the opening balance allocated to DESA in 1991 despite the entries into and out of this account. It is unlikely that this does not represent a valid liability.

229. The current portion of long term loans should represent the principal payments currently due on loans. Additions during the year are transferred from long term liabilities. When scheduled payments have not been made the outstanding amounts are transferred to the Debt Service Liability (DSL) account. It would appear that transfers from long term liability to current liability and then to DSL is not always made on a consistent basis. The account analysis shows a balance of TK 135 million for a debenture loan. It is understood that DESA has never had a debenture loan and so this amount can be written off.

230. The movement on the current portion of long term liabilities for the year ended June 2007 is set out in Table 4.16. This shows that no payments were made of loan instalments due.

Description Balance 01 July

2006 Additions

during year

Transfer to Debt Service

Liability

Balance 30 June 2007


Foreign Loan 1,004.9 337.0 1,006.8 335.1

Government Loan 1,664.6 1,452.6 212.0

Debenture loan 135.8 135.8

Total 1,140.7 2,001.6 2,459.4 682.9

Table 4.16: DESA Current Portion of Long Term Loans 30 June 2007



231. The movement on the account “Under deduction made by Government on DSL and reimbursable project aid (RPA)” is set out in Table 4.17. This shows a large balance of TK 1,008 million as remaining outstanding, even following a large repayment during the year. The repayment relates to an adjustment against Government agencies receivables.

Description Balance 01 July

2006

Repayment due/reimbursed

during year

Repayment/ adjustment during year



Repayment of Foreign Loan

1,936.0 1,936.0 0

For RPA 381.6 381.6

For Government (577.6) 1,452.6 248.1 626.9

Total 1,740.0 1,452.6 2,184.1 1,008.5

Table 4.17: Under Deduction made by Government on DSL and RPA June 2007

232. The large balance shown as “other liabilities” (TK 10,817 million) at 30 June

2007 referred mainly to unpaid interest and interest accrued which is not yet payable.17 A summary of the liabilities is set out in Table 4.18.

Description Balance 01 July 2007

Interest/ Liability during

the year

Paid/ Adjusted during the

year



Debenture Interest 83.2 83.2

Interest on foreign loan 8,844.9 549.2 4,497.4 4,896.7

Interest on GoB loan 146.4 314.1 118.2 342.4

Sub total 9,074.6 863.4 4,615.6 5,322.4

Other 26.9 27.1 9.3 44.7

Total 9,101.5 890.5 4,624.9 5,367.1

Table 4.18: DESA Other Liabilities 30 June 2007

233. Over TK 4 billion of this balance was allocated to DESA in 1991 as part of the split from BPDB and cannot be reconciled to specific liabilities, for example, although part relates to debenture interest there has never been a debenture.

17 Most of DESA ‘s loan agreements have a grace period, normally five years, during which interest is accrued but not

payable until the end of the grace period.



234. This opening balance was made up of TK 3,955 million interest on foreign loan and TK 145 million Government loan.

235. The largest single liability on the balance sheet was for accounts payable to BPDB and PGCB for electricity purchases. The balance as at 30 June 2007 is analysed in Table 4.19.

BPDB PGCB Total


Balance 01 July 2007 30,546.9 1,066.1 31,613.0

Billing for year 10,294.0 1,186.6 11,480.6

Less payments 13,600 1,000.0 14,600

Balance 30 June 2007 27,240.8 1,252.7 28,493.5

Table 4.19: DESA Accounts Payable to BPBD and PGCB

236. The balance at 30 June 2007 of TK 28.5 billion represents over two year’s billing, rather than the one or two months that would normally be expected within a distribution company.

237. The accounts show that TK 656 million is payable to contractors and suppliers, but this amount appears to be overstated. A large balance of TK 829 million was allocated to DESA in 1991 and remained unadjusted for a number of years. This account should be fully reconciled any nonexistent liability written off. It is expected that this would be at least 50% of the account.

238. Similarly the accounts show a liability of TK 9.6 million under “bank loan” which, again, is a liability that was allocated to DESA in 1991. No repayments have been made against this and it can be assumed that this liability does not exist.

239. Government duty of 5% is paid on electricity bills and the uncollected Government duty liability should be adjusted accordingly with any write off of receivables. The liability balance should correspond with the asset “accounts receivable Government duty”.

4.7 Restructuring the Balance Sheet

240. As discussed earlier, DESA’s balance sheet portrays an insolvent organisation which can only continue to operate with the understanding and cooperation of its creditors, in particular BPDB. In the process of corporatising DPDC, the balance sheet must be substantially restructured in order to give the company any chance of financial independence.

241. The following paragraphs are based on DESA’s accounts for the year ended 30 June 2007. On the actual date of transfer a set of final accounts should have been prepared for DESA and the adjustments recommended below will need to be updated at that time.

242. The Consultant’s recommended approach to restructuring is to create an opening balance sheet for DPDC which provides DPDC with the opportunity for future financial sustainability. To this end it is important that DPDC is not encumbered with excessive liabilities that it is unable to support without a substantial increase in end user tariffs.



243. Restructuring will, inevitably, involve a significant financial commitment from GoB (either writing off or converting to equity amounts due from DESA). The major issue involved is the large amount owing to BPDB and PGCB for electricity (TK 28,493 million) and the large amount of debt service (principal and interest) that remains overdue (TK 6,375.6 million). Both these liabilities have accumulated over a number of years at a time when DESA was making financial losses. Although part of this can be “offset” against DESA’s holding of DESCO shares which are shown at considerably less than market value, there would still remain a substantial GoB commitment.

244. DESA currently carries a large cash balance (TK 2,699 million) and it is recommended that most of this is used to pay off some of the debt to BPDB and PGCB. There are also many adjustments which can be made to DESA’s existing balance sheet in terms of writing off assets (including some receivables and stock) and also some liabilities which cannot be identified. Despite the assistance of some very able accounting personnel in DESA the shortcomings in the existing financial systems means that it is impossible to verify balance sheet amounts to specific assets and liabilities. The adjustments recommended are set out in Section 4.8.

245. It is recommended that, once DESA’s balance sheet has been adjusted, assets and liabilities are transferred to DPDC with the exception of the following items:

DESA’s shareholding in DESCO - Despite being a valuable source of revenue in the form of dividends, and perhaps profit on the future sale of shares, there does not seem to be a compelling reason why DPDC should own DESCO. DPDC’s Executive should focus on managing its own business and its financial performance is best measured without the distortion of including dividends from other companies. The Consultant recommends that this investment is initially left with DESA for subsequent transfer/sale to a more suitable parent company (perhaps BPDB or GoB directly);

Outstanding debt service liabilities and interest on foreign and Government loans - Whilst it is recommended that DPDC should be responsible for the future service of foreign and Government debts it will not be able to pay the unpaid balances and the Consultant suggests that the unpaid amounts subject to loan agreements or subordinate loan agreements with GoB (e.g. most of the foreign loans) remain with DESA, ultimately for write off by the Government or, perhaps the conversion into equity in DPDC;

Accounts payable to BPDB and PGCB – This is the largest liability on DESA’s balance sheet and the Consultant recommends that DPDC only takes on that portion that it can reasonably be expected to pay. After most of the existing cash balance is used to pay off some of this debt it is recommended that DPDC assumes responsibility for only the last six month’s unpaid accounts. The remainder will stay with DESA, ultimately for settlement or write off by GoB (GoB owns both BPDB and PGCB) or, perhaps, for conversion into equity in DPDC; and

Scrap and obsolete stock – A comprehensive check of existing stores should be undertaken and the ledger adjusted accordingly, DESA stores hold a considerable amount of scrap stock (at nil value), the Consultant recommends that DESA realises some value from this by inviting tenders for its purchase.



246. Appendix 4.2 outlines the suggested approach and also sets out how DPDC’s initial balance sheet might look if the recommended adjustments are followed. This balance sheet shows a far healthier financial position than currently faced by DESA. In particular, current assets and current liabilities are much more in balance, with the current ratio (i.e. current assets to current liabilities) exceeding 1.2 which means that DPDC will be in a much better position to meet its ongoing commitments. It also shows a more acceptable gearing with the ratio of debt to debt plus equity at 50%, a much more manageable level than currently exists.

247. Following the transfer, DPDC will need to make further adjustments. In particular, the company will need to fully recognise its pension liability, and also commence the preparation of a comprehensive asset register so that an asset revaluation can be undertaken.

4.8 Recommended Adjustments to Balance Sheet

4.8.1 Fixed Assets

Transfer completed projects from projects in progress to fixed assets. TK 1,812 million (plus other parts of projects identified as completed and earning revenue);

Reach agreement with DESCO regarding the valuation of assets transferred (Gulshan and Tongi) and adjust value of fixed assets accordingly;

Transfer balance of fixed assets and projects in progress to DPDC at current balance sheet value; and

DPDC should create an asset register identifying specific assets and revalue assets according to their replacement value (adjusted for depreciation to reflect asset age and condition). Balance Sheet values should then be adjusted, if necessary using the existing revaluation reserve to write down any asset value reduction.

4.8.2 Investments

Write off following investments against profit and loss:

o FDR (Against GPF/CPF) TK 9.3 million

o Savings certificates (Against GPF/CPF) TK 2.4 million

o FDR (Against Security Deposit, Contractors & suppliers) TK 2.7 million

Transfer Investment in FDR (Miscellaneous Fund) to DPDC TK 1,133 million

Transfer investment in BCI Bank to DPDC TK 6.4 million

And

Keep DESCO investment with DESA.

(Note that market value is 9,757 million).



4.8.3 Current Assets

Reconcile cash balances;

Use most of cash balance to pay proportion of outstanding electricity costs and transfer remaining cash balances to DPDC;

Write-off uncollectable receivables from customers against bad debt provision TK 1,150;

Reach agreement with DESCO regarding amount owing from DESCO for power purchases and write-off any uncollectable balance;

Attempt to reach agreement with DESCO and REB regarding amounts owing from customers handed over and write-off the balance deemed uncollectable (it is likely that this could be the entire balance of TK 2,175,1 million);

Remaining balance of receivables should be transferred to DPDC;

The amount shown as receivable for Government duty should be adjusted for the customer debt write-off. Assume 5% of amount written off;

DPDC should commence making annual provisions for bad debts of not less than 2% of annual billing;

Reconcile advance to contractors and suppliers balance and transfer balance to DPDC. The amount showing as “advance to DPDC” should be set off against credit balance which should already be in DPDC’s accounts;

Stock that has been allocated to projects in progress but which is surplus (GIETC job) and is held in stores should be recognised as stock and accounts adjusted to transfer the value from projects in progress to stock. TK 1,402 million. Alternatively, any excess stock could be retained by DESA for transfer to PDB for use anywhere in Bangladesh;

Stock values should be adjusted for obsolete, unuseable and untraceable items and written off to profit and loss. Pending a detailed review it is assumed that 40% of revenue and development stock falls within this category. TK 427 million;

Arrangements should be made to dispose (sell) existing scrap stock (held at nil value);

Remaining stock balance should be transferred to DPDC;

The balance on prepaid and other assets should remain with DESA for write-off with the exception of prepaid rent which should be transferred to DPDC. TK 1.9 million;

The advance income tax balance should remain with DESA for write-off. TK 28.6 million;

The advance to employees balance should be transferred to DPDC with the exception of TK 10.43 million which should be written-off by DESA as an unrealisable asset; and

A final reconciliation should be undertake on the “other asset” balance and any amount that cannot be identified as a realisable asset (e.g. cash in transit) should be written-off (it is expected that the write-off should be in



the order of TK I,000 million). The residual balance should then be transferred to DPDC.

4.8.4 Long Term Liabilities

The balance sheet balances should be checked against GoB records and actual balances agreed and accounts adjusted accordingly; and

Outstanding balances should be transferred to DPDC.

4.8.5 Medium Term Liabilities

The 1991 opening balance on the Security Deposit for customers of TK 261 million should be written-off by DESA and the balance transferred to DPDC. The possibility of using this account to write-off uncollectable customer debts should also be properly explored; and

DPDC should recognise the full liability of pensions due to staff.

4.8.6 Current Liabilities

The 1991 opening balance on the contractors and suppliers of TK 23 million should be written-off by DESA and the balance transferred to DPDC;

The balance on taxes and duties of TK 531 million should remain with DESA for write-off;

The incorrect liability for a debenture loan – TK 136 million should be written-off;

The bank loan liability of TK 10 million which does not exist should be written-off;

Accounts payable to contractors and suppliers should be properly reconciled and any balance not representing actual liabilities should be written-off. It is assumed that at least 50% of the account balance can be written-off;

It is suggested that DPDC should only assume responsibility for up to six months of outstanding BPBD and PGCB accounts. After utilisation of cash balance to clear as much as possible the remainder should remain with DESA, ultimately for settlement or write off by GoB or conversion into equity in DPDC; and

The outstanding debt service liability for unpaid interest (other liabilities) and under deduction made by Government on DSL should not be transferred to DPDC but should remain with DESA, ultimately for settlement or write off by GoB or conversion into equity in DPDC.

4.8.7 Capital and Reserves

The Grants balance should be written-off against profit and loss; and.

The 1991 opening balance on Deposit Works Fund should be written-off against profit and loss.



4.9 Financial Projections

4.9.1 Introduction

248. The Consultant has developed a financial model of DPDC’s activities that takes account of investment, operating costs, debt service and projected revenues. The model provides cash flows, balance sheet and financial projections for DPDC and includes sensitivity analysis of DPDC’s financial performance.

249. The results produced from the financial model are dependent upon the data used, which includes:

Data inputs from DPDC and DESA staff;

Historic accounting information from DESA, which in many areas was found to be far from perfect;

The restructuring that is proposed for DPDC’s balance sheet and the associated allocation of its existing debt and liabilities; and

Information on the investment programme.

250. It is very difficult to forecast with any degree of certainty future levels of inflation and for this reason the Consultant’s modelling has been undertaken in real terms using 2008 price levels. This approach allows for the proper analysis of real underlying trends and avoids the distortions and complications from changes in price levels. Current average retail tariffs and purchase costs of electricity have been used throughout.

251. The model is flexible and will be passed to DPDC to develop and use as a financial planning tool. In the following section the key financial issues for DPDC are discussed and the input assumptions used in the financial model are detailed.

4.9.2 Principal Assumptions

Sales Growth

252. DESA sold 3,915 GWhs of electricity during the year ended June 2007. Compared with 3,178 GWhs in year ended June 2004 this represents an annual average cumulative growth rate in excess of 7% over the three year period.

253. In forecasting future growth rates it is necessary to consider demand growth coupled with the capacity of generation, transmission and distribution to meet the increased demand. DPDC will not be able to control the availability of generation and transmission capacity but will be able to influence the volume of electricity sold through its ability to manage the distribution network.

254. One aspect that DPDC’s management team is focussing on is the reduction of system losses18 which were in excess of 25% for the year ended June 2007. Although this has reduced from a peak of over 28% this still represents over 1,300 GWhs of electricity that were purchased by DESA but not sold to customers. The cost of these “lost” units was in the order of TK 2.9 billion. Clearly any positive results from loss reduction initiatives will assist DPDC in meeting its customer’s demand.

255. In addition, DPDC must plan and implement the appropriate capital projects to extend and reinforce the distribution network in order to reach new customers

18 The difference between the number of units purchased by the company and the number of units billed as sold.



and deliver a reliable and quality supply of electricity. It must also manage the maintenance of the system effectively to minimise disruption to supplies.

256. The Power System Master Plan Update19 2006 reviewed in some detail the entire Bangladesh Power Sector and derived load forecasts that provide a useful basis for DPDC’s sales forecasts.

257. The Master Plan comments that over the last ten years net energy demand growth at an average compound annual rate of 8.1% accompanied gross domestic product (GDP) growth at an average of 5.1%. However, load shedding has been a problem throughout the period. Demand forecasts were based on the correlation between electricity demand and GDP growth, using a base case of 5.2% growth.

258. The forecast profitability of the business is very sensitive to assumptions of sales growth, particularly as most costs other than the purchase of electricity are fixed in nature, e.g. any margin20 earned on additional units is not accompanied by a significant increase in operating costs.

259. Modelling has, therefore, been undertaken under three different scenarios. The Power Sector Master Plan includes a demand forecast by company,21 including DESA/DPDC. The demand growth rates are set out in Table 4.20. As the growth rates appear higher than has historically been observed, these rates have been used as the basis for the “high sales growth” scenario.

Year Unit Sales Growth

2008 11.4%

2009 11.3%

2010 11.3%

2011 10.5%

2012 10.4%

2013 10.4%

2014 10.3%

2015 10.3%

2016 9.5%

Table 4.20: Power Sector Master Plan Sales Growth Projections for DESA/DPDC

260. A more conservative assumption of 6% annual sales growth has been used as the “base sales growth” scenario in line with DPDC’s management’s view of expected growth. A “low sales growth scenario” of 3% per annum has also been analysed.

19 Power System Master Plan Update June 2006, Asian Development Bank TA No 4379 20 The difference between the selling price and the purchase cost of electricity 21 Table 3-15 Demand Forecast by Company



System Losses

261. In accordance with the management team’s focus on loss reduction it has been assumed that losses will gradually be reduced to a more acceptable level of 12% by 2016. In achieving this, it has been assumed that more significant improvements will be realised in the earlier years, reducing by 1.5 percentage points in 2008, by 1.75 in 2009, 2.0 in 2010, 1.75 in 2011, tailing off thereafter to 12% overall by 2016.

262. The total system loss levels assumed for each year is set out in Table 4.21.

Year ended June 2007 (Act)

2008 2009 2010 2011 2012 2013 2014 2015 2016

Assumed losses % 25.2 23.7 21.9 19.9 18.2 16.7 15.4 14.4 13.7 12.9

Table 4.21: Projected Total System Losses

Other Operating Income

263. Other operating income comprises late payment charges, meter rents and connection/disconnection fees. It is assumed that this will increase in line with electricity revenue.

Non Operating Income

264. Non operating income for the year ended June 2007 was TK 142.4 million. This represented approximately 1% of operating income. However, it is not clear from the accounting information what most of this income relates to (TK 88 million has been categorised as miscellaneous income or other income). It is possible that a significant amount relates to incorrect posting of customer account payments. For the purposes of modelling it is assumed that “other income” will be 0.4% of energy revenue.

Work in Progress

265. Currently within DESA it is apparent that there is a long delay between the actual completion of capital jobs and the accounting transfer of these jobs from work in progress to fixed assets. This has resulted in a lower depreciation charge being applied to the profit and loss account and, therefore, an insufficient provision being made for the future replacement of assets. It may also mean that interest charges on associated borrowing has been capitalised as interest during construction rather than directly to the profit and loss account. In the past these accounting treatments will have resulted in DESA showing a higher profit (or a lower loss) than it would otherwise have done.

266. In order to apply the correct depreciation charge to allow for the future replacement of assets it is essential that when capital works are completed the accounting transfer from work in progress is undertaken promptly.

267. For modelling purposes it has been assumed that work in progress is capitalised (e.g. transferred to fixed assets) during the year following expenditure. This does mean that in future the annual depreciation charge will be significantly higher than previously. Interest is capitalised as Interest During Construction (IDC) on the average annual work in progress balance.



Tax

268. DESA has not been liable for corporation tax in the past but it has been assumed that DPDC will be subject to tax on profits in the future. For modelling purposes it has been assumed that the standard rate of 35% will apply on profits. It has also been assumed that accounting profits are the same as tax profits. No relief has been allowed for losses which are not carried forward to be set off against future profits.

DPDC’s Expansion Plans

269. The Bangladeshi Power Sector has suffered from significant under investment in the past. With rapid load growth,22 the rehabilitation of existing power plants and the commissioning of new power plants in order to meet the projected demand, significant investment is required in the distribution system. Without such investment it will not be possible to distribute power effectively.

270. The key economic benefits of the major investment in the distribution infrastructure that is required include the following:

Meeting the increasing demand for electricity (part of the suppressed demand);

Improving the reliability of supplies to existing customers;

Reduction in technical losses on the distribution system; and

Reduction or elimination of the need for customers to run their own standby generation (part of the suppressed demand).

271. DESA’s accounts for the year ended June 2006 show the projects in progress set out in Table 4.22.

Project Balance as at 30 June 2007

(TK 000s)

PDP East 4,437

Outside Dhaka Metropolitan Area 1,812,475

Emergency Rehabilitation of Dhanmondi 132/33kV Substation 341,979

Greater Dhaka Power Distribution Project Phase IV 14,713,493

Horiur-Ullon 98,962

Other 437

Total 16,971,783

Table 4.22: Projects in Progress as at 30 June 2007

22 Including the impact of significant suppressed demand



272. As discussed earlier, it is apparent that some of this work has actually been completed and should be transferred to fixed assets. However, there remains some work to be undertaken on some of these projects. As a result of discussions with DESA staff it is assumed that the additional expenditure set out in Table 4.23 will be undertaken on these projects.

Project Additional

expenditure required

(TK 000s)

Emergency Rehabilitation of Dhanmondi 132/33kV Substation 1,675

Greater Dhaka Power Distribution Project Phase IV 36,000

Horiur-Ullon 243,700

Other 128,600

Total remaining on existing projects 409,975

Table 4.23: Additional Expenditure Required on Existing Projects in Progress

273. It has been assumed that the remaining expenditure will be incurred during year ending 30 June 2008.

274. In addition to the remaining expenditure on existing schemes, capital expenditure has also been allowed for new schemes. Table 4.24 summarises capital projects that have been proposed by DESA.

Project Project Description Approval Status Estimated Cost

(TK000s)

1 Reinforcement, Renovation & Augmentation of 33/11kV

sub stations Approved 883,258

2 Development of new 132/33 kV and 33/11 kV substations

Approved 4,346,155

3 Procurement and Installation

of 50/75 MVA, 132/33kV Transformer projects

Approved 544.156

4 Upgrade of Shyampur BSCIC 11kV Switching

Station Approved 117,031

Sub total 5,.890,600

5 Strengthening of Power

Distribution System Approved subject to

finance 2,356,499

6 Procurement of Spares and Equipment for transmission

and distribution system23

Approved subject to finance

4,849,609

23 This project includes the purchase of 33kV and 11kV cable. Prior to purchase a full review of DPDC’s cable requirements

should be undertaken as there is already a large quantity of spare cable held in stores.



Project Project Description Approval Status Estimated Cost

(TK000s)

7 Emergency Construction of Substation for power system

Unapproved 1,959,100

Sub total 9,165,208

Total 15,055.808

Table 4.24: Capital Projects Proposed by DESA

275. It is understood that projects 1 to 4 have financing secured and have been transferred to DPDC to manage. Projects 5 and 6 have been approved subject to financing and project 7 is awaiting approval. For modelling purposes it has been assumed that all projects will be undertaken according to their planned timetables and financing arrangements.

276. Two further projects that are actively being considered are the installation of prepayment metering in all domestic properties and the purchase of emergency materials. A cost of TK 4 billion has been included for the prepayment project, spread over the three financial years from 2009 to 2011, and TK 500 million for the emergency materials, spread over 2009 and 2010.

277. From years 2012 onwards it has been assumed that capital expenditure requirements will be TK 500 million per annum to cover asset replacement and unidentified future projects.

Project Funding

278. Funding secured for existing projects24 has been on the basis of 60% by foreign loan with the remaining 40% funded by the GoB, The Government funding has been on the basis of 40% loan and 60% grant.

279. It has been assumed that future funding of capital projects will continue in a similar pattern.

280. Table 4.25 summarises the capital expenditure programme assumed for the years 2008 to 2011.

24 Including proposed projects 1-4



Cost 2008 2009 2010 2011 Completion of Existing Projects Emergency Rehabilitation of Dhanmondi 132/33kv substation

2 2

Greater Dhaka Power Distribution Project Phase IV

36 36

Horiur- Ullon

244 244

Other

129 129

Proposed Projects - Approved and financing secured

Reinforcement, Renovation and Augmentation of 33/11kV sub stations

883 265 265 353

Development of new 132/33kV and 33/11 kV substations

4,346 869 1,087 1,087 1,304

50/75 MVA, 132/33kV transformers

544 326 218

Upgrade of Shyampur BSCIC 11 kV Switching station

117 47 70

Proposed Projects - Awaiting financing

Strengthening of distribution system

2,356 707 707 943

Spares and Equipment for transmission and distribution

4,850 1,940 2,910

Proposed Projects - Awaiting approval

Emergency Construction of sub stations

1,959 392 490 490 588

Other projects being considered

Emergency Materials

500 200 300

Prepayment Metering

4,000 1,000 2,000 1,000

Other asset replacement and enhancement

Total 19,966 4,956 6,946 5,172 2,892 -

Financing Foreign Loans 11,979 2,974 4,168 3,103 1,735 Govt equity 4,792 1,189 1,667 1,241 694 Govt loans 3,195 793 1,111 828 463

19,966 4,956 6,946 5,172 2,892

Table 4.25: DPDC Capital Expenditure Programme (TK mill)

Debt Terms

281. Existing loans have been modelled at existing terms. Future local currency loans are assumed to be repayable over 20 years and attract an interest rate of 5% per annum (in line with recent loans). Future Foreign loans are also assumed to be for a 20 year term with an interest rate of 7% per annum.



Interest During Construction (IDC)

282. During year ended 30 June 2007 total interest charged was TK 863 million. The charge to the profit and loss account for the year was TK 406 million, the remainder being charged to capital projects as IDC.

283. For modelling purposes it has been assumed that interest will be charged on the average balance of work in progress at the average of the local lending rate and the international lending rate.

Operating Costs

284. The starting point for making projections of operating costs was actual expenditure for the year ended 30 June 2007. The quality of the accounting information and analysis available did, however, make it difficult to undertake a detailed analysis of costs.

285. Staff costs for year ended 30 June 2007 amounted to TK 826 million. This included the cost of salaries for permanent and temporary staff, overtime payments and allowances etc, and also a payment of TK 160 million for pensions. The total number of permanent employees at the end of December 2007 was 3,057 with a further 1578 temporary employees.

286. As discussed in the HR section, it has been assumed that there will be an initial uplifting of DPDC’s salary levels for permanent staff to double that of existing levels to bring them into line with market rates. The increase has been applied to allowances and pension contributions but overtime payments have been kept at current cost levels as it has been assumed that less overtime will be worked. It has been assumed that the salary increases will take effect for the final quarter of financial year ended 30 June 2008.

287. No further real25 salary increases have been modelled and staff costs have been adjusted according to staff numbers.

288. In assessing costs it has been assumed that a gradual reduction in staff numbers from the current total of 4,635 to a more efficient level of 2,350 permanent members of staff and 200 temporary members will take place by 2016. The assumed phasing is shown in Figure 4.1.

25 E.g. apart from any cost of living increases



0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

TK

mil

l re

al

Master Roll

Staff

Officers

Figure 4.1: Projected Staff Numbers

289. In achieving this reduction in staff numbers it has been assumed that no severance payments will be required as reductions will be met through “natural wastage”.

Maintenance Costs

290. DPDC plans to spend an additional TK 80 million over two years on transformer maintenance over current maintenance costs.

291. Thereafter, it has been assumed that maintenance costs will be 1.3% of gross fixed assets.

Other Operating Costs

292. It is assumed that other operating costs will increase from the current level in proportion to the growth in electricity revenue.

Bad Debt Provision

293. The relatively high incidence of bad debts experienced by DESA suggests that it would be prudent to build up a bad debt provision for the future write off of bad debts. It is recommended that an annual provision of at least 2% of revenue is made in the profit and loss account. This has been factored into the financial model.

294. The forecasts of DPDC’s operating costs used in BPI’s base case are summarised in Table 4.26.



Table 4.26: DPDC Operating Cost Forecast

295. These forecasts are shown diagrammatically in Figure 4.2.

0

500

1000

1500

2000

2500

3000

2008 2009 2010 2011 2012 2013 2014 2015 2016

TK

mill

re

al

Others

Provision forbad anddoubtfuldebtsMaintenanceCosts

OtherOperatingCosts

Staff Costs

Figure 4.2: DPDC Operating Costs Forecast

Depreciation

296. Depreciation is charged in accordance with current DESA accounting policy, i.e. 3.2% on the reducing balance method for all fixed assets, except vehicles which are charged at 9%. Depreciation applies from the first full year after expenditure.

297. Fixed assets are currently valued at their historic cost. Any revaluation to current replacement cost would mean that the annual depreciation charge would be higher than at present in order to make provision for the future replacement of assets.

2007

actual 2008 2009 2010 2011 2012 2013 2014 2015 2016

TK mill

TK mill

TK mill

TK mill

TK mill

TK mill

TK mill

TK mill

TK mill

TK mill

Staff Costs 826 947 1,253 1,174 1,122 1,101 1,080 1,061 1,042 1,024

Other Operating Costs

228 266 282 299 317 336 356 377 400 424

Maintenance Costs

250 330 330 505 604 674 715 722 729 738

Provision for bad and doubtful debts

0 317 336 356 377 400 424 449 476 505

Total 1,305 1,860 2,201 2,333 2,420 2,510 2,575 2,610 2,648 2,689



298. The modelling assumptions made about the prompt transfer of costs from work in progress to fixed assets coupled with the anticipate significant capital expenditure programme means a substantial increase in the annual depreciation charge from the current levels. This is shown diagrammatically in Figure 4.3.

0

200

400

600

800

1000

1200

1400

1600

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

TK

mill

re

al

Figure 4.3: Projected Depreciation Charge (on historic cost basis)

Working Capital

299. For the purpose of modelling, it has been assumed that adjustments are made to DESA’s existing stock valuation, to write off obsolete, unusable or missing stock and to include surplus stock currently recorded in work in progress. It has been assumed that stock levels will remain at a constant level thereafter.

300. It is essential, however, that DPDC manages its stock position carefully to allow operational flexibility and responsiveness whilst avoiding tying up capital unnecessarily in holding excessive stocks.

301. Electricity debtors have been calculated at 3 months electricity sales (a reduction from the current level of more than 6 months). Other debtors have been calculated as equivalent to one month’s sales. DPDC must ensure that debts are effectively followed up and collected to improve upon the unsatisfactory debt situation within DESA.

302. Creditors, which in the main cover the purchase and transmission of electricity, have been set at the equivalent of two months purchases.

Financial Projections

Base Case

303. Full projected profit and loss accounts, balance sheets and cash flows for the base case using the assumptions outlined above are set out in Appendices 4.2 to 4.6.

304. Figure 4.4 illustrates the projected profitability under the 6% per annum sales growth scenario. It shows:



Earnings before Interest, Tax , Depreciation and Amortisation (EBITDA), which is a useful indicator of the operational cash flow that is expected;

Earnings before Interest and Tax (EBIT); and

Profit before tax.

-1000

0

1000

2000

3000

4000

5000

6000

2008 2009 2010 2011 2012 2013 2014 2015 2016

TK

mil

l

EBITDA(operational cashflow)EBIT

Profit Before Tax

Figure 4.4: DPDC Profitability (1) – 6% per annum sales growth

305. Although under this scenario revenue increases steadily, the projections show

DPDC making a net loss for the financial years ending 2009 to 2012. This is explained by several key factors:

A substantial proportion of DESA’s profit for the year ended 30 June 2007 resulted from its shareholding in DESCO in the form of dividends and profit on the sale of shares. It has been assumed that DPDC will not continue to receive the benefit from this shareholding;

The annual depreciation charge increases substantially because of the assumed conversion of current capital work in progress to fixed assets and the additional depreciation arising from the additional capital expenditure expected;

Interest expense increases because of the additional borrowing requirements resulting from the capital expenditure programme;

The initial step change in salary levels means a large real increase in staff costs, even allowing for the staff reduction programme; and

An annual; provision has been allowed for bad and doubtful debts.

306. Figure 4.5 shows two measures of profitability:

Return on Capital Employed, measured as EBITDA/ Capital plus long term debt; and

Return on Net Fixed Assets, measured as Profit Before Tax (PBT)/ Fixed Assets after depreciation.

307. Again this shows a low performance in the early years rising to a more acceptable level after five years.



0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

2008 2009 2010 2011 2012 2013 2014 2015 2016

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

Return onCapitalEmployed(EBITDA/Equity+ long term debt

Return on NetFixed Assets(PBT/Net FixedAssets)

Figure 4.5: DPDC Profitability (2) – 6% per annum sales growth

308. Figure 4.6 shows DPDC cash flow projections. It shows a negative cash flow

for years ending 30 June 2008 and 30 June 2009, but the positive cash flows thereafter are not sufficient to turn the cumulative position positive until 2014. The main reason for this is that it has been assumed that DPDC will pay for its purchases of electricity promptly and also clear the outstanding balance that has been assumed at the outset.

-8000

-6000

-4000

-2000

0

2000

4000

2008 2009 2010 2011 2012 2013 2014 2015 2016

Year

TK

mil

l

Cash Flow

Capex

CumulativeCash Flow

Figure 4.6: DPDC Projected Cash Flows – 6% per annum sales growth



309. Figure 4.7 shows two aspects of expected funding:

The level of “gearing”, measured as the amount of debt/the sum of debt and equity; and

Debt Service Cover Ratio (DSCR), measured as EBITDA/the annual amount due for debt repayment and interest.

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

2008 2009 2010 2011 2012 2013 2014 2015 2016-

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

1.80

Gearing(Debt/Debtplus Equity)

DebtServiceCover(EBITDA/Interest anddebtrepayment

Figure 4.7: DPDC Funding – 6% per annum sales growth

310. The level of gearing shown is far more reasonable than currently exists within DESA and is on the basis that the financial restructuring is undertaken. The level of gearing shown by DESA at 30 June 2007 was abnormally high because of a large amount of debt outstanding and a negative value for equity as a result of a large negative profit and loss account balance from previous years’ losses.

311. The projections for DSCR, however, show this to be at an unsatisfactory level during the early years. In simple terms, a level of less than one means that there is insufficient cash earned to meet the annual interest and principal repayments. However, no allowance has been made within the model for any deferral of interest (currently no interest is payable during the first five years of a loan although it is accrued for later payment). Such deferral will clearly be required for new borrowings.

“High Sales Growth” Case

312. Full projected profit and loss accounts, balance sheets and cash flows for the “high sales growth” scenario are set out in Appendices 4.7 to 4.10.

313. Under this scenario DPDC shows a much healthier financial outlook than under the base case with higher levels of profitability from the increased sales revenue.

314. The results are summarised in Figures 4.8 to 4.11, which show measures of profitability, cash flow and funding implications under this scenario.



-1000

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

2008 2009 2010 2011 2012 2013 2014 2015 2016

TK

mil

lEBITDA(operational cashflow)EBIT

Profit Before Tax

Figure 4.8: DPDC Profitability (1) – High Sales Growth

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

2008 2009 2010 2011 2012 2013 2014 2015 2016

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%



Figure 4.9: DPDC Profitability (2) – High Sales Growth



-10000

-5000

0

5000

10000

15000

2008 2009 2010 2011 2012 2013 2014 2015 2016

Year

TK

mil

l

Cash Flow

Capex

CumulativeCash Flow

Figure 4.10: DPDC Projected Cash Flows – High Sales Growth

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

2008 2009 2010 2011 2012 2013 2014 2015 2016-

0.50

1.00

1.50

2.00

2.50

3.00



Figure 4.11: DPDC Funding – High Sales Growth

“Low Sales Growth” Case

315. Full projected profit and loss accounts, balance sheets and cash flows for the “low sales growth” scenario are set out in Appendices 4.11 to 4.14.

316. Under this scenario DPDC would face severe financial challenges. Profitability is very poor with losses forecast until 2015. Cash generation is also very poor and would require careful management attention to keep this under control.

317. The results are summarised in Figures 4.12 to 4.15 which show measures of profitability, cash flow and funding implications under this scenario.



-1000

-500

0

500

1000

1500

2000

2500

3000

3500

2008 2009 2010 2011 2012 2013 2014 2015 2016

TK

mil

lEBITDA(operational cashflow)EBIT

Profit Before Tax

Figure 4.12: Profitability – Low Sales Growth

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

2008 2009 2010 2011 2012 2013 2014 2015 2016

-2.0%

-1.5%

-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%



Figure 4.13: Profitability (2) – Low Sales Growth



-8000

-7000

-6000

-5000

-4000

-3000

-2000

-1000

0

1000

2000

2008 2009 2010 2011 2012 2013 2014 2015 2016

Year

TK

mil

l

Cash Flow

Capex

CumulativeCash Flow

Figure 4.14: DPDC Projected Cash Flows – Low Sales Growth

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

2008 2009 2010 2011 2012 2013 2014 2015 2016-

0.20

0.40

0.60

0.80

1.00

1.20



Figure 4.15: DPDC Funding – Low Sales Growth

Comparison of Scenarios

318. Figure 4.16 compares the profit before tax forecast under the three scenarios discussed. This clearly shows the significance of sales growth to the financial outcome of DPDC and the importance to its management team in ensuring, as far as it can, that DPDC is capable of meeting its customers’ demand.



-1,000

-

1,000

2,000

3,000

4,000

5,000

6,000

2008 2009 2010 2011 2012 2013 2014 2015 2016

TK

mil

l

3% per annum

6% growth

High Salesgrowth (masterPlan)

Figure 4.16: DPDC Sensitivity to Sales Growth – Profit Before Tax Sensitivities

319. The financial results discussed in the previous section are dependent upon a whole range of assumptions. Tables 4.27 and 4.28 indicate the sensitivity of the results to changes in key assumptions. Table 4.27 shows the expected profit before tax using the specified sensitivity instead of the relevant assumption used in the base case. For example, if there were no initial salary increases (as opposed to the 100% increase assumed in the base case), the expected profit in year 2009 would be TK 188 million instead of a loss of TK 336 million).

320. Table 4.27 shows the difference from the base case profit.

Sensitivity 2008 2009 2010 2011 2012 2013 2014 2015 2016 Base Case 457 (336) (282) (235) (25) 371 961 1,556 2,187

No Initial Salary Increase 623 188 212 240 444 833 1,417 2,006 2,630

200% increase 291 (861) (775) (709) (493) (91) 505 1,106 1,744Salary 10% more 362 (462) (399) (347) (135) 263 855 1,452 2,085Salary 10% less 552 (211) (164) (122) 85 479 1,067 1,660 2,289

No reduction in staff numbers

411 (489) (513) (518) (329) 46 616 1,193 1,806

Maintenance 10% more 424 (369) (332) (294) (91) 300 889 1,484 2,114Maintenance 10% less 490 (303) (232) (175) 42 442 1,032 1,628 2,260

Capex 10% more 447 (360) (353) (364) (194) 181 771 1,368 2,002Capex 10% less 467 (313) (211) (105) 145 561 1,151 1,744 2,372Interest 1% more 513 (361) (351) (349) (169) 210 800 1,399 2,035Interest 1% less 401 (311) (212) (120) 120 532 1,121 1,712 2,339

Table 4.27: Sensitivity to Key Assumptions. PBT (TK mill)



Sensitivity 2008 2009 2010 2011 2012 2013 2014 2015 2016 No Salary Increase 166 525 494 475 468 462 456 450 443

200% increase (166) (525) (494) (475) (468) (462) (456) (450) (443)Salary 10% more (95) (125) (117) (112) (110) (108) (106) (104) (102)Salary 10% less 95 125 117 112 110 108 106 104 102

No reduction in staff numbers (46) (152) (232) (283) (305) (325) (344) (363) (381)Maintenance 10% more (33) (33) (50) (60) (67) (71) (72) (72) (73) Maintenance 10% less 33 33 50 60 67 71 72 72 73

Capex 10% more (10) (23) (71) (130) (170) (190) (190) (188) (185)Capex 10% less 10 23 71 130 170 190 190 188 185 Interest 1% more 56 (25) (69) (114) (145) (161) (160) (156) (152)Interest 1% less (56) 26 70 115 145 161 160 156 152

Table 4.28: Sensitivities to key assumptions. Difference from Base Case PBT (TK mill)

Business Plan

321. A draft high level business plan has been prepared and is attached as Appendix 4.15. This brings together the financial projections included in this section with other aspects of the business, particularly human resources, which are discussed elsewhere in this report. The business plan has been prepared on a collaborative basis with DPDC’s management team and BPI’s team. The process included three workshops, led by BPI’s team and attended by DPDC’s management team, to develop the business plan.

322. The second draft of the business plan was appended to the Immediate Recommendations Report26 submitted to the Power Secretary in November 2007.

26 BPI’s Immediate Recommendations for DPDC – DESA-TA3978 BAN/DL/001



5. HUMAN RESOURCES AND ORGANISATION

5.1 Workplan

323. The aspects of the terms of reference relating to organisation and governance, together with staffing and employment matters were developed into a workplan for the technical assistance. The workplan has been delivered in all important respects, though there have been changes of emphasis between 2005 and 2008. The most significant have been reflected in the plan – see for example the addition of an item on transfers (this has been a major issue which remains unresolved pending court action) and the fact that full delivery of HR8 has not been practical (the Consultant has facilitated informal seminars/workshops but has not run formal training courses using external tutors/training providers).

Project Ref

Source Work Area/Task Resp’ble Team

HR1 ToR 9(i) and (ii)

Review existing organisation and associated arrangements, identifying critical functions which may be absent but necessary for DESA to act as a corporate entity.

Design an effective organisation and management structure for DESA.

HR(P)

HR2 ToR 9(ii) Prepare supporting job descriptions for senior roles in new organisation. HR(P)

HR3 ToR 9(ii) Prepare recommended scheme of delegated authorities (SODA). F (P)

HR4 ToR 9(v) Develop recommendations and procedures on corporate governance, clarifying and defining roles and Board, Directors, sub committees. Communicate this to key stakeholders.

HR(P), Legal (S)

HR5 ToR 9(i) and (iii)

Review existing numbers, skills and deployment of staff in DESA; develop recommendations on future requirements. Recommend appropriate strategies/policy changes to support achieving these recommendations.

HR (P), F (S)

New New Develop options for the handling the transfer of staff from DESA to DPDC; study best practice; evaluate these options; present one or more ways forward for DPDC to consider/determine.

HR (P)

Delete

ToR 9(iv) and (v)

Review existing HR and employment policies. In so far as is practical, these should include performance management (appraisal schemes and code of conduct/discipline); arrangements for promotion and grading.

HR6

Replace by Research local good employment practice and prepare draft service rules for consideration by DPDC management team.

HR (P)

HR6 ToR 9(vi) Identify the key training needs associated with the transition of DESA to a more autonomous, corporate entity. Develop strategic statement for approval.

HR (P), Team (S)

HR8 CN8.1 Coordination of training programmes. Preparation of proposal for approval by ADB before commitment of expenditure.

TL(P), team and HR (S)

Table 5.1: Human Resources Workplan



5.2 Approach

324. Work commenced in 2005 and, alongside the Inception Report, discussion papers on HR and organisation were produced. The work was only partially completed and lack of data was a major impediment to finalising proposals before the work was aborted. In 2007 the work was, in most important respects, restarted. The main themes or workstreams that the Consultant addressed are summarised in the diagram below:

Figure 5.1: Approach to Delivering the HR Workplan

5.3 Organisation and Staff Deployment

5.3.1 Existing Organisation and Set Up

325. The composition and functions of the Authority were set by the Dhaka Electricity Authority Act 1990 and, within this statutory framework, the organisation has followed the basic approach that is common to much of the Bangladesh Power Development Board’s (BPDB) distribution operations. It is headed by a Board comprising a Chairman, with three Members: Engineering and Commercial; Finance; and Administration. Field operations are managed through two Zones (North and South), with eight Circles and 32 local Sales and Distribution (S&D) Divisions. A further Circle with three Divisions deals with Grid Operations and Maintenance, reporting to a Head Office Superintending Engineer. There have been asset transfers and organisational developments, but the form of organisation has not changed radically since the formation of the Authority.

326. DESA has a setup with 6395 approved posts. As at November 2007, the Authority operated with a workforce of 3057 permanent employees, supplemented by a master roll of 1578 daily paid workers. The current position is shown in Table 5.2.

The new DPDC

Staffing and productivity

Organisation

Governance

Development

Service rules and

employment

Transition from DESA

• International standards• M&AoA, Company law• BSEC• Power sector corporatised entities

• Theoretical principles• International utility examples• Power sector corporatised entities• Bangladeshi private sector practice

• Analysis of employee profile• Review of current practice• Power sector corporatised entities• Benchmark cf utility standards

• Legal framework• Bangladeshi private sector practice• Gov’t policy statements• Power sector corporatised entities

• Legal framework and HC decision(s)• Gov’t policy statements• Previous power sector transfers• Staff and stakeholders

• Bangladeshi private sector practice• Gov’t policy statements• Power sector corporatised entities• Analysis of training needs



Employee Numbers

Permanent

Class Numbers

1 290

2 237

3 2199

4 331

Total permanent 3057

Master Roll

Unclassified 1578

Total 4635

Source: DESA

Table 5.2: Current Staffing within DESA

327. The detailed organogram for DESA is complex as shown at Appendix 5.1. A simplified representation of the current organisation, setting out Head Office and field operations, is shown in Figure 5.2.



Chairman

Member Eng & Com

Member Finance1

Member Admin2

GM, North GM, SouthAddl CE,

P&D

SE x 4 Circles

SE x 4 Circles

SE x 4 ProjectsSE Planning

SE SCADA

SE Grid Secretary

Director Audit

Note 1 Member Finance: 2x Director, 1xSen Systems Analyst, 3xAdditional Director, 3xExecutive EngineerNote 2 Member Administration: 1xDirector, 3xAdditional Director

Head Office

Figure 5.2: Simplified Representation of DESA’s Current Organisation

Field Operations

S&D Div x4Satmasjid

DhanmondiShemoliJigatola

S&D Div x4Tejgaon

MogbazarKakrail

Shrebangla

S&D Div x4Segunbagicha

KhilgaonBashaboRazarbag

S&D Div x4Segunbagicha

KhilgaonBashaboRazarbag

S&D Div x4KamalapurMugdaparaShamibag

Maniknagar

S&D Div x4Banglabazar

BangshalNarinda

Kajla

S&D Div x4Shampur

JurainPostagola

Fatulla

S&D Div x4N. gonj (E)N.gonj(W)

DemraSiddirgonj

SatmasjidCircle

TejgaonCircle

RamnaCircle

AzimpurCircle

MotijeelCircle

BanglabazarCircle

ShampurCircle

NarayangonjCircle

GM, North GM, South

ACEP&D

Project Director9th and 10th PP

Project DirectorGIETC

Project Director(Other)

SE, Planning Circle

Project DirectorCorporate P&D



328. The organisation of DESA’s S&D Divisions has evolved over time and there are some variations between Divisional offices. However, a typical Division is represented in the organogram shown in Figure 5.3. Headed by an Executive Engineer, each Sub Divisional Engineer (SDE) is responsible for a particular area or feeder dealing with operations, maintenance and repairs, expansion, new connections on the network; meter reading, billing and collection and checking for illegal abstraction and other irregularities. The number of employees varies between the Divisions. In most Divisions there are vacancies compared to the setup. Customer numbers served in each Division range from approximately 10,100 to 31,000.

Figure 5.3: Simplified Organogram of DESA - S & D Division

329. This is an example only. The numbers of SAE’s vary, as does the number of these posts that are vacant compared to the original setup. In some Divisions, work is organised functionally, with operation and maintenance (O&M) of the distribution network being managed separately from the customer service activity (meter reading, billing and collection).

S&D DivisionRepresentative only

Executive Engineer,

S&D

GardenerCleanerPeonsDrivers

Customer care desk

Assist Dir, Accounts

AdministrationComputer Operator

AccountantAss Account

JAALedger keeper

Cashier

Storekeeper

Sub Divisional Engineer *

Sub Divisional Engineer



Helpers etc

Lineman

ForemanS/S

Attendants

Control room

SAE* SAE SAE SAE

Billing supervisor

Billing supervisor

Billing supervisor

Billing supervisor

Meter readers

Meter readers

Meter readers

Meter readers

* SDE and AE will typically have feeder wise responsibilities



5.3.2 Essential Functions

330. Forming a company from part of an existing organisation involves creating new functions if the new company is to be able to operate independently. For example, the Dhaka Electricity Supply Company (DESCO) built an organisation from zero. In West Zone, with the establishment of the West Zone Power Distribution Company Limited (WZPDCL), it was necessary to create the post of Company Secretary (for administering Board meetings, preparing reports, Companies Act compliance); sections to handle technical functions previously done by the BPDB on its behalf (network planning, design, major project management); develop a Management Information System (MIS) capacity; and begin to introduce a dedicated financial management system to be able to monitor and control its operations. The North West, Central and South Zones of BPDB face similar challenges.

331. Unlike other distribution entities that are being corporatised, DESA has not, to any significant extent, relied on services from BPDB. DPDC will not therefore encounter the problems faced by the four BPDB distribution zones - but it will have others that are probably more challenging and difficult to overcome. DESA has functioned as an Authority for about fifteen years. Thus it has a Secretariat and administrative functions, technical planning, project management, design and coordination functions in place and, as an Authority, has produced reports and accounts, albeit not consistently to recognised accounting standards requirements. Indeed, it provides services to other sector bodies. Network control for the DESCO area and that part of greater Dhaka operated by the Rural Electricity Board (REB) / Palli Bidyut Samities (PBS), is provided from SCADA Bhaban in Katabon. DESA’s technical staff also provide technical assistance, typically on work requiring greater distribution engineering expertise, to those operating plant and equipment in the DESCO area. There is no need for DESA to transfer-in ‘know how’ from BPDB. The question is not therefore about creating major new functions from a zero base - it is rather about developing, restructuring or strengthening existing ones so that the new company acts in a more commercial and customer responsive way.

332. Although DESA has evolved, it continues to operate with business processes, rules and systems closer to those of a Government Department than to the standards of a well run private sector company. If it is to function as a more autonomous corporate entity and operate in a commercial manner, it will need to transform the way it works and develop additional functions.

333. For example, the new company will require:

expertise in regulation (as its tariffs and prices for other services will be set by the Bangladesh Energy Regulatory Commission (BERC) on the basis of proposals submitted to the BERC by DPDC);

an understanding of electricity purchasing (even though in the single buyer model currently included in the reform programme, the new Company will not directly purchase);

comply with the Companies Act and other regulations relating to Company Secretarial practice;

a stronger audit function if is it to meet the required standards of probity and corporate governance; and



strengthened public relations if the new company is to establish itself as an independent and successful organisation, valued by the customers and communities it serves.27

334. The proposed organisation, processes, job descriptions and service rules, together with the training and acquisition of new skills set out in more detail how the new company can go about making these changes happen.

5.3.3 Productivity

335. The ‘3-Year Road Map for Power Sector Reform 2007 – 2009’28 recognises ‘that the main problem lies in the distribution segment’. Compared to other distribution companies/entities, DESA does not achieve acceptable results. Looking at the standard measures used to compare distribution utilities, such as system losses and collection efficiency, DESA does not perform well.29 This has been analysed in several reports on the sector and is acknowledged by the Ministry of Power, Energy and Mineral Resources (MPEMR). The 3-Year Road Map says:

‘… that unbundling of the power sector as a part of reform started with the creation of DESA in 1991. However, DESA did not perform well.’30

336. DESA is technically insolvent after many years of financial losses. The Authority did make a profit in 2006 and 2007, though the forecasts indicate losses for the next two to three years.31 It is not only the performance outcomes that are relatively poor however (with most indicators below the sector norm). As shown in Table 5.3, the evidence suggests that DESA also operates with more staff than many better performing electricity distribution utilities, in terms of, for example, staff per customers served.

No of Customers per Employee

DESA WZPDCL REB DESCO

170 178 282 360

Source: Power Cell

Table 5.3: Comparison of Employees versus Customers Served

337. Though indicators such as these are imperfect, and are influenced by many variables outside the control of DESA,32 they confirm the anecdotal evidence and reviews of specific processes which indicate that in, relative terms, DESA is overstaffed.

338. The sources of performance problems have been discussed frankly with officers from DESA and with the new leadership team from DPDC. They may be looked at in terms of:

27 There may be individual employees working in DESA with this expertise but DESA, as an organisation, does not currently

carry out these functions to any significant degree. 28 3-Year Road Map for Power Sector Reform 2007 – 2009 Revised April 2007 MPEMR. 29 The comparative data referred to in this section can be found in the Powe Cell review Bangladesh Power Sector

Performance Monitoring Indicators – Summary Report for Q3 2006. 30 The Road Map document says elsewhere ‘creation of DESA as a separate authority, without introducing new management

and corporate culture and without sufficient autonomy and incentive, did not yield good results’. 31 As shown in the financial analysis, this is mainly because of the salary increases built into the model. 32 This will not be explored at length here but for this indicator, urban utilities can be expected to perform better than rural

electricity distributors. Also, the extent to which activities are outsourced and contractors are used may be significant. (The DESCO business model is based on outsourcing a number of core functions, DESCO performs relatively well.)



(a) increasing income by reducing non-technical losses such as illegal connections, tampering with or by-passing metering, poor end-user metering (inadequately maintained, non recalibrated regularly), inaccurate or false meter readings and low collection ratios;

(b) reducing costs by tackling over ordering, overstocking and improving inventory control;

(c) improving the income stream through increasing the reliability of the distribution system by introducing improved maintenance; and

(d) reducing technical losses by replacing undersized and overloaded plant and cables, rectifying inappropriate network design, using appropriate conductor joints and by ensuring the proper management of construction / rehabilitation works.

339. In addition to the twin pressures to increase income and reduce costs, the new company will increasingly have to operate within a regulatory framework in which standards for the reliability and quality of supply will be set, with financial penalties being imposed when these are not met. There is recognition of the problems and an awareness of what needs to be done, though the scale of the task has so far been beyond DESA. Improvements have been made (and those relating to customer services are summarised below) but there is much for the new company to achieve through its new organisation and staffing.

5.3.4 Inherited Overstaffing

340. The implementation of power sector reforms has had important consequences for DESA, not all of which appear to have been referred to in the papers reviewing reform. The transfer of assets - and the responsibility for their operation - from DESA to REB and DESCO were not accompanied by transfers of the staff who were working on them. This was most significant in the creation of DESCO in 1996, following which the new company progressively took responsibility for Mirpur, Gulshan, Baridhara and Uttara.33 Part of greater Dhaka was also handed over to the REB (8 PBSs) though this was on a smaller scale. DESA retains only system control of the full network and provides ad hoc technical assistance on the O&M of the transferred assets where technical / operational knowledge is not available in DESCO.

341. DESCO was staffed from a zero base and staff for the company were recruited on new terms and conditions of employment (importantly on higher pay and on contracts with a fixed term). It adopted a business model of outsourcing key functions to contractors. Three main contracts cover outsourced work: one for metering and commercial work and two covering engineering operations (one for line work and one for the O&M of substations and associated plant).34

342. This is in sharp contrast to the position in DESA, where staff are on permanent contracts, with service rules as per the BPDB book.35 No staff automatically transferred to DESCO or REB with the transfer of assets. Only a very small number resigned from service with DESA and joined the new companies. This meant that large numbers of staff were retained by DESA, especially when their work migrated to DESCO.

33 The most recent transfer took place in March 2007, with the handover of the assets and customers of Tongi (E&W) S&D

Zone to DESCO. 34 In 2005, DESCO used approximately 350 staff from contractors on this. (Estimated only and not verified at the time of

publishing this report.) 35 Bangladesh Power Development Board Service Rules 1982, as amended. For a description of these see the ‘service rules’

section.



343. In terms of preserving employment, the policy has been successful in achieving its aim. In terms of giving DESCO a completely fresh start, it was also a success. However, in terms of the most efficient allocation of staff within DESA (and between DESA and DESCO) it was less successful. DESA was left with stranded staff as the assets they had been responsible for were transferred. These staff were absorbed into the DESA organisation; some were added to existing Departments / Divisions and the boundaries of some Divisions were adjusted to create more local units. Although customer numbers were increasing in DESA through growth, these ‘additional’ staff go a long way to explaining why DESA failed to make significant productivity improvements. Thus DESCO operates with larger Divisions (and therefore carries less management and non-operational overheads) than DESA. Records have not been kept of how many staff were left stranded and re-absorbed when the assets were transferred. However, it is likely to be in excess of 1,000 – the approximate number of contractors and staff employed by DESCO on this work at transfer, plus a number left behind when assets transferred to the REB.

344. The transfer of assets appears to have had other consequences. There is a widely held view in DESA that the assets transferred to DESCO / REB were newer (because of their location and the pattern of capital investment), better performing and easier to operate and maintain. There is also a view that, although it continues to help by providing technical expertise to DESCO when needed (because of its longer experience) and by providing some shared services (such as SCADA), the assistance that DESA provides to DESCO and to the REB is rendered without any specific recognition. As a consequence this has led to a feeling among many DESA staff with whom we have spoken that they have been unfairly criticised.36

345. Critically for DPDC, the problem of DESA being a safe haven for ‘stranded’ staff can no longer be ignored or covered up.37

5.3.5 Staff Turnover and Retention

346. Following an historical trend evident since an earlier Government embargo on recruitment to all but essential posts, the overall number of permanent staff has declined. (It is not possible to be precise about total numbers as the position is complicated by untracked movements in numbers on the Master Roll).

347. Those who have retired or otherwise left the service of DESA have not, in most cases, been replaced. Thus although there have been promotions and transfers within DESA, numbers of permanent employees have declined by about 11% in the three years 2005 to 2007. The reduction is some indicator of what level of wastage might be expected in the future. There has been no significant outsourcing by DESA,38 so at the end of December 2007, it can be said that some 4,500 people are presently working for, or directly providing services to, DESA as shown in Table 5.4.

36 One DESA employee working in Ghulshan prior to the transfer described the effort that had gone into persuading staff that

improvements in performance would lead to them being retained on their work. He was one of many who regarded the transfer as demoralising for DESA staff ‘It was like a father giving over a healthy, growing child and being left with the sickly ones.’

37 See especially the tables in the Financial forecasts and business plan section showing the sensitivity to changes in the key assumptions: the base case (a) assumes that the target staffing levels are achieved. An alternative scenario based on no reduction is also presented.

38 Though the outsourcing of certain customer service activities, to provide an element of benchmark competition, has been under review by DESA and now by DPDC.



Employee Numbers

Permanent

Class 2005 2007

1 (technical and non-technical) 363 290




Total permanent 3427 3057

Master Roll

Unclassified Not available 1578

Total Not available 4635

Table 5.4: Staff Currently Employed in DESA

5.3.6 Staff Costs

348. It is common for power sector corporations to plan for the transition from a low wage, low productivity organisation which is ‘generously’ staffed, to one that is characterised by high wages, high productivity and lean staffing.

349. For DPDC this may be problematic. Changes to the cost of staff, relative to other costs, would not, under normal circumstances, significantly affect DESA’s (DPDC’s) overall financial position. In the year ended June 2007, the annual staff cost of TK 826 million was 63% of operating cost, excluding depreciation.

350. Some increases in staff costs could have been absorbed or offset by a reduction in staff. However, there is a major issue to be faced if the new company adopts what has become the ‘market rate’ for pay in newly corporatised power sector organisations. The Board of DPDC appeared to endorse this approach when approving the initial setup of DPDC, meaning that Directors are paid equivalent packages to those in other corporatised power companies. If this ‘market rate’ is followed through and applied to all staff in the new company, it would mean an approximate doubling of the pay and benefits for most employee groups.

351. As can be seen from the financial model, these very sharp increases in pay and benefits have a significant impact on the new company’s finances. The issues for DPDC associated with this are discussed in the sections dealing with financial forecasting (which forecasts the consequences of such dramatic increases in pay and benefits on profitability)39 and service rules (see below).

352. DESA appears to be relatively overstaffed compared to other distributors. However, this is only one of a number of management priorities, many of which are pressing. Introducing a new organisation, with less hierarchy and fewer levels of management, simpler channels of communication, enhanced delegation and improved controls will provide the basis for improving performance. It is therefore this objective – as well trying to contain staff numbers and costs – that makes moving to a new organisation a pressing

39 See especially the tables showing the sensitivity to changes in the key assumptions: the base case (a) is taking a 100%

increase (the market rate assumption) but other scenarios have been prepared which show the impact of (b) no initial increase, (c) 10% increase, (d) 10% decrease, (e) 200% increase.



matter for the new company. The new organisation will provide a platform for improving the level of skill and job satisfaction for many employees. In summary therefore, realising savings through reducing staff is a proper objective for DPDC - but it is secondary to securing performance improvements which will lead to a financially viable company delivering more reliable, affordable and accessible electricity supplies.

5.3.7 Policy Statements on the Treatment of Employees

353. There are some Government policy statements which must inform how the new company begins to operate and set up its staffing.

354. In November 2005, the interested parties (including the MPEMR, Power Secretary, etc) and DESA held discussions and reached an accord on job security; protection of pay and benefits; and what would happen if there were any job losses, including arrangements for voluntary early retirement. Although there has been disagreement over the detail of the precise extent of the guarantees that exist, there is, at the very least, a commitment that staff will be offered as much protection as is practical.40

355. The 3 year Road Map also gives policy guidance on staffing matters and, in particular, arrangements for the transfer. It includes, inter alia, the determination that during 2008 ‘… payment of service benefits etc. will be completed. Employment of all transferred employees to the corporatised entity shall be governed by the latter’s service rules. Re-organisation of existing organisational structure will be completed under DPDC management.’ MPEMR is also firm on the policy that the migration of staff should not be automatic. If the new company is to succeed, it must be given the opportunity to select its own staff according to its needs and not simply inherit DESA as it is.

356. These policy statements provide the framework within which employment in the new company must be developed.

5.4 Employee Profile

5.4.1 Database

357. With the assistance of staff from DESA, the local Consultant developed a profile of employees to assist in assessing current staffing from which realistic plans for the future of the new company could be prepared. Understanding the current profile and the opportunities and constraints for future change was an essential part of the planning process. Information was received on 3057 permanent employees.41

358. Included as appendices are detailed tables showing:

the number of permanent employees of DESA, of all classes, listed by designation (Appendix 5.2);

permanent employees listed by pay according to the 2005 National Pay Scale (5.3); and

the allocation of permanent employees by Department and organisational unit (5.4).

40 In January 2008 a series of writ petitions were presented and the High Court issued an order to ‘restrain the respondents

from making any appointment, or processing any appointment … in DPDC … before absorption of existing employees and officers of … DESA.

41 Full technical notes are available from Monower Associates, who completed the database and carried out the analysis. The main points at issue may be noted as follows. For some of the records there were omissions and/or obvious errors, meaning that they were unusable. For these reasons 39 records, of staff from all classes of employee, were eliminated. The analysis by category or characteristic will not therefore add to 3057.



359. This section summarises the main issues to emerge from the analysis of this data.

5.4.2 Age and Length of Service

360. Age has been calculated as at 31 December 2007 and presented in ranges. A chart is shown at Appendix 5.5. The workforce at DESA is mature, with the bulk of employees (over four fifths) in the ranges 37 to 42 years (853), 43 to 48 years (767) and 49 to 54 (841). This skewed age distribution means that firstly, there is a relative shortage of young talent in DESA; and secondly, that there may well be succession problems as older staff will approach retirement en bloc. Over half of class 1 employees are aged over 50.

361. This presents both a problem and an opportunity. Effective succession plans will be required to ensure the availability of good quality technical and professional staff to replace those who retire. On the other hand, this profile means that staff reductions can be made by not replacing those who retire or who leave for other reasons. It is through this situation that the base case in the financial model (which assumes the target staff reductions in line with the organisation described below) is realistic.

362. Length of service has been calculated as at 31 December 2007 and shown in ranges. See Appendix 5.6. The minimum length of service is one year; the maximum 55 years. Comparing the length of service by group, the maximum number of employees (1423) is within the 17 to 24 years category. This confirms two general impressions. Firstly, that most employees join DESA and stay with the organisation until retirement (or until some other external event compels the employee to leave). Secondly, that the ban on external recruitment has meant that there are relatively few employees with short service.

5.4.3 Turnover and Wastage

363. The chart at Appendix 5.7 shows the pattern of retirements from 2007 to 2012. Retirements peak in 2010 when 116 staff are expected to leave DPDC’s service.

364. As described above, historic staff turnover has been in the region of 5-6% pa. The pattern of retirement suggests this will continue into the future. Therefore, providing there is only very limited recruitment from outside the new company, the target staff reductions assumed in the financial forecasts can be met without needing to introduce a major severance programme. The case for a severance scheme, even if only limited in scope, comes from the need to introduce ‘new blood’ – to recruit from outside to ensure that DPDC has the skills that are either scarce or not present that need to be available to a commercially focussed power sector company.

5.4.4 Education and Skills

365. From the information available, it has been possible to produce an analysis of the qualifications held by DESA staff. Regrettably, however, training records were either incomplete or not available in a form that enabled a meaningful analysis of existing skills and competencies to be made. This meant that, in the time available, it was not possible to identify specific training needs or make specific recommendations on how they might be met. However, BPI has prepared a training policy and methodology that DPDC can adopt and from which specific training needs can be determined in the future.42

42 This is available as a separate document (from the local consultant).



366. A chart showing the distribution of qualifications is included at Appendix 5.8. Technical staff are generally well qualified. Superintending Engineers (SEs) and Executive Engineers (XENs) have a BSc; and the majority of Sub Divisional Engineers (SDEs) and some Assistant Engineers (AEs) are qualified to BSc or diploma level. Many Finance and HR / administration staff are formally qualified but have had less exposure to professional development than might be expected of these occupations in more developed utilities.

367. Overall though, the charts confirm that (at least by international comparison with other electricity utilities) DESA has a relatively high proportion of unskilled, relatively poorly qualified and relatively poorly educated staff. This hierarchical, stratified organisation of work has deep economic and cultural roots but there will be longer term technological and commercial pressures for this to change, not least through the progressive introduction of computerisation, newer distribution engineering technologies and alternative working methods, (some of which are reviewed in the MIS and Customer Service chapters).

5.4.5 Service Rules and Conditions of Employment

368. Table 5.2 in the introduction to this chapter shows the number of permanent employees listed by pay grade and designation according to the 2005 National Pay Scale. As will be discussed, the intention is to simplify the organisation structure, reducing hierarchy, clarifying reporting lines and clarifying responsibilities. In parallel, the pay structure could be simplified. At the present time, some jobs have categories or levels, which have their roots in historic skill and pay differentials. A simple, if basic, step would be to eliminate categories (given alphabetical designations) within jobs. Examples of those in use are set out in Table 5.5.

Job Designation Categories within

Grade

Lineman A, B, C

Foreman A, B, C, D

Electrician A, B, C

Complaint supervisor A, B, C, D

Switchboard attendant A, B, C, D

Meter mechanic A, B

Painter B, C

Table 5.5: The Number of Permanent DESA Employees by Grade & Designation

369. Combining the categories into a single grade means accepting that there will be no pay or grading differential between those who are trained and qualified in their craft, trade or role. This could be managed through careful assimilation.43

5.4.6 Master Roll

370. In addition to permanent employees, there are almost 1600 workers on the Master Roll, with 44 different job titles being used. These 1600 are essentially daily workers, with no contract of employment and no formal rights to future

43 Care would need to be taken on assimilating staff to the new ‘integrated’ grade, to ensure that the more senior,

experienced staff moved to a higher point on the new scale than more junior, less experienced staff.



continuity of work or employment. Most are employed as Assistants (489), Meter Readers (269) and Computer Operators (104) but there are also some Master Roll employees with qualifications and higher skills (for example, SAEs and Accountants). The rates of pay range from TK 157 to TK 368 per day. No significant benefits are payable in addition to these day rates.

371. There are two important issues. First, DESA (and for the future DPDC) will be dependent on many on these people for its effective operation – at least in the short term. The analysis of the DPDC management team, and, to an extent, that of the Consultant has focussed on permanent staff. The reality is that Master Roll employees tend to be younger, often with shorter service, and have experience of working elsewhere. They make an important contribution to DESA, some performing core functions, and their work should not be ignored.44 Second, though this group may have no (or at best very limited) employment security with DESA, many have been in the employment of the Authority for several years. Although there is a pressing need for the new company to steadily improve productivity and reduce staff numbers, the value (and loyalty) of those on the Master Roll should not be ignored.

5.5 Corporate Governance

372. Given the often reported perception of the Power sector – that it is inefficient, delivers poor service, is prone to corruption and inhibits economic growth – it is essential that the new company adopts high standards of corporate governance. Thus a separate, detailed review was conducted during the initial stages of the Technical Assistance (TA); a report produced and circulated for comment.45 This reviewed the economic case for good governance; surveyed current approaches, focussed on best practice among investor owned utilities; summarised the most generally accepted standards of best practice; and set out the ‘report or explain’ minimum standards set by the Bangladesh Stock Exchange Commission for listed companies. The report went on to make specific recommendations on: the Memorandum and Articles of Association (M&AoA) for the new company, the size and makeup of the Board, together with its modus operandi (i.e. how it should work to maximise the chances of the new company being a success).

373. Appendices to the report translated this analysis and the recommendations into practical, working documents that the Board could either use or review and adapt to meet its specific needs. These appendices covered the roles and responsibilities of the Board Chairman; Board level organisation; terms of reference for key sub committees; job descriptions for Board level roles, and what the annual report should normally include on matters such as disclosure of interests and corporate governance.

374. The key recommendations may be summarised as follows:

Future revisions to the 3 year Road Map should include specific commitments on corporate governance;

Corporate governance can contribute to creating a regulatory system for the sector by building a transparent and stable framework for conducting business. As the next ‘unbundled’ company to be formed from the assets of the state-owned power sector, it is important that DPDC’s governance is

44 Some of those we spoke to during the study were of the view that Master Roll staff were quite often younger, more active

and worked more flexibly that their equivalents who had permanent status as employees of DESA. 45 Corporatisation of DESA - Board Composition, Structure and Governance Report. Issued June 2005, revised and re-issued

September 2007.



appropriate and effective. It has the potential to become a model of good practice;

The Board should comprise between ten and twelve members, a size consistent with ensuring the representation of interests and effective decision making processes;

Executive Directors should be represented on the Board of DPDC (with powers as directors rather than being ‘in attendance’). A key theme in the Consultant’s perspective on governance and organisation is that Executive Directors should be given – and fully accept – ownership of business decisions and be accountable for business outcomes;

There should be a mix of executive, non-executive (shareholder nominated, which for the foreseeable future means Government) and independent directors. In a step towards this, the Government made a general statement that for the future, Boards of the new power sector companies would be selected from experts and professionals, as a step towards greater independence;46

The roles of the non-executive Chairman and the executive Managing Director (MD) should continue to be separate. In the longer term, the Chairman should be appointed from amongst the independent members as part of a strategy of adopting generally accepted international norms of corporate governance. In November 2007 an important reform in this direction was taken when the Government decided to discontinue the practice of appointing the Secretary, Power Division as the Chairman of each of the power sector companies;

There should be a clear, well defined distinction between the roles of the non-executive Chairman and the MD, the latter of who has day to day executive responsibility for running the new company. To this end, a statement defining the role of the Board should be agreed and published. Amongst other things, it should clarify the roles of the owners, non-executive and independent directors, and the executive. The full Board should set the vision, values and high level strategy for DPDC;

There should be: (a) clarity and transparency regarding the disclosure of interests and; (b) a process for dealing with actual and potential conflicts;

The Board should operate with sub committees, which have Terms of Reference (ToR) in line with international standards. An audit committee is mandatory. Sub committees for Governance and Nominations; procurement and Human Resources were recommended. The Government has made a statement that, for the future, the new companies will have board sub committees with responsibilities for: (a) Audit; (b) Recruitment and Promotion, and (c) Procurement. This is a very positive measure. For the longer term, a sub-committee with a remit for Information Communication Technology (ICT) could be considered, given the strategic significance of ICT to the new company; and

The annual report, an important way of communicating to stakeholders, should address and report on governance issues, including progress towards meeting international standards.

46 A Year of Reforms Secretary, Power Division 11 January 2008.



375. A commitment to good corporate governance, followed by practical steps to introduce a clear and efficient framework, is an important part of the new company beginning its operations. Through the November 2007 announcement, much has been done by the Power Secretary to create an improved system of governance and more can be done to build on this.

5.6 The New Organisation

5.6.1 Principles of Organisational Design

376. Developing an organisation and setup for DPDC is not an abstract process. There are nonetheless some sound principles which apply to all organisations and lessons to be learned from how successful electricity distribution utilities are structured and staffed. Some examples of good utility management can be found in Bangladesh – it is not all about importing practice from the west, India or other emerging economies.

377. Simple, but tested, principles have been applied. These include:

(a) seeking to create a structure with fewer levels of management (to facilitate communication, speed up decision making); the pace of decision making will also be enhanced by adopting the recommendations on governance, which include Executive Directors on the Board with responsibilities for all day to day operational matters;

(b) introducing broader spans of control (avoiding ‘one to one’ reporting relationships, minimising hand-offs);

(c) ensuring that each function has clarity of purpose (thereby avoiding duplication). A specific example is the proposal for the role of Operations Director with a function distinct from that of the technical Engineering function47 (to ensure appropriate focus on planning and technical standards on the one hand and delivery of operational work and improved customer service on the other); and

(d) building-in flexibility to create an organisation that is capable of change without major disruption (meaning that some processes will be fixed but in others, multi-disciplinary teams will be appropriate, to ensure that synergies are identified and the benefits captured).

378. These principles of organisational design cannot be looked at in isolation. The organisation will need to build on processes, which are common to electricity distribution utilities – but distinct from many other organisations. These core distribution functions include: the management of major new build or rehabilitation projects (from planning, design, technical specification, procurement, the management of field resources and hand-over to O&M); the revenue cycle (from metering, data capture through meter reading, bill preparation and distribution, customer payments, revenue collection and managing debt) and others such as tariff planning and setting in a regulated environment; corporate and business planning. Evidence from utility practice elsewhere points to the importance of accurate, timely and focussed management information and reporting.

47 In other documents, the terms Technical Director and Engineering Director are often used interchangeably when describing

this role. For clarity, in this report, Technical Director refers to the existing job, Engineering Director to the role after Operations has been separated out.



5.6.2 Organisational Structure

379. There is a growing recognition that although power sector reforms have been positive, they have fallen short of what was expected. This has been the view of several external observers and acknowledged by the Government in the most recent Road Map for Sector Reform. The reasons are manifold. The level and timing of investment; the poor state of the existing infrastructure; together with high rates of real and unrealised demand are mentioned. Directly relevant to this debate are issues of poor governance; ineffective regulation and limited market development; and the relative under utilisation and poor deployment of labour. There is no single, or simple, solution to solving the labour problem. However, the first steps can be taken to improve workforce quality, motivation and deployment by developing an appropriate organogram, which reflects the experience of other utilities that have successfully introduced change.

380. The principles in the previous section were utilised when developing the recommended organisational structure and organogram for DPDC.

381. Less hierarchy. At the heart of the proposal is a move to a less hierarchical management configuration, with fewer layers. In place of the existing 3 (or possibly 4-tier structure) of HQ, two Zones, eight Circles and 32 Divisions, the recommendation is to move to a 2-tier structure. Management will be centred on HQ and 8 Circles. This will be followed through by adopting the proposed job descriptions, allocating work accordingly, and agreeing the proposed scheme of delegated authority. This will enable DPDC’s employees to use their own initiative and talents, through empowering them to solve problems at a local level. Operational decision making will, in so far as is practical, be devolved to circle level. In the longer term, each circle could operate as a self managing profit centre.48 Field staff will continue to be based at DPDC’s substations and customer service units.

382. The creation of power sector corporate entities in the Bangladesh power sector has followed a consistent pattern. The new distribution companies have been formed with a leadership team of three executive Directors: Managing Director, Technical Director and Finance Director. Key non executive, part time roles have been filled by Government appointees and a smaller number of independent directors. This pattern was followed for DPDC.

383. There are three key points of difference between what is proposed and current practice in the Bangladesh power sector. The first is at Executive Director level, the recommendation being that Executive Directors should be full members of the Board. The second concerns the division of the current Technical post into two separate roles: an Operations Director and an Engineering Director. The third is the proposal that there should be a Board level Director with responsibilities for Human Resources. These three points of difference, and the reasons for them, will each be considered in turn.

384. Executive Directors. The Consultant recommends that Executive Directors should be full members of the Board of the new company. Five are proposed:

385. Managing Director, Finance Director, Engineering Director, Operations Director and HR Director; and their roles and responsibilities carefully defined (most succinctly in the pack of job descriptions). It is common for the MD and FD to be full members; it is also common for other senior staff / heads of functions to attend Board meetings to observe and participate in discussions by invitation. It

48 This would build on the Strategic Business Unit (SBU) initiative and be facilitated by the planned MIS developments.



is less common for these senior people to be full Board members and the practice does not occur in those parts of the Bangladeshi power sector that have been corporatised thus far.

386. As described in the review of governance, the Consultant believes there is a strong case for having Executive Directors as full members of the Board: they should actively contribute to the setting of strategy and be engaged in its approval, thereby consolidating ‘ownership’ of what the company is committed to achieve. Through this they will become party to setting the direction of DPDC and – very importantly – be personally accountable to the full Board for its delivery. Independent and Government / shareholder directors, acting in a non-executive and part time capacity will (when combined) be in a majority: but the presence of Executive Directors will ensure that strategy and policy is firmly grounded in the practicalities of what needs to be done – and what can be reasonably achieved.

387. The executive members, usually the Managing Director and his or her direct report functional Directors carry out the management of the business and make all operational decisions within the framework set by the full Board. The role of the part time, non-executive members of the Board is to bring aspects of their business experience into the strategic direction of the organisation, ensuring transparency of process and probity in all decision making. The non executive members themselves will not be part of decision making on a day to day basis, but will monitor the business through board meetings and, as described in the governance section above, by a number of sub committees of the Board.

388. An Engineering Director and an Operations Director. The second important change involves dividing the current responsibilities of the Technical Director (TD). It has become the norm to have a Technical Director who controls, and is accountable for, all aspects of engineering on the distribution network from the long term strategic development of the network through to 24 hours-a-day real time operations, dealing with system outages, safety issues and planned and emergency repairs and maintenance. In addition to this, the holder of the position is responsible for: metering; commercial operations including meter reading, billing and the collection of revenue; and the planning and delivery of new customer connections.

389. It is the view of the Consultant that the responsibilities of the TD post as presently constituted are too diverse and varied to be delivered effectively by a single individual – and that by addressing this DPDC can begin to tackle one of the root causes of the under performance in the sector. The immediate pressures of revenue collection and dealing with system interruptions prevent the strategic management of the distribution asset, and its development, from being delivered. An initial analysis suggests that the organisation is continually “fire fighting” – the focus being on dealing with essential operational needs – evidence suggesting that there is little movement from the ‘steady state’ in terms of performance improvement, technical management and maintenance of the distribution network.

390. The Consultant therefore recommends that the post of Technical Director is split into two posts, one to be known as the Engineering Director and one as the Operations Director. The Engineering Director’s role is to address the engineering requirements of a distribution business. This includes the long term development of the network, planning for future extensions and enhancements to meet demand increases, preparing the network to cope with increased generation; setting the standards for equipment to be purchased, developing



maintenance procedures and standards; approving plant for addition to the network and ensuring centralised systems remain operational. It is a technical management role. The department will be relatively small – but will contain among the best technical engineering talent in DPDC.

391. The Operations Director’s role is to focus on daily operations, ensuring that the staff posted to the proposed eight circles work effectively, safely and in accordance with the standards set by the Engineering Director. The post holder will be the senior line manager for all of the staff in the field who deliver service to customers. Through a number of direct reports he or she will be accountable for achieving work programmes, carrying out emergency fault repairs, undertaking routine maintenance and ensuring that meters are read, customers billed and revenue collected. The holder of the position will be accountable for the quality of work that is carried out, identifying the training needs of the staff and working with the HR Director to prepare plans for future staff recruitment and skills training.

392. This proposal reflects the practice in a number of other large scale – and successful – utilities. However, as with all change, it is important to recognise that there are potential difficulties. Identifying and addressing these at the planning stage will be critical to ensuring that the outcome of the change is positive overall. In the early period, there may be tension between the two Directors (Engineering and Operations). This can be addressed by having well drafted and agreed job descriptions and setting clear targets. Strategy, policy, standards (Engineering Director) will thereby be separated from delivery (Operations Director). Although not a recognised form of organisation in the Power sector in Bangladesh, it has the potential to be a catalyst for change at DPDC.

393. Human Resources at Board Level. The third change, which would move away from existing Bangladeshi power sector practice, is the proposition that there should be an Executive Director appointed with responsibility for human resources and administration. The reasons for this are twofold. At a theoretical level there is an increasing body of evidence that an organisation’s human capital – its people – can be the source of competitive advantage. At a practical level, there is a consensus that many of the most pressing issues facing DPDC are staffing or staffing related. There is the immediate problem of managing staff transfers; in the short term there is the matter of implementing the new organogram and setup and dealing with redeployment and consequential surpluses; further into the future are the major issues of securing productivity and performance improvements and up-skilling the workforce. The magnitude of these staffing issues indicates that they need serious and sustained Board level attention – and hence an HR Director.

394. Leadership and Organisation. A new organisation is a condition for creating the new company. However, it is not a sufficient condition. More important is the selection and appointment of the management team to lead DPDC and drive through a change in the culture and methods of working.

395. Background papers have been prepared to facilitate this. A pack of job descriptions has been developed, covering 34 of the most senior positions in DPDC. They are in a form that can be used (at a later date) for job evaluation - and hence market comparisons on pay - to a generally accepted international standard. This appendix (number 5.6) is bound as a separate document. In addition, as part of the ‘Immediate Recommendations’ Report of November



2007 a role profile and selection criteria for the most senior posts were prepared.49

5.6.3 Organisation of Field Activities

396. Options for the most effective organisation of field work have been carefully studied and BPI is grateful to those who have expressed a view on the most appropriate way forward. Essentially there are two main approaches – though many variations of these are possible.

397. The first option is to work with generally managed business units (Circles), in which technical operations, maintenance and supply restoration, and commercial / customer service activities are managed as one. Such an approach maximises flexibility in the use of resources, encourages management development (managers are able to quickly develop a good understanding of the full range of functions), enables shared administrative services within the Circle to be easily organised and managed, and provides a platform for the future development of integrated (sometimes called single point of contact) customer services.

398. The second approach is to adopt what may be described as a functional organisation of field work. This involves managing technical work and commercial / customer services activities as separate work streams. Both approaches have been adopted, in some form, within DESA and senior staff therefore have experience of the alternatives.50 Our recommendation is to work with a functional structure, the main purpose being to give clarity and focus to each activity. The functional structure is reflected in what is recommended for both head office and field activities. This should bring benefits. On technical work, there is a tendency to prioritise all available resources on addressing immediate problems. This is understandable but the proper maintenance of assets requires a dedicated, adequately resourced team if a long run improvement in network performance is to be delivered. Similarly, further improvements to customer service are, in the Consultant’s estimation, more likely to result if a focussed and dedicated team is devoted to this work. As described in the chapter dealing with customer service, much good work has been done – but it needs a dedicated team to build on this.

399. An organogram showing the proposed structure and deployment of staff is attached at Appendices 5.9 – Board and Head Office, and 5.10 – Circle and field resources.

49 See Appendix 6 to the Corporatisation of DESA- Immediate Recommendations for the formation of DPDC BPI 13

November 2007 (This report has had limited circulation.) 50 Indeed, some S&D units have retained a functional structure.



5.6.4 Job Descriptions

400. Job descriptions for 34 of the most senior roles in DPDC have been prepared, to a standard format that can be used for job evaluation purposes at a later date if required. They have been cross referenced to the organograms, so that it is easy to build up a comprehensive picture of what the new organisation looks like and how it is to function. The job descriptions are shown at Appendix 5.11.

5.6.5 Forecast of Staff Requirements

401. Drawing on the experience of senior staff in DPDC, counterparts from DESA, the Consultant’s experience of what has been achieved in other southern Asian power distribution utilities, and benchmarks of good performance established by regulators in European utilities, a target staffing was developed. However, this was tempered by the reality of what DPDC could reasonably achieve given the employee profile (especially staff turnover and the pattern of retirements). The financial forecasts are therefore based on a target staffing of 2350 by the year end 2016, with a master roll of 200 to provide flexibility in the overall resource. The phasing of staff reductions in the financial forecast is therefore realistic – though it allows for the minimal recruitment of ‘new blood’ (to carry out functions not currently undertaken by DPDC or to bring in new, talented and well qualified engineers).

402. These manpower forecasts form a key part of the financial model. They assume self sufficiency i.e. that there will be no external funding for a severance scheme.51 Beyond tackling obvious problems of poor performance or conduct, which may lead to some not transferring, the forecast assumes that DPDC will, in practice, commence operations at a staffing level similar to that which currently exists in DESA.

403. They further assume that there will not be significant outsourcing in the early years. There are a range of possibilities for outsourcing – from limited outsourcing to facilitate benchmark competition in certain activities, to the radical outsourcing of whole functions (akin to the DESCO model). Whilst outsourcing might improve the financial performance of DPDC, it will exacerbate the overstaffing problem unless the outsourcing contract makes provision for a proportion of staff to move from the company to the service provider.52

404. In summary therefore, the recommendation is that DPDC adopts the senior level organisation structure and set up mapped out above. For more junior levels, managers should adopt the basic organisation recommended and be charged with (as a personal responsibility) achieving the target staffing level set out in the plan, taking every opportunity to not fill vacant posts, redeploy, retrain and otherwise encourage staff to move to productive activities.

5.6.6 Scheme of Delegated Authority and Administrative Rules

405. At an earlier phase, the Consultant produced a scheme of delegated authority (sometimes referred to as a SODA), appropriate to a power distribution company. This was reproduced as an appendix to the ‘Immediate Recommendations’ report of November 2007. It delineates financial, staffing and resource allocation responsibilities and, when taken together with the

51 Variously described elsewhere golden handshake or early leaver’s payment. 52 The consultant was advised that tender documentation etc for outsourcing meter reading had been prepared; that for LV

maintenance is under consideration.



organogram and detailed job descriptions, will ensure that the members of the company’s new management team are clear about what is expected of them.

406. The relevant authorities to act are included in the draft Service Rules shown at Appendices 5.12, 5.13, and 5.14.53

5.7 Migration of Staff to DPDC

407. The transfer of assets and liabilities was at the centre of the ‘Immediate Recommendations’ Report of November 200754. Appendix 6 to that report sets out a detailed action plan for the management of the transition. At the request of the ADB, the full report is included at Attachment XX to this report.

408. The arrangements by which staff transfer to the new company are of particular importance. They are:

Sensitive. Given the widespread view that DESA has more staff than is necessary for a power distribution utility serving a customer base of 600,000, the creation of the new company will, at some point, lead to a reduction in jobs. DESA staff are understandably unsettled by this prospect;

Complex. A broad range of options have been canvassed and the current approach was stayed by an injunction of the High Court; and

Critical. The future of the new company, and the extent to which it is able to succeed in meeting its targets, will depend on a workforce that is well motivated and committed to delivering improved performance.

409. There are two dimensions to the migration of staff. The first concerns the pace and timing of transfers – essentially should there be a phased transfer or ‘all in one go’? This was directly addressed earlier in the TA in some detail, and reviewed in the ‘Immediate Recommendations’ Report of November 2007.55 The main options were to: (a) phase migration by transferring responsibility for a number of major projects to the new company. The new company could therefore start operations on a limited, focussed and manageable basis, absorbing day to day operations at a later date. The second option (b) was to phase migration on a geographic basis, with DPDC taking over a zone, followed by the progressive migration of HV networks, the second zone, other functions etc. The third option (c) was to have a ‘one hit’ transfer. It was this, third option – to have assets and liabilities transfer on one day - that was settled on as the favoured approach. This option was recommended by the Consultant and accepted by key stakeholders.

410. An initial target for the transfer was set for the end of 2007 and a detailed migration plan developed. This target was not achieved. The next logical date is the end of the first quarter of 2008, this being the date by when DPDC should be in place according to the ADB loan covenant. At the time the Consultant completed the TA in March 2008, there was little prospect of movement however, whilst any action was stayed in the High Court.

411. The second dimension concerns the mechanics of the transfer – the terms on which staff transfer (and what would happen to those who do not transfer). Resolving this has so far proved intractable. There are three main options for

53 Each of the three sets of service rules proposed includes a schedule headed ‘administrative rules’ which include the

essential elements of a SODA relevant to each group of staff. 54 Corporatisation of DESA- Immediate Recommendations for the formation of DPDC BPI 13 November 2007 (This report has

had limited circulation.) 55 See especially appendix 2 summarises and evaluates each of these options.



the transfer of staff to DPDC. For ease of reference, they are described as (a) the ‘reform option’; (b) the ‘Consultant’s option’; and (c) the ‘lien option’. Other variations on these themes are possible, though for simplicity, these three have been described in more detail. The key steps involved in each option are represented in the simple, diagrammatic form shown in Figure 5.4.

(a) REFORM OPTION (b) CONSULTANT’S OPTION (c) LIEN OPTION

Communicate clear view of the future

Advertise posts in the new organisation, both

in DESA and externally

Select on merit and appoint to

new posts



‘Cascade’ the process for each layer of

management, until all posts filled

Those not selected:• Leave (with

Golden handshake)

• Continue to work in a special organisation (DESA Cell), paid at DESA rates

New style

contract

DESA employee expresses preference

DPDC review preferences, +

skills, experienceWhere no suitable

candidates, advertise externally

Select and appoint to new posts

New style

contract

Those not selected:• Leave (with

Golden handshake)

• Transfer to DPDC, on DPDC terms, to work on special projects



Transfer to DPDC on lien, 12 months, retaining all DESA pay, employment

rights

DPDC review skills, experience

Where no suitable

candidates, advertise externally

Select and appoint to new postsNew

style contract



Those not selected have the option to:

• Leave (with Golden handshake)

• Stay on DESA contract, being found work by DPDC as available

• Transfer to DPDC, on DPDC terms, to work on special projects

Figure 5.4: Key Steps for Transferring Staff

412. The ‘reform option’ is being pursued at the moment, endorsed by MPEMR and the Board of DPDC. Although not articulated in full detail, it provides for the advertising of all posts in the new company, internally and externally, with the selection of officers and staff being made by an independent committee. Appointments are to be made on new style employment contracts. The approach is unpopular among many in DESA and was subject to challenge in the High Court.56

413. The ‘Consultant’s option’ is essentially that set out in the Consultant’s November 2007 report.57 This involves inviting DESA employees to express a

56 See the earlier footnote for a summary of the writ petitions. 57 Corporatisation of DESA- Immediate Recommendations for the formation of DPDC BPI 13 November 2007 (This report has

had restricted circulation.)



preference (or more accurately preferences); DPDC then reviews all employees and makes appointments from among DESA people in so far as this is practical and efficient; where there are not suitable candidates available, posts are to be advertised externally and appointments made. Those from DESA not appointed to substantive roles would be offered work on special projects (and, for example, there are many maintenance matters that need attention). A carefully controlled early separation / golden handshake scheme would be implemented to accelerate the rate at which target staffing levels can be achieved and productivity improvements delivered.

414. The ‘lien option’ reflects what has become a conventional approach during corporatisation, as adopted (with some variations) for Ashunganj, West Zone and PGCB – with all its attendant advantages and disadvantages.

415. Some issues are common to all three approaches. We have been informed that the Government has made provision for all pension and gratuity to be fully paid up at the point of transfer; this is very positive in that it removes from the new company a major unfunded liability and gives DESA staff comfort that their accrued benefits will be payable. In addition, it will be essential to develop and communicate a clear view of what will happen, and ensure that key stakeholders understand what is to happen and why. This is important whichever option is pursued.

416. There are other decisions within each option that are of significance.

417. Example 1 - The extent to which staff are required to (a) transfer on a new style, fixed term employment contract - akin to that used in some other corporatised entities, such as DESCO - or (b) retain their existing DESA contracts, pay and benefits for an initial period at least.

418. Whether having new contracts in place is an integral part of the transfer, or whether they can be introduced at a later date, will depend on which option is followed and the timing of implementation.

419. Example 2 – Will it be acceptable to leave staff in DESA, on their existing DESA pay and service rules, following the transfer of all assets and liabilities to the new company? This may be a consequence of the reform option. In this scenario, those staff not appointed will end up without any work to do unless (a) some work is left in a residual DESA, or (b) some other work is found.

420. Table 5.6 has been prepared to help clarify the advantages and disadvantages of the three principal approaches.



Employee Transfer - Assessment of Principal Options

No Criteria ‘Reform’ Option

Consultant’s Option

Lien Option

1. Likelihood that DPDC will be staffed with the best qualified

and experienced people. H M L

2. Chance that the change can be achieved at reasonable cost. M M L

3. Likely to meet specific reform criteria. H M L

4. Likely to have minimal social impact/least likely to lead to

disruption. L H M

5. Likely to be perceived as fair by DESA staff. L H H

Table 5.6: Principal Options for Employee Transfer

421. Until the legal impediments to pursuing the reform option are removed, then the Consultant’s option is the most realistic approach, providing as it does for some element of employee choice and protection, combined with a rigorous selection method for those who are to move into more senior managerial, technical and supervisory positions in DPDC.

5.8 Service Rules

5.8.1 Pay Levels

422. There is a market rate for pay and other conditions of service that has developed among the recently corporatised Bangladeshi power sector entities. This is not surprising. Although these are distinct corporate entities, they remain Government owned, with the Government as the major shareholder, and have certain common directors.58 The main companies formed since the decision to unbundle are: EGCB, PGCB, DESCO, WZPDCL, APSCL. Though not yet corporatised, other relevant comparators will be: (a) those parts of the sector remaining under direct government control: BPDB and DESA, REB (and to a lesser extent the PBSs); and (b) the IPPs active in the country.

423. Thus although the new companies have moved away from the ‘blue book’ of BPDB Service Rules, they have adopted broadly similar pay scales, policies and employee rules. There is an economic logic to this, in that until market mechanisms have been developed and embedded, there is merit in maintaining a degree of coordination. At its most basic, this ensures that the new companies do not bid up pay rates for scarce managerial talent. The current ‘going rate’ for pay and benefits in the sector has been set out by PA / HB Consultants, the team appointed to study and support the corporatisation of BPDB.59 In approving the initial setup of DPDC, it can be seen that the Board followed what had become market practice, setting the pay and benefits of Directors, and the few senior staff to be appointed, by reference to pay levels in PGBC, DESCO etc.

424. It is of course appropriate that the new Directors and their immediate reports should be paid the market rate. However, the consequences of an approximate

58 Specifically, the Power Secretary has chaired the Boards of the principal companies and hence has had direct control in

key, strategic areas of the new companies’ operations. 59 The consultant assembled data on pay and benefits but is happy to acknowledge the good work done by PA/HB

Consultants. See especially Corporatisation of the Bangladesh Power Development Board, Draft Final Report, 17 November 2007 prepared by PA Consulting Group in association with HB Consultants. ADB funded Technical Assistance, project reference 4626-BAN. See section 4.5 and especially the table at appendix G.

This is available at www.bpdb.gov.bd/download/BPDB%20Draft%20Final%20Report.pdf



doubling of pay levels (if what has been agreed for the set up is extended to other groups of staff, as it has been in the other companies) has a significant effect on the operating costs of DPDC and hence its financial viability – at least until the savings which accrue from staff reductions are realised. The impact of higher pay levels, together with adopting a gradualist approach to staff reductions, is shown in outputs from the business model. The net effect is to push DPDC into loss for the first two years of its operation.

425. There may be scope to offset the effect of increasing pay levels so dramatically by management action. Measures such as reducing the high level of overtime working60 and containing the materials cost of maintenance have been suggested as ways of mitigating the effect of pay increases but these will be difficult to deliver and the Consultant is not convinced that these will be sufficient in themselves.

5.8.2 Service Rules

426. The low risk approach to introducing new service rules for DPDC is for the new company to adopt those used in the other corporatised power sector bodies within Bangladesh. These represent important, positive changes in terms of simplification and flexibility. As the Board has opted to follow the market rates for pay and benefits for those so far appointed to DPDC, so it could also adopt what have become the common service rules.

427. However, as required by the ToR for this TA, the Consultant has produced service rules appropriate to the new company, which draw upon good practice in Bangladesh.61 Three sets of service rules have been prepared: for managers, for officers and for graded staff. These have been produced as separate documents. Following what has become common practice among the new power sector corporate entities, they are based on a ‘term’ contract, that employees can expect to be renewed, subject to good conduct and performance.

60 Thus in the draft service rules for graded staff, a cap on overtime working has been included. In the draft it has been set at

12 hours in any one week. 61 The consultant is pleased to acknowledge that these are the work of the national consultant, Monower Associates, a Dhaka

based HR consultancy with a broad client base which though primarily private sector, does include the power sector.



6. CUSTOMER SERVICE

6.1 Introduction

428. This section of British Power International’s (BPI’s) report presents the findings and recommendations against the Terms of Reference (ToR) for bulk metering and customer service activities for the restarted Technical Assistance (TA) as shown at Appendix 6.1 to this report.

429. These sections of this report have largely been written by the following team:

Name Role

Salahuddin Jahingir DESA Project Manager and Counterpart

A H M Mohiuddin DESA Counterpart

Gias Uddin Mollah BPI’s Domestic Expert

Geoff Stott BPI’s UK Expert

430. BPI gratefully acknowledges the help it has received, both from its designated counterparts in Dhaka Electric Supply Authority (DESA), and from those other members of DESA’s team with whom discussions have been held.

431. All metering elements of the original ToR for this TA are now being progressed by Power Cell as a separate activity supported by the World Bank. However, for completeness and to provide some surety as to the arrangements, an overview of the existing bulk metering provisions is included within this section of BPI’s report.

432. A finding of the work undertaken by BPI under this TA during 2005 was that DESA’s customer service activities should be analysed. This activity was therefore included in the ToR for the restarted TA and the findings are contained in this section of BPI’s final report.

433. Between the suspension of the TA in 2005 and its restart in September 2007, DESA has embarked upon several initiatives that are aimed at improving the level of service it provides to its customers. These initiatives are shown at Appendix 6.2 to this report.

434. Consequently, when compared with the work undertaken in 2005, BPI’s domestic Customer Service Expert has observed improvements during his recent visits to DESA’s Sales and Distribution (S&D) Divisional offices.

435. One of DESA’s initiatives concerns the decentralisation of its computer work associated with energy accounts; where DESA is in the process of providing for the operation of the activity at its S&D Divisional offices.

436. DESA has also introduced ‘one-point’ customer service desks at its S&D Divisional offices and these are receiving favourable feedback from DESA’s customers.

437. In noting DESA’s initiatives in its customer service activities, BPI considers that the principal activities where most improvement can now be gained are those regarding the meter reading, account billing and account collection elements of the overall energy accounting process, replacing the currently labour-intensive, manual system with a more automated approach.



6.2 Bulk Energy Metering

438. During the period between the suspension of work on this TA in 2005 and its resumption in 2007, the whole aspect of energy metering has been the subject of a special, separately funded study by Power Cell, which has superseded BPI’s original remit.

439. However, for completeness and to, BPI’s domestic Customer Service Expert has examined the existing import and export metering arrangements within DESA and discussed the aspects of import and export metering to / from DESA with Power Cell. The following paragraphs provide an overview of BPI’s findings regarding the arrangements for metering the bulk energy imports to, and exports from, DESA / DPDC.

Import Metering

440. The Bangladesh Power Development Board (BPDB) is responsible for the generation of bulk electricity, which is transmitted within the country by the Power Grid Company of Bangladesh (PGCB).

441. The PGCB transmits the bulk electricity to Grid Substations for import to the various distribution companies.

442. Within Dhaka, some of these Grid Substations are exclusively for imports to DESA / DPDC and some of them have imports to other distribution companies, such as the Rural Electrification Boards (REB) and the Dhaka Electricity Supply Company (DESCO).

443. The import metering arrangements at the Grid Substations therefore differ, dependent upon the exclusivity or the number of separate distribution companies that take bulk electricity supplies from them. As a result, DESA / DPDC has import metering at 132kV, 33kV and 11kV voltage levels.

444. Table 6.1 shows the existing number of import meters by voltage level.

Voltage Level (kV) Import meters

132 14

33 16

11 13

Table 6.1: Existing Import Meters by Voltage Level

445. DESA is currently classified as a 132kV customer, so all import meter readings taken at the 33kV and 11kV levels are related back to the 132kV level.

446. BPI’s investigation reveals that the installed meters and associated equipment are of a modern standard and are fit for purpose.

Interface Metering

447. At some locations another distribution company, such as an REB or DESCO, takes some of its electricity supply from equipment that is owned by DESA / DPDC and for which DESA / DPDC is metered in bulk, generally at a higher voltage level.



448. There is thus a need for accurate interface metering at these locations to ensure that each distribution company pays for the bulk electricity it imports.

449. BPI has discussed this aspect of bulk electricity metering with Power Cell and has been shown the Invitation to Tender (ITT) that Power Cell has issued for ‘Phase I’ of the supply and installation of accurate interface metering, which includes the Dhaka area.

450. BPI understands that the timescale for this phase of the project is expected to take one year to complete.

6.3 Customer Service Activities

451. BPI’s domestic Customer Service Expert has visited four of DESA’s S&D Divisional offices, two in the North Zone and two in the South:

Azimpur – North zone;

Narayangong (East) – South zone;

Shatmasjid – North zone; and

Shiddirgonj – South zone.

452. BPI’s notes of these four visits are shown at Appendices 6.3 to 6.6 respectively.

453. The following principal customer service activities were examined during the visits:

Service Connection;

Meter Reading;

Account Billing;

Account Collection; and

Disconnection and Reconnection.

454. The methods of customer complaint handling were also discussed during the four site visits.

455. The five principal activities were then depicted as process flowcharts to provide a better understanding of the detailed activities undertaken by DESA’s customer service personnel.

456. BPI’s international Customer Service Expert and DESA’s Project Manager subsequently visited Segunbagicha S&D Divisional Office. The drafted flowcharts were discussed with DESA’s senior managers and modified in the light of the clarifications received.

457. For ease of reference, BPI’s findings are separately presented under each element of DESA’s customer service activities, the process flowcharts being annotated as necessary to enable the reader to understand the process without recourse to other notes.

458. This report includes BPI’s observations and recommendations on DESA’s customer service activities, separated into the same individual elements.

6.4 Service Connection

459. DESA has produced a 25-page, A4-sized, spirally bound booklet that is used to document an application for supply (new service connection).

460. Each booklet, which is individually numbered, provides the facility for a photograph of the customer to help prevent identity fraud.

461. The process flowchart for the new connection activity is shown in Figure 6.1.



462. The flowchart shows that the whole process, from beginning to end, is intended to take no more than one calendar month to complete. This timescale was confirmed during the visit to Segunbagicha S&D Division by BPI’s UK Consultant.

463. It was also confirmed that DESA’s senior managers have no recollection of a connection ever having been refused, any problems always being reasonably resolved so that the proposed connection can proceed.

464. As can be seen from the notes on the flowchart, DESA’s Divisional offices are empowered to accept up to 8kW of load without reference to a higher authority. Beyond this level there is an escalation procedure designed to safeguard DESA’s infrastructure against inadvertent overload.

465. DESA’s senior managers confirmed that, since the introduction of this process, the processing of applications for new service have been trouble free, prospective customers seem pleased with the information contained within the new connection booklet.

466. BPI discussed the testing of the meter prior to it being fitted and was assured that the meter is tested on a meter test bench before the cover is sealed.

467. However, there appears to be no process to recalibrate meters on a regular basis; DESA’s approach is to recalibrate a meter only when successive meter readings show unexplained variations in energy consumption.



Figure 6.1: Flowchart of the Existing New Service Connection Element of DESA’s Customer Service Activities

DESA sends either a refusal of

connection or a ‘demand note’ for

the cost of connection

(NB: 7kW load 1Ø and 8kW 3Øare accepted at the

Division

Above this up to 49kW is referred to the SE at the Circle

Above 49kW is further referred to the GM at DESA

HQ and the Chairman DESA)

DESA tests the meter on a test bench

at its Divisional office and

seals it

DESA specifies the meter and for single phase

the Customer

buys it

Customer hands the meter to DESA for

testing prior to it being accepted

The whole process from receipt of application to entering the details on the computer database is completed within one month

Customer makes

application for the new service connection and is given a fixed date by which the application

will be processed

Prospective Customer buys

a specially printed booklet regarding the application for a new service

connection

Customer pays the demand

note

DESA connects the service drop

and the meter

DESA seals the meter

terminal cover

(NB: a wiring certificate is

required from the

Customer’s electrician)

(NB

: D

ES

A’s

peo

ple

ca

nno

t re

call

a c

onn

ect

ion

b

ein

g r

efu

sed

)

Customer’s details are

added to the computer database.

The Customer receives the first energy bill the

month after connection / taking supply

DESA completes the census

form with the Customer’s

details.

Customer details

added to computer

census form

Y

N N Y

N

Y

application received

new service

connection booklet

connection accepted

meter tested and

sealed

meter supplied

demand note paid

remedial work done

remedials inspected

remedials inspected

remedials accepted

more remedial work

remedialsaccepted

meter and service

connected



6.5 Meter Reading

468. The process flowchart for the meter reading element of DESA’s customer service activity is shown in Figure 6.2.

469. Until recently all computer work and document printing associated with meter reading, account billing and account collection was done at DESA’s computer centre at Gulshan.

470. Over the past few months there has been an increasing trend for DESA’s Divisional offices to be self-sufficient in their customer service computing needs, with four offices now completely stand-alone in this respect.

471. Twelve other Divisional offices have data communication links to DESA’s computer centre and are capable of both inputting the data and printing the associated documentation locally.

472. Irrespective of the computing arrangements, the monthly meter reading, account billing and account collection cycle at each Divisional office follows the same process.

473. Although, for ease of reference, the three elements of DESA’s meter reading, account billing and account collection have been depicted on separate process flowcharts; in practice they are contiguous and form one overall process.

474. As can be seen from the flowchart, the current meter reading element of the process is labour intensive and includes stages of manual data entry and transcription.

475. Meter readers check for illegal abstraction, meter tampering and other irregularities during their monthly visits to read energy meters.

476. Each month, in addition to these checks by meter readers, the engineers in charge of 11kV feeders also inspect a random sample of customer connections along each feeder for signs of illegal abstraction, meter tampering and other irregularities.



meter reading

sheets and books to

supervisor

meter reading sheets

completed

meter reading books

completed

meter reading and billing cycle prepared

meter reading sheets printed

meter reading books and

sheets collected

Meters are read on a monthly

cycle

A dated meter reading and

billing cycle for each of 32 Divisions is

prepared at the beginning of each

month

4* Divisions have stand alone

systems

12* Divisions have links to

central computer centre

Meter Reading Sheets (MRSs)

are printed at the beginning of each

month

Some are printed locally and some

centrally

Meter Readers collect the meter reading books

and MRSs from the Meter Reading

Supervisor

Meter Readers visit customers’ premises and

enter the current meter readings in the meter reading

books

Checks are made both by meter readers and engineers in

charge of 11kV feeders for cases

of illegal abstraction, etc.

Meter Readers return to the

office and enter the readings into

the MRSs

This is a manual transcription process –

therefore the clarity of

handwriting is important

Meter Readers submit the

completed Meter Reading Books

and MRSs to the Meter Reading

Supervisor

Key: * these numbers correct at the time the visits conducted during October and November 2007

Figure 6.2: Flowchart of the Existing Meter Reading Element of DESA’s Customer Service Activities



6.6 Account Billing

477. The process flowchart for the account billing element of DESA’s customer service activity is shown in Figure 6.3.

478. This element follows immediately after the meter reading element and forms the second part of the overall process.

479. Implicit in this element is the need for clarity of entries on previously completed documents such as the meter reading book and the meter reading sheet as these entries are read by DESA’s computer personnel at the time of inputting data into the computer.

480. As can be seen from the flowchart, the printed bills are checked for accuracy before being passed to the meter readers for hand delivery.

481. The printed bill is in three parts:

The meter reader removes the office copy for retention at the S&D office; and

The remaining two parts are delivered to the customer.

482. The bills are delivered by the same meter readers who took the meter readings.



The Meter Readers deliver the printed bills to Customers

(NB: the bills are delivered by the same Meter Readers who took the meter

reading)

The Meter Reading

Supervisor checks the

printed bills for accuracy

The printed bills are sent to the Meter Reading

Supervisor

The Customers’ bills are printed

(NB: the bills can be printed either locally –

as at all 4 stand-alones and

some of the 12 with links – or by

the central computing

centre – the slowness and

lack of reliability of the link cause some of the 12

to rely on centrally

produced bills)

The data is input into the computer by the computing team

Any arrears are shown on the monthly bill

Meter Reading Supervisor

sends the MRSs to the computing

team for inputting of data into computer

(NB: the computing team

can be either Divisional or

Central)

Meter Readers

deliver bills to

Customers

Meter Readers receive

bills

bills checked

bills sent to

Supervisor

Customers’ bills printed

meter reading

sheets sent for data inputting

meter reading

data inputted

The Meter Reading

Supervisor hands the

printed bills to the appropriate Meter Readers

Figure 6.3: Flowchart of the Existing Billing Element of DESA’s Customer Service Activities



6.7 Account Collection 483. The process flowchart for the account collection element of DESA’s customer

service activity is shown in Figure 6.4.

484. This element of the overall process follows immediately after the account billing element and forms the third part of the overall process.

485. Customers are asked to pay their energy accounts at nominated branches of Bangladesh’s Banks, BPI understands that the Banks do not currently levy any charge on DESA for this service.

486. Most of DESA’s S&D Divisions have established payment booths within their offices, staffed by Bank personnel, at which customers can pay their electricity bills.

487. The customer takes the two parts of the electricity bill to the Bank:

One part forms the paid voucher that the Bank submits to DESA; and

The other part forms the customer’s receipt of evidence that the bill has been paid.

488. The Banks record the payments manually on a Daily Collection Sheet (DCS), retain the paid vouchers and provide the customer with a receipt.

489. Divisional offices collect the DCS sheets and the paid vouchers on the next working day.

490. Once back in the office, the DCS and paid vouchers are used by the Divisional accounting team to check against the monies that were due and the amounts actually paid.

491. The overall process for DESA’s monthly meter reading, account billing and account collection ends with data being inputted into a computer database and the original documents being filed.



The DCSs and paid vouchers are filed at the division’s office

The DCSs and paid vouchers are sent to the

computing team for inputting into

the computer



Central)

The division’s accounting team

checks the payment against the DCS and the vouchers, thus reconciling the

monies paid in at the Bank with the associated documentation

DCSs and paid vouchers are

delivered to the division’s

accounting team

Each morning DCSs and paid vouchers from

Banks are collected by

each Division

Customers pay for their energy accounts at a

convenient branch of a Bank

(5 to 8 per Division)

Most Divisions also have a dedicated

collection booth staffed by Bank

personnel for the receipt of payments

Customer gets a receipt

Bank completes a Daily

Collection Sheet (DCS)

DSCs and paid

vouchers are filed

Customer pays bill

DCSs and paid vouchers delivered

DCSs and paid voucherscollected

DCSs and paid

vouchers checked

DSCs and paid

vouchers submitted

DSCs and paid

vouchers inputted

The data from the DCSs and

paid vouchers is input into the

computer by the computing team



Central)

Figure 6.4: Flowchart of the Existing Account Collection Element of DESA’s Customer Service Activities



6.8 Disconnection and Reconnection

492. DESA uses two distinct descriptions of bill to classify situations that could result in the disconnection of a customer.

Panel Bill

493. Where irregularities such as illegal abstraction, meter tampering or meter by-pass are discovered, DESA carries out an immediate temporary disconnection and raises a “panel bill”.

494. The term “panel bill” is used to describe a bill rendered where illegal abstraction has taken place.

495. The charges for energy on a panel bill are higher than those for regular monthly energy accounts.

496. Panel bills and associated disconnection notices are delivered by meter readers in the same way that regular monthly accounts are delivered.

497. Customers in receipt of a panel bill are given seven days in which to pay it. Payment of a panel bill is made at branches of the Bangladesh Banks in the same way as for payments for regular monthly accounts.

498. If payment is not made after seven days then a permanent disconnection is effected by DESA’s team who physically removes the offending customers’ service line and meter.

499. Following a permanent disconnection, DESA seeks redress and recovery of the outstanding debt though the Courts.

500. The process ends with DESA’s database being updated accordingly.

501. The process flowchart for the disconnection and reconnection process for a panel bill is shown in Figure 6.5.

Arrears Bill

502. DESA uses the term ‘arrears bill’ to describe a bill rendered for non-payment of an energy account where no irregularities are discovered, such as those where a panel bill would be issued.

503. Arrears bills and associated disconnection notices are delivered by meter readers in the same way that regular monthly accounts are delivered.

504. Arrears bills are raised one month after that in which the arrears occurred.

505. Customers in receipt of an arrears bill are given one month in which to pay it, during which time they can continue to use their electricity supply and accrue increasing debt. That is, the debt has accrued over a total of three months.

506. Payment of an arrears bill is made at branches of the Bangladesh Banks in the same way as for payments for regular monthly accounts.

507. Following the non-payment of an arrears bill, there are two stages of disconnection, both carried out by DESA’s specialist disconnection and reconnection team.

508. The first of these stages, invoked after three calendar months of the arrears bill and associated disconnection notice having been issued, involves the temporary disconnection of the defaulting customer’s service line.



509. After a temporary disconnection, the second stage is to allow customers a further three months to pay a panel bill. If payment is made within the three months then the customer is reconnected.

510. If payment is still not made after three months then a permanent disconnection is effected by DESA’s team who physically removes the defaulting customers’ service line and meter.

511. Following a permanent disconnection, DESA seeks redress and recovery of the outstanding debt though the Courts.

512. The process ends with DESA’s database being updated accordingly.

513. The process flowchart for the disconnection and reconnection process associated with an arrears bill is shown in Figure 6.6.

Load above that Sanctioned

514. DESA must safeguard its distribution system from overload. Consequently it monitors the amount of energy used by its customers by checking its customers’ energy bills against the sanctioned level; i.e. that agreed with DESA.

515. When a customer’s load exceeds the sanctioned level the customer is given one month in which to either agree the additional load with DESA or to reduce the load to the sanctioned level.

516. If DESA’s distribution system cannot support any additional load and the customer does not comply with DESA’s instruction to reduce the load to the sanctioned level, the customer is disconnected.

517. In all cases the customer is charged at twice the normal rate for the additional demand above that sanctioned.



The Customer is temporarily

disconnected by the Division’s

dedicated Disconnection

and Reconnection

team who disconnect the service drop

Panel bill and a written

disconnection notice (7 days to pay) are raised for irregularities such as meter

tampering

(NB: the payment

process is the same as for energy bills)

The Customer is served with the

panel bill and written disconnection notice

The Customer has 1 month in which to

pay

(NB: the panel bills and disconnection

notices are delivered by Meter Readers in

the same way as energy bills

The charges for panel bills are higher

than the usual energy charges)

The Customer’s service is either permanently

disconnected or reconnected by the division’s dedicated Disconnection and Reconnection team

(NB: a permanent disconnection is effected by removal of the service line

and the meter)

Y

Customerpays

N

database records updated

Customer reconnected

Customer permanently disconnected

panel bills and disconnection notices printed

irregularity discovered

Customer temporarily

disconnected

panel bills and disconnection notices served

An irregularity such as meter tampering is

found by DESA

Figure 6.5: Flowchart of the Existing Disconnection and Reconnection Process for a Panel Bill



The Customer is disconnected by

the Division’s dedicated

Disconnection and

Reconnection team and given

a further 3 months to pay

(NB: a temporary

disconnection is effected by

disconnecting the service drop)

Customer temporarily

disconnected

Y

Customer pays

N

database records updated

Customer reconnected

Customer permanently disconnected

Arrears bill and a written

disconnection notice (1 month

to pay) are raised for non-payment of an

energy bill

(NB: normal domestic energy

bills are pre-printed with a

notice requesting

payment within 3 months)

arrears bill and

disconnection notices printed

arrears bill and disconnection notices served

(NB: the payment

process is the same as for energy bills)

The Customer is served with the arrears bill and

written disconnection notice

The Customer has 1 month in which to

pay

(NB: the arrears bills and disconnection

notices are delivered by Meter Readers in

the same way as energy bills

The Customer’s service is either permanently

disconnected or reconnected by the Division’s dedicated Disconnection and Reconnection team

(NB: a permanent disconnection is effected by removal of the service line

and the meter)

N

Customerpays

Y

Figure 6.6: Flowchart of the Existing Disconnection and Reconnection Process for an Arrears Bill



6.9 Complaint Handling for Customer Service Activities

518. DESA’s approach to customer complaint handling was observed as part of the visits carried out by BPI’s domestic team to DESA’s four S&D Divisions.

519. They were pleased to note that, at all locations, DESA has a one-point customer service centre in operation.

520. The following are some of the activities that customers discuss at DESA’s customer service centres:

Meter replacements;

Account queries and resolution;

Temporary service connections;

New, permanent service connections; and

Disconnection and reconnection of services.

521. In addition to these subject matters, there are also other miscellaneous topics that customers discuss at DESA’s customer service centres.

522. During the visit to Segunbagicha S&D Division, BPI’s UK Customer Service Expert was given to understand that complaints regarding meter reading, account billing and account collection have fallen off during the last twelve months. DESA’s personnel attributed this reduction in complaints to two things:

The fact that the Divisional team has direct access to the energy account information for its customers; and

The political situation in Bangladesh having positively affecting the trustworthiness of both customers and DESA personnel.

6.10 Organisational Structure within DESA’s S&D Divisions

523. The existing organisational structure within DESA’s S&D Divisions is on a geographical basis where the Divisional managers and engineers have responsibility for both customer service activities and engineering activities.

524. A simplified organisational chart is shown diagrammatically in Figure 6.7.



Figure 6.7: DESA’s Existing S&D Divisional Organisation

Notes:

1. For clarity, only one full organisational leg is shown below SAE. The arrows indicate a similar combination of responsibilities below that level.

2. SAE and AE personnel have 11kV feeder-wise responsibilities.

DIVISIONAL CONTROL ROOM

bill supervisor

meter readers

accountant, assistant

accountant, junior assistant

accountant, ledger keeper,

cashier

SAE

admin section

cleaner driver peon

customer desk

computer operator

executive engineer

SDE / AE

SDE / AE

SDE / AE

SDE / AE SDE

AD (accounts)

SAE SAE SAE SAE store

keeper

substation attendants

foremen

helpers, etc

linemen



7. MANAGEMENT INFORMATION SYSTEMS

7.1 Introduction

525. BPI’s TA assignment for the Corporatisation of DESA was suspended in July 2005 and restarted in August 2007. Due to the elapsed time the composition of the whole Management Information System (MIS) Team (International and Domestic Experts and the DESA Counterpart) has changed though the brief details contained within the Inception Report62 is useful, there was a need for the new Team to repeat the information gathering exercise and respond to the issues raised by the previous Team. The current Team Members are:

International Expert Domestic Expert Counterpart

Brian Wales Md. Naimul Islam Md. Yousuf

7.2 Workplan

526. The elapsed time of fourteen months and the Asian Development Bank (ADB) requirement to complete the project within six months has had a major impact on the time available to complete all the tasks as defined in the BPI’s Terms of Reference (ToR) and as included in the original Project Work Plan. The MIS Project Work Plan, shown in Table 1, has been revised and highlights those tasks which cannot be completed in the six month period.

527. Although the ToR refers mainly to the provision of a FMIS the majority of the underlying data and information is created and exists in the daily transactions carried out in the various business processes. For the purpose of this report the terms FMIS and computerised systems, in general, can be considered inter-changeable.

62 DESA/DL/GEN10 Corporatisation of DESA - Inception Report Revised Draft June 2005



Management Information Systems

Project Ref

Source Work Area/Task Responsible

Team

MIS1 ToR 6(i) Review of existing financial management system using ADB questionnaire.

MIS (S)

MIS2 ToR 6(ii)

Prepare draft requirement definition (based on review of business needs to be met by the Financial Management Information System (FMIS)). Propose outline hardware and software specifications of the solution.

MIS (P)

MIS3 ToR 6(iii)

Review options for procurement of the FMIS taking into account systems already available to government owned utilities, assessing availability, costs and benefits of these systems. Develop recommendations for the augmentation of existing/new FMIS system to be procured.

MIS (P) F, HR and Com (S)

MIS4

ToR 6(iv)

Provide guidance on the procurement process, ensuring compliance with ADB procedures.

MIS (P)

MIS5 ToR 6(iv) Assist in dealing with bidder’s queries.

MIS (P)

MIS6

ToR 6(i) Evaluate bids and technical specification. MIS (P)

MIS7 ToR 6(iv) Provide guidance during implementation, including sample supervision of installation and commissioning.

MIS (P) F (S) and Com (S)

MIS8 ToR 6(v)

Support the development of management systems and business processes for the newly corporatised company (such as computerised daily and monthly reporting formats for the MIS).

F (P) MIS and Com (S)

Note: The tasks in italics were included when the project had an elapsed time of 14 months. If it is now to be

completed within 6 months, it will not be possible to undertake the ‘implementation’ part of the original ToR

Table 7.1: MIS Project Work Plan

7.3 BPI’s Approach

528. Three trips have been completed by BPI’s International MIS Expert with additional work undertaken in Dhaka by the Domestic Expert, and with support from both the assigned Counterpart and other DESA staff members. A large proportion of the time spent during the first two trips was focused on gathering information on the current DESA information systems and understanding its business processes. The third trip concentrated on more specific issues which are as follows:

Review and assess the current non-operational business information systems and supporting technological infrastructure;



Develop a high level understanding of the key business activities;

Formulate the basic information system requirements for DPDC by establishing an Information and Communications Technology (ICT) Strategy which would enable the company to report on its compliance to Statutory and Regulatory requirements and provide evidence to its adherence to Corporate Governance; and

As a consequence produce a list of key business performance indicators and measurements together with a suggested management reporting regime for both internal and external stakeholders (i.e. GoB, BERC and Power Cell) and potential investors.

529. Following the completion of the third trip the more detailed MIS work plan, showing the key tasks and associated activities to deliver the outputs of the ToR, was revised and is shown at Appendix 7.1. Slippage has occurred with the original target delivery dates as a significant proportion of the MIS resource during Trip 2 was diverted to support and provide input to a migration plan for the Power Secretary’s programme of transferring the distribution business from DESA to DPDC by 31 December 2007.

530. The initial focus has been to collect and assimilate the information systems currently used within DESA and other Government owned utilities. Where possible, this activity was expanded within DESA to gain an understanding of the associated business processes. The current information systems originate from the Financial Management Upgrade (FMU) project which was, with ADB support, to provide a common computerised accounting and financial management system throughout the Bangladesh Electricity Power Sector. A brief history of the FMU project in DESA is provided at Appendix 7.2. Although the non-billing modules have not been implemented, it is recognised that a very large amount of effort was made during both Phase 1 and 2 from which useful information has been produced, especially relating to the Standard Practice Instructions (SPI) which documents the various financial processes essential to the distribution business.

7.4 Review

531. Within DESA, both the billing and customer accounting system and the Tongi development and revenue stores systems are established computerised processes although the systems are not effectively used for management reporting. The failure to implement the remaining non-billing modules has placed the majority of DESA business processes at a disadvantage by having to rely on manual paper-based systems with all the attendant risks of incurring errors due to mistakes in transition of data between forms and spreadsheets. However, the commitment of those DESA staff interviewed and their desire to produce accurate information must be complimented.

532. The lack of formalised and documented business processes has contributed to inefficiencies in the use of resources and the lack of delivering effective management information. These issues have resulted in the business measurements and performance indicators currently produced by DESA being limited and open to question as to their significance. Again, those DESA staff interviewed were aware of these deficiencies and shortcomings but accepted that



the established “working practices” and limited “tools” prevented them from improving the quality of the reporting. One opportunity which had not been taken up was the production of specific reports directly from the databases maintained by the IT Centre.

533. The DESA IT Centre (ITC) has the responsibility for implementing and maintaining the billing and customer accounting system. With limited resources the ITC management has been able to implement a programme to extend the facility to all customers in each of the 32 divisions thereby completing a major objective of the original FMU project. They have also recognised an opportunity for making the system more effective by adding a bar-code to identify each bill. This action will improve the bank-based processes by reducing the degree of errors and speeding up the exchange of information. It was also noted that there are five Divisions which have introduced their own billing and customer accounting systems.

534. Whilst there appears to have been an effort in the past to capture details of operational fixed assets, there is no effective asset database for management purposes. Without such a system, asset valuation cannot be realistically calculated nor can plant maintenance or replacement programmes be effectively planned. This deficiency is made worst in financial management terms, as it appears that some additional assets introduced through completed “new” works (capital projects) become operational but remain categorised as “work-in-progress”.

535. The Tongi revenue and development stores system provides information to the appropriate function within the DESA Headquarters but is totally dependent on manual input on the quantity of serviceable items. There appears to be no “link” between project planning and the procurement and stores processes to ensure that “item turnover” is effectively managed. A good example of this is the large quantity of 11kV three core cables that is available in the development stores yet current capital projects appear to be requesting the purchase of cable to the same specification. Once again it seemed that both DESA stores and planning staff are aware of this “issue” but unable to overcome or “short-circuit” the deficiency in their respective processes.

536. BPI understands that a number of electricity distribution service organisations within the Bangladesh Power Sector (i.e. DESA / DPDC, BPDB, WZPDC, DESCO, REB) are at different stages of acquiring information systems. There appears to be no concerted approach in establishing a common computerised system to be made available throughout the distribution sector which was one of the fundamental principles of the original ADB Financial Management Upgrade (FMU) project. Although outside the terms of reference of this project, the benefits from past expenditure and future opportunities of economies of scale need to be considered in terms of overall cost effectiveness for this particular sector.

7.5 Analysis

537. There are three distinct processes which the computerised system should provide to a business:

The management processes are those that relate to the overall function of the business in terms of reporting on the compliance to Statutory and Regulatory



requirements and which provide evidence of the company’s adherence to Corporate Governance;

The functional processes which are necessary for carrying out the core purpose of the business of effectively distributing electricity (i.e. energy purchasing and sales, operations, asset management etc.); and

The supporting processes which provide the underlining support for both the management and functional processes (e.g. accounting, HR, ICT etc.).

538. In each of the three processes the computerised system must provide accurate and meaningful information in a timely manner to all levels of management – from corporate executives through to functional supervisors. This information enables managers to make decisions relating to their respective level of responsibility and accountability, ranging from establishing business critical priorities and long-term strategic planning to the development and performance monitoring of medium and short-term operational plans and to those associated with the day-to-day core activities of the business. The success of any business can be directly related to its ability to manage these processes efficiently whilst maintaining or improving the delivery and quality of its core services – the effective distribution of electricity to all its customers.

539. From the management perspective the system needs to address the challenges of compliance reporting,63 business performance monitoring and planning. This can be achieved by providing managers with better visibility and access to information thereby giving them the ability to analyse such information and enabling them to identify opportunities which create better and more cost effective services to their customers in line with the company’s development and growth strategies. The information will only be useful if it relates to realistic and attainable business performance indicators (PI) or measurements. PIs derived from the DESA Commercial Operations Statistics and those from the Power Cell Web site were included in the BPI Report.64 They are reproduced with some modifications at Appendix 7.3. Some of these PIs are derived from underlying metrics which will be required by DPDC as part of the commercial and operational aspects of its business. Appendix 7.4 gives examples of these underlying metrics and an indication of which departments may need such information.

540. It is most likely that there are other metrics, associated with the commercial and operational aspects of DPDC, which will be required to be collected and processed. These, together those tabled will be used to form the basis of monitoring the performance of the various business functions of DPDC. They will be used by DPDC managers to establish annual targets for the company and those departments for which they have responsibility. To illustrate this, Appendix 7.5 shows a table which describes a number of measures with target units, their frequency of measurement and the reason for considering them. This approach highlights one of the main requirements of an effective MIS which is the automatic / semi-automatic output of reports. A suggested management reporting regime has been provided at Appendix 7.6.

63 Corporation of DESA – Board Composition, Structure and Governance - Report. Issued June 2005, revised and re-issued

September 2007 64 DESA-TA3978 BAN/ DL Corporatisation of the DESA BPI’s Immediate Recommendations for DPCC – Issued November 2007



541. In order to ensure that any proposed computerised system will provide DPDC with the appropriate ICT systems, services and end user facilities it is necessary to develop an ICT Strategy which encompasses all those aspects that a modern electricity distribution company will require to conduct its core business efficiently. BPI’s paper65 “Information and Communications Technology (ICT) Governance and Strategy” was produced to provide DPDC with suitable guidelines for implementing the strategy in the areas of information, applications, organisation and the technical environment which would fulfil DPDC’s obligation to comply with Statutory and Regulatory requirements and provide evidence of its adherence to good corporate governance.

542. The organisational aspect was further developed in line with the overall project’s Human Resources and Management Plans to establish an ICT department to support and maintain the information systems, services and user facilities in the medium to long-term. BPI’s paper66 “Developing an Information and Communication Technology Department” was produced together with an Organogram and Job Descriptions for the higher management levels. The essential elements of an ICT organisational framework have been incorporated in the recommendations for the new organisation.

543. Both papers were submitted 20 January 2008 in draft form to the DPDC Directors for comment with copies sent to the DESA Computer Centre management team for comment. The finalised versions of the two papers have been reformatted as appendices and appear at Appendix 7.7 and Appendix 7.8 respectively.

544. From all the information gathered, especially that relating to the current DESA information systems and with a general understanding of the associated business processes, a Statement of Requirements (SoR) has been produced. The SoR follows the ICT Governance and Strategy guidelines which describe the information systems, services and user facilities which would enable DPDC to operate efficiently in the future. The SoR, which is shown at Appendix 7.9, has been produced in a format that can be incorporated in a Request for Proposal (RFP) or used to form the general specification of the appropriate ADB bidding process for the supply and installation of ICT systems.

7.6 Procurement Methodology

545. The approach taken has been in line with the ADB Procurement Guideline for Two Stage Bidding for a turnkey contract. This procedure, under which un-priced technical proposals are invited first, provides the opportunity to review the best options which suppliers can offer. By concentrating on the high-level design and performance requirements whilst specifying minimum technical specifications, enables suppliers’ greater flexibility in their proposals. Reviewing the responses provides DPDC with the opportunity to compare the differences and identify the “best” options. This process results in clarification of the technical specification and results in amended bidding documents forming the second stage invitation for final

65 DL/MIS/001 - Information and Communications Technology (ICT) Governance and Strategy –Draft paper January 2008, Final

draft to be issued March 2008 66 DL/MIS/002 - Developing an Information and Communication Technology Department – Draft Paper January 2008, Final draft to

be issued March 2008



technical proposals and price bids. The technical proposal is opened first and reviewed to determine the responsiveness to the bidding documents. Only those bidders whose technical proposals conform to the requirements are included in the evaluation and comparison process.

7.7 Overview of Proposed Computerised System

546. The proposed computerised system will provided for some 39067 terminals, including the current PCs,68 dispersed in some 46 office locations within the DPDC region of Dhaka. The SoR specifies the various business applications and databases necessary for DPDC to operate more effectively with greater financial management and providing the tools for managers to assess the performances of those functions for which they have responsibility.

547. Wherever possible the previous investment by DESA in IT equipment and software will be included in the proposed solution.

7.8 Estimated Costs

548. At this stage only indicative costs can be tabled. Although the prices of generic hardware and software can be acquired and a reasonable speculation made as to the quantity there a number of “soft” areas in such IT projects are “challenging” to cost. Such areas are for example:

modifying applications to suit working practices and modifying business process to effectively use the applications;

introducing new systems to managers and staff with all the attendant issues of managing change;

the level of staff training to ensure the basic understanding for adopting the new system and working practices; and

unforeseen issues which result in changes in the original proposal.

549. The last example can be normally resolved by including a contingency of 10% of the overall costs. However, suppliers are very reluctant to provide any realistic costs on the remaining examples and it is normal practice to include figures from previous projects.

550. The initial cost estimation, excluding Tax, VAT, communication and annual on-going charges, is provided by category in Table 7.2. It must be recognised that these figures are indicative and must be revised following the confirmation of the number of terminals (existing and additional) to be assigned at each office and the total number of users to be trained. This work must be completed as it is essential information for specifying the final quantity, size and capacity of the various components of the computerised system and supporting network. The framework for developing the estimates is shown in more detail at Appendix 7.10.

67 Approximately 75% of the number of DESA Class 1 and 2 employees as December 2007 68 Results from IT equipment survey outstanding



Category Estimated Cost

(USD )

Hardware 1,422,000

System Software 762,000

Application Software 502,000

Business Process Development & Training 1,300,000

Miscellaneous 190,000

Contingency 418,000

Total 4,594,000

Table 7.2: Cost Estimation for Major Components for the Computerised System

7.9 Expected Procurement and Construction Period

551. It has been assumed that the ADB will approve the project to computerise DPDC’s business processes and that the procurement process will commence at the start of the next financial year (June 2008).

552. A high-level programme, following the ADB procurement guidelines, is shown in Figure 7.1. The period covered is approximately 11months and shows the key stages for procurement of a computerised system. The duration of some tasks has been taken as worst-case and it is likely that the period could be reduced.

ID Task Name

1 High-level programme for procurement of computerised system2 Procurement Plan6 Bidding Documentation10 Notification and Advertising16 Prequalification of Bidders21 Two-Stage Bidding - Stage 1 process34 Two-Stage Bidding - Stage 2 process

Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 32008 2009

Figure 7.1: High-level Procurement Programme

553. A high-level outline implementation plan covering a maximum 12-month period, showing the key stages of the project is shown in Figure 7.2. An additional 6-month support service period is added to ensure that the system is fully bedded down and the skills and knowledge transfer to DPDC staff is completed. An appropriate training programme for all DPDC users shall be established and implemented.



ID Task Name

1 Project Design,Supply, Installation & Implementation2 Start of Contract / Effective Date3 Supplier Mobilization period4 Business Process Analysis5 Surveys & Installations 6 Implementation/Training 7 Final Acceptance8 Ongoing Support9 Ongoing Support & additional training

22/04

Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 32009 2010 2011

Figure 7.2: High-level Outline Implementation Plan

554. A phased approach should be devised and agreed in line with DPDC business priorities. This should include of three pilot trials to ensure the introduction of the new computerised systems and services are aligned with the business processes being undertaken. The project should be undertaken using an approved and agreed project management methodology (e.g. PRINCE2). Such a project management approach is briefly described at Appendix 7.11.



Appendix 4.1: Financial Management Assessment

WHY:

Effective financial management is a critical success factor for project sustainability. Irrespective of how well a particular project or program is designed and implemented, if the executing or implementing agency does not have the capacity to effectively manage its financial resources, the benefits of the project are unlikely to be sustainable.

WHAT:

The financial management assessment (FMA) includes a review of the executing/implementing agency’s (EA/IA) systems for financial and management accounting, reporting, auditing and internal controls. In addition, the FMA involves a review of the EA/IA disbursement and cash flow management arrangements. The FMA is not an audit. It is a review designed to determine whether or not the EA/IA financial management arrangements are considered capable of and adequate for recording all transactions and balances, supporting the preparation of regular and reliable financial statements, safeguarding the entity’s assets, and are subject to audit (of substance and form acceptable to ADB). Issues or weaknesses identified during the FMA should be taken into consideration either through project design (i.e. including a component to strengthen financial management systems) or the development of project implementation arrangements (i.e. including a project administration/management office within the entity with necessary financial management skills and/or procedures).

WHEN:

The FMA should be completed as part of project preparation. The FMA should be completed as early as possible, preferably during project preparation, to allow for early detection and resolution of issues. If a PPTA is used to prepare the project, the initial results of the FMA should be included in the mid term report of the PPTA.

HOW:

The broad approach to a FMA is as follows:

Review country diagnostic assessments completed by ADB or development partners.69

Determine if a FMA has been completed by another donor. If so review and update if necessary.

If a FMA has not been completed for the EA/IA, the EA/IA, supported by PPTA Consultants, should complete the financial management assessment questionnaire (FMAQ).

Based on the results of the questionnaire, determine what, if any, additional review/follow up is warranted

69 Including: Country Financial Accountability Assessment (CFAA), Country Procurement Assessment Report (CPAR), Country

Governance Assessment (CGA) and Diagnostic Study on Accounting and Audit (DSAA)



Identify issues or risks associated with the entity’s financial management systems and determine the most appropriate risk mitigation measures to be adopted as part of project design and/or project implementation arrangements

The results of the FMA should be noted in the RRP.

WHO:

The FMA is the responsibility of the Project Team although this work could be undertaken by Consultants under the supervision of the Mission Leader and/or financial management specialist assigned to the project. The initial assessment may involve review of entity procedures, reports etc, many of which may be prepared in a language other than English. It is therefore suggested that the FMAQ be completed by domestic Consultants (assigned to the PPTA, or engaged as staff Consultants under a PPN process).

DELEGATED COOPERATION:

Through the OECD-DAC and the MDB Working Group on Financial Management Harmonization, bilateral development partners and MDBs have agreed on the concept of delegated cooperation, essentially this is a willingness to accept the diagnostic work of others. The goal of harmonization is to reduce the administrative burden on DMCs. To that end, only one FMA should be completed for each executing or implementing agency. If a FMA has been completed by another donor, this can be relied upon (provided it is up to date and ADB is comfortable with the methodology employed).

FOR FURTHER INFO:

Guidelines for the Financial Governance and Management of Investment Projects Financed by ADB



Financial Management Assessment Questionnaire

Topic Response Remarks

1. Implementing Agency

1.1 What is the entity’s legal status / registration? DESA is a statutory organization under Power Division of Ministry of Power, Energy and Mineral Resources of Government of the Peoples Republic of Bangladesh. Dhaka Electric Supply Authority (DESA) was established by a Presidential Ordinance (Act No. 36 of 1990), which has started functioning from October 1, 1991.

Presently in the process of Corporatisation. New name : DPDC

1.2 Has the entity implemented an externally-financed project in the past (if so, please provide details)?

Yes it has implemented externally funded projects. Mode of funding: Funds are not sent to DESA. When the contractor, as per agreement, sends a bill DESA checks and certifies this bill for payment by ADB. No foreign funds are actually recd. by DESA in its bank accounts

1.3 What are the statutory reporting requirements for the entity?

Yes as per requirement of the Companies Act 1994

These are being complied with

1.4 Is the governing body for the project independent? No

1.5 Is the organizational structure appropriate for the needs of the project?

The present structure was put in place in 1991, and has to a great extent lost relevance to present needs

DESA is presently in the process of being corporatized to become DPDC

2. Funds Flow Arrangements

2.1 Describe (proposed) project funds flow arrangements, including a chart and explanation of the flow of funds from ADB, government and other financiers.

DPA or Direct Project Aid is recd. From different donors (like ADB, WB etc.) in the manner given in 1.2 above

2.2 Are the (proposed) arrangements to transfer the proceeds of the loan (from the government / Finance Ministry) to the entity satisfactory?

As per the GOB standard procedure

This may need to improve

2.3 What have been the major problems in the past in receipt of funds by the entity?

N/A

2.4 In which bank will the Imprest Account be opened? N/A

2.5 Does the (proposed) project implementing unit (PIU) have experience in the management of disbursements from ADB?

Yes in so far as regd. (Please see 1.2 above)

2.7 Does the entity have/need a capacity to manage foreign exchange risks?

Under the existing funding pattern, DESA does not have to manage forex risks

2.8 How are the counterpart funds accessed? This funding is received by DESA from GOB




2.9 How are payments made from the counterpart funds?

DESA receives this from GOB under Annual Development Program

2.10 If part of the project is implemented by communities or NGOs, does the PIU have the necessary reporting and monitoring features built into its systems to track the use of project proceeds by such agencies?

N/A

2.11 Are the beneficiaries required to contribute to project costs? If beneficiaries have an option to contribute in kind (in the form of labor), are proper guidelines formulated to record and value the labor contribution?

N/A

3. Staffing

3.1 What is the (proposed) organizational structure of the accounting department? Attach an organization chart.

Top four designations in the accounting department: (1).Head of Department: Member (Finance). Line of reporting Chairman DESA (2). Director (Fin and A/c) Reporting to Member (Fin). (3). Additional Director (Fin. And A/c). Report to Director (Finance) (4). Deputy Director (Fin. & A/c) Report to Add Director

3.2 Identify the (proposed) accounts staff, including job title, responsibilities, educational background and professional experience. Attach job descriptions and CVs of key accounting staff.

(1).The present structure is given above (2).Job descriptions, CVs are being looked at by the ADB TA HR Experts

All Job descriptions, CVs will be re-looked at before inclusion in DPDC

3.3 Is the project finance and accounting function staffed adequately?

Yes

3.4 Is the finance and accounts staff adequately qualified and experienced?

Yes, although they may require training in certain areas

3.5 Is the project accounts and finance staff trained in ADB procedures?

No

3.6 What is the duration of the contract with the finance and accounts staff?

(1). Member(Finance): Govt. appointed (2). All other in the department are regular DESA employees

3.7 Indicate key positions not contracted yet, and the estimated date of appointment.

N/A

3.10 Does the project have written position descriptions that clearly define duties, responsibilities, lines of supervision, and limits of authority for all of the officers, managers, and staff?

Yes

3.11 At what frequency are personnel transferred? As and when required

3.12 What is training policy for the finance and accounting staff?

No regular training scheme. This is an area which needs to be looked at.




4. Accounting Policies and Procedures

4.1 Does the entity have an accounting system that allows for the proper recording of project financial transactions, including the allocation of expenditures in accordance with the respective components, disbursement categories, and sources of funds? Will the project use the entity accounting system?

Yes

4.2 Are controls in place concerning the preparation and approval of transactions, ensuring that all transactions are correctly made and adequately explained?

Yes

4.3 Is the chart of accounts adequate to properly account for and report on project activities and disbursement categories?

The Chart of Accounts presently in use was last revised in December 1987. (Comments from DESA)

The entire Chart of Accounts should be looked at before implementation in DPDC

4.4 Are cost allocations to the various funding sources made accurately and in accordance with established agreements?

Yes

4.5 Are the General Ledger and subsidiary ledgers reconciled and in balance?

There are issues of mismatch between the different books of accounts, in certain cases. Main problem are is “Accounts Receivable”.

This is an area which needs to be looked at.

4.6 Are all accounting and supporting documents retained on a permanent basis in a defined system that allows authorized users easy access?

Yes

Segregation of Duties

4.7 Are the following functional responsibilities performed by different units or persons: (i) authorization to execute a transaction; (ii) recording of the transaction; and (iii) custody of assets involved in the transaction?

Yes

4.8 Are the functions of ordering, receiving, accounting for, and paying for goods and services appropriately segregated?

Yes

4.9 Are bank reconciliations prepared by someone other than those who make or approve payments?

Yes




Budgeting System

4.10 Do budgets include physical and financial targets? For Project / Capital Expenditures (both physical and financial targets) are looked at and a quarterly report of this goes to GOB However for revenue budgets only financial targets are considered.

4.11 Are budgets prepared for all significant activities in sufficient detail to provide a meaningful tool with which to monitor subsequent performance?

Yes

4.12 Are actual expenditures compared to the budget with reasonable frequency, and explanations required for significant variations from the budget?

Yes

4.13 Are approvals for variations from the budget required in advance or after the fact?

All variations must be approved before the event,

4.14 Who is responsible for preparation and approval of budgets?

Member (Finance)

4.15 Are procedures in place to plan project activities, collect information from the units in charge of the different components, and prepare the budgets?

Yes

4.16 Are the project plans and budgets of project activities realistic, based on valid assumptions, and developed by knowledgeable individuals?

Yes

Payments

4.17 Do invoice-processing procedures provide for: (i) Copies of purchase orders and receiving reports to be obtained directly from issuing departments? (ii) Comparison of invoice quantities, prices and terms, with those indicated on the purchase order and with records of goods actually received? (iii) Comparison of invoice quantities with those indicated on the receiving reports? (iv) Checking the accuracy of calculations?

Yes

4.18 Are all invoices stamped PAID, dated, reviewed and approved, and clearly marked for account code assignment?

Although PAID is not stamped, the recipient has to sign on the cheque stub. The voucher bears the cheque number and the account code is clearly given indicating payment has been made.

4.19 Do controls exist for the preparation of the payroll and are changes to the payroll properly authorized?

Yes

Policies And Procedures

4.20 What is the basis of accounting (i.e., cash, accrual)? Accrual, although there are elements of cash accounting in the system.




4.21 What accounting standards are followed? Generally Accepted Accounting Principles (GAAP)

4.22 Does the project have an adequate policies and procedures manual to guide activities and ensure staff accountability?

Yes, adequate but pl. see 4.23

4.23 Is the accounting policy and procedure manual updated for the project activities?

The Procedures Manual presently in use by DESA dates back to 1981

A thorough updating needs to be done before implementation in DPDC.

4.24 Do procedures exist to ensure that only authorized persons can alter or establish a new accounting principle, policy or procedure to be used by the entity?

Yes

4.25 Are there written policies and procedures covering all routine financial management and related administrative activities?

Yes

4.26 Do policies and procedures clearly define conflict of interest and related party transactions (real and apparent) and provide safeguards to protect the organization from them?

{AUDIT}

Yes

4.27 Are manuals distributed to appropriate personnel? {AUDIT}

Yes

Cash and Bank

4.28 Indicate names and positions of authorized signatories in the bank accounts.

Signatories to the bank accounts are the incumbent persons who hold the ranks of: (1). Director (Fin and A/c) (2). Additional Director (Fin. And A/c). (3). Deputy Director (Fin. & A/c) (4) Assistant Director. (Fin. & A/c)

4.29 Does the organization maintain an adequate, up-to-date cashbook, recording receipts and payments?

Yes

4.30 Do controls exist for the collection, timely deposit and recording of receipts at each collection location?

Yes Area for future improvement

4.31 Are bank and cash reconciled on a monthly basis? Yes

4.32 Are all unusual items on the bank reconciliation reviewed and approved by a responsible official?

Yes

4.33 Are all receipts deposited on a timely basis? Yes

Safeguard over Assets

4.34 Is there a system of adequate safeguards to protect assets from fraud, waste and abuse?

This is an area which needs to be developed.

Fixed Assets register is still not in place. This remains an important milestone to be achieved.




4.35 Are subsidiary records of fixed assets and stocks kept up to date and reconciled with control accounts?

No.

4.36 Are there periodic physical inventories of fixed assets and stocks?

Yes, annual verification of stocks is done during statutory audit

Obsolete item is stores need to be removed (physically and from the records)

4.37 Are assets sufficiently covered by insurance policies?

No. DESA does not have such insurance policies.

Other Offices and Implementing Entities

4.38 Are there any other regional offices or executing entities participating in implementation?

Yes

4.39 Has the project established controls and procedures for flow of funds, financial information, accountability, and audits in relation to the other offices or entities?

Yes, although the area of control needs to be reviewed and improved

4.40 Does information among the different offices/implementing agencies flow in an accurate and timely fashion?

No. Delay in the system

4.41 Are periodic reconciliations performed among the different offices/implementing agencies?

Yes but not on a regular basis

Other

4.42 Has the project advised employees, beneficiaries and other recipients to whom to report if they suspect fraud, waste or misuse of project resources or property?[Audit]

Yes

5. Internal Audit

5.1 Is there a internal audit department in the entity? Yes

5.2 What are the qualifications and experience of audit department staff?

The staff do not have the requisite audit qualifications. However some of them have requisite experience

Training reqd.

5.3 To whom does the internal auditor report? Chairman DESA

5.4 Will the internal audit department include the project in its work program?

Yes

5.5 Are actions taken on the internal audit findings? Yes, mostly

6. External Audit

6.1 Is the entity financial statement audited regularly by an independent auditor? Who is the auditor?

Regularly audited by an external auditor. Auditors are appointed for 3 years at a time. Present auditors are: Nurul Azim & Co. Chartered Accountants.and AB Saha & Co. Chartered Accountants.

6.2 Are there any delays in audit of the entity? When are the audit reports issued?

Sometimes




6.3 Is the audit of the entity conducted according to the International Standards on Auditing?

Yes according to ISA as adopted by Institute of Chartered Accountants of Bangladesh

6.4 Were there any major accountability issues brought out in the audit report of the past three years?

The Audited Reports for the year ended 30th June 2007 has commented on (a). Stock Valuation and Store Consumption, and (b). Other assets : concerned with clearing accounts

6.5 Will the entity auditor audit the project accounts or will another auditor be appointed to audit the project financial statements?

Same auditor

6.6 Are there any recommendations made by the auditors in prior audit reports or management letters that have not yet been implemented?

Yes Primarily about the record of Fixed Assets.

6.7 Is the project subject to any kind of audit from an independent governmental entity (i.e., the supreme audit institution) in addition to the external audit?

Yes, by the AG office

6.8 Has the project prepared acceptable terms of reference for an annual project audit?

It is covered under the general audit of the entity

7. Reporting and Monitoring

7.1 Are financial statements prepared for the entity? In accordance with which accounting standards?

GAAP

7.2 Are financial statements prepared for the implementing unit?

No

7.3 What is the frequency of preparation of financial statements? Are the reports prepared in a timely fashion so as to useful to management for decision making?

Monthly Trial Balance is prepared

7.4 Does the reporting system need to be adapted to report on the project components?

No An improved Chart of Accounts can easily cater to this.

7.5 Does the reporting system have the capacity to link the financial information with the project's physical progress? If separate systems are used to gather and compile physical data, what controls are in place to reduce the risk that the physical data may not synchronize with the financial data?

Not precisely However, at the time of finalization of annual accounts financial data is reconciled with physical data

7.6 Does the project have established financial management reporting responsibilities that specify what reports are to be prepared, what they are to contain, and how they are to be used?

Yes

7.7 Are financial management reports used by management?

Yes

7.8 Do the financial reports compare actual expenditures with budgeted and programmed allocations?

Yes




7.9 Are financial reports prepared directly by the automated accounting system or are they prepared by spreadsheets or some other means?

Accounts are prepared using MS Excel Trial Balance prepared on Visual Foxpro

8. Information Systems

8.1 Is the financial management system computerized? No

8.2 Can the system produce the necessary project financial reports?

Yes This is an area for improvement

8.3 Is the staff adequately trained to maintain the system?

Yes Area where training may be required

8.4 Does the management organization and processing system safeguard the confidentiality, integrity and availability of the data?

Yes

Supporting Documents Financial regulations, standards or pronouncements used by the project/entity Information concerning the legal and organizational structure of the entity Extracts or copies of important legal documents, agreements, or minutes Information concerning the sector, economic and legislative environment within which the

entity operates Evidence of consideration of the work of the Internal Auditor (if applicable) and

conclusions reached Analyses of significant ratios and trends (revenue generating projects) Draft format of the financial statements produced by the project/entity Copies of communications Chart of Accounts Project or entity Financial Management Manual Audit terms of reference Terms of reference and curriculum vitae for key financial and accounting personnel Operational manual Copy of most recent audit report (if applicable)



Appendix 4.2 Restructuring DESA Balance Sheet (TK million)

30th June 2007 Adjustment to DESA Accounts Reference Restructured DESA BS Residual DESA DPDCFixed Assets DR CRUtility Plant-in-Sevice 18,920.1 1,812.0 a 20,732.1 20,732.1 Accumulated Depreciation ( 7,579.5) ( 7,579.5) ( 7,579.5)

11,340.66 13,152.7 - 13,152.66 Project in Progress 16,971.8 3,214.0 a,f 13,757.8 13,757.8 Investment 2,183.1 14.4 b 2,168.7 1,028.9 1,139.8

- Current Assets - Cash 2,701.0 2,500.0 o 201.0 201.0 Accounts receivable - Consumers 6,545.4 1,711.0 c,e 4,834.4 4,834.4 Accounts receivable - Other 3,152.2 2,175.0 d 977.2 977.2 Accounts receivable - VAT 988.7 194.3 r 794.4 794.4 Provision for Bad & Doubtful Debts ( 1,478.1) 1,478.1 c,d 0.0 - 0.0 Advances to Contractors & Suppliers 953.1 s 953.1 31.0 922.1 Prepaid & Other Expenses 406.2 404.3 h 1.9 1.9 Advance Income Tax 28.6 28.6 i 0.0 0.0 Advances to Employees 217.3 10.4 j 206.9 206.9 Stock & Stores 1,069.6 1,402.0 427.8 f,g 2,043.8 2,043.8 Other Assets 1,401.0 1,000.0 k 401.0 401.0

15,985.06 10,413.7 31.0 10,382.7 -

TOTAL ASSETS 46,480.56 39,492.8 1,059.9 38,432.9

Capital & ReservesEquity 12,272.1 12,272.1 9,471.3 Net Surplus/(Deficit) ( 25,673.3) 4,293.4 1,471.7 b,e,d,g,h,I,j,k,l,m,n,p,q,r,t,u,v ( 28,495.1) ( 25,694.2)Appraisal Surplus 5,994.6 5,994.6 5,994.6 Grants 14.1 14.1 p 0.0 0.0 Deposit Works Fund 549.9 169.0 q 380.9 380.9

(6,842.53) (9,847.4) (25,694.2) 15,846.9

Long Term LiabilitiesGovernment Loan 5,702.8 5,702.8 5,702.8 Foreign Loan 7,814.9 7,814.9 7,814.9

13,517.68 13,517.7 - 13,517.7

Medium Term LiabilitiesSecurity Deposit - Consumers 1,593.5 261.0 l 1,332.5 1,332.5 GPF/CPF 123.8 123.8 123.8 PensionFund 123.4 123.4 123.4

1,840.63 1,579.6 - 1,579.6

Current LiabilitiesSecurity Deposit - Contractors & Suppliers 241.5 23.0 m 218.5 218.5 Taxes and Duties 530.8 531.0 n ( 0.2) ( 0.2)Current Portion of Long Term Liabilities 682.9 135.8 t 547.1 547.1 Bank Loan 9.7 9.7 u ( 0.0) ( 0.0)Accounts Payable - BPDB & PGCB 28,493.5 2,500.0 o 25,993.5 20,378.5 5,615.0 Accounts Payable - Others 4.1 4.1 4.1 Accounts Payable - Contractors & Suppliers 656.2 328.1 v 328.1 328.1 Uncollected VAT 970.6 194.3 r 776.3 776.3 Other Liabilities 5,367.1 5,367.1 5,367.1 - Under Deduction made by Govt on DSL and 1,008.5 1,008.5 1,008.5 -

37,964.78 34,242.9 26,754.1 7,488.7

46,480.56 13,151.53 13,151.53 39,492.8 1,059.9 38,432.9

Net Assets ( 6,842.5) ( 9,847.4) 15,846.9 Net Current Assets ( 21,979.7) ( 23,829.2) 2,894.0 Current Ratio 0.42 0.30 1.39 Debt/(Debt + Equity) 203% 368% 46%Days in accounts payable 256.7 153.8 153.8

Transfer to DPDC



a Transfer completed projects from projects in progress to fixed assets

b Write off investment balances

c Write off uncollectable customer debts (against bad debt provision)

d Write off uncollectable debts for customers handed over (against bad debt provision and p&l)

e Wright off uncollectable debt from DESCO (assume TK561 Mill) against p&l

f Transfer surplus stock from GIETC project in progress to stock

g Write off stock value for obsolete, unuseable or missing stock (assume 40% of current stock)

h Write off prepaid balances (excluding rent)

i Write off Advance Income Tax

j Write off Advance of Employees

k Write off unrealisable other assets (assume TK1000 mill)

l Write off security deposit consumers opening balance

m Write off security deposit contractors

n Write off opening balance taxes and duties

o Use part of cash balance to clear some payables

p Write off Grants

q Write off Deposit Works Fund

r Adjust government duty for customer debt write off (5% of debt written off)

s Advance to DPDC to be set off against credit balance in existing DPDC accounts

t Write off incorrect liability for debenture loan

u Write off incorrect liability for bank loan

v Write off invalid liabilities to contractors and suppliers



Appendix 4.3 DPDC Projections Summary – at 6% per annum sales growth Actual Projected

Year ended 30 June 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Units Sold (GWhs) 3,871 3,915 4,150 4,399 4,663 4,943 5,239 5,554 5,887 6,240 6,614

Income Statement Summary

Revenue (TK mill) 13,249 13,766 15,833 16,783 17,790 18,857 19,989 21,188 22,459 23,807 25,235

Gross Profit (TK mill) 2,012 2,285 3,110 3,599 4,164 4,723 5,276 5,823 6,363 6,893 7,461

EBITDA (TK mill) 475 981 1,251 1,398 1,835 2,311 2,772 3,254 3,759 4,251 4,777

EBIT (TK mill) 345 986 927 651 941 1,218 1,544 1,972 2,506 3,030 3,587

Profit Before Tax (TK mill) 49 1,039 457 (336) (282) (235) (25) 371 961 1,556 2,187

Cashflow Summary

Net Cash from Operating Activities (TK mill) (205) 3,118 (1,184) 110 477 865 1,376 1,925 2,383 2,767 3,180

Net Cash from Investing (TK mill) (1,884) (2,484) (4,956) (6,946) (5,172) (2,892) (500) (500) (500) (500) (500)

Net Cash from financing (TK mill) 1,533 (416) 4,635 6,576 4,721 2,090 (480) (744) (941) (1,028) (979)

Increase / (decrease) in cash (TK mill) (556) 218 (1,504) (259) 25 64 396 681 942 1,240 1,700

Balance Sheet Summary

Total Assets (TK mill) 48,346 46,481 40,030 46,187 50,700 52,640 52,232 51,967 51,979 52,307 53,113

Net Fixed Assets (TK mill) 11,527 11,341 26,524 31,227 37,583 41,963 43,800 43,044 42,236 41,452 40,693

Current Assets (TK mill) 20,007 15,985 6,849 6,500 6,430 6,393 6,682 7,250 8,072 9,185 10,750

Current Liabilities (TK mill) 46,091 37,965 4,154 4,071 4,145 4,230 4,326 4,565 4,893 5,238 5,602

Capital and Reserves (TK mill) (13,841) (6,843) 15,847 17,333 18,664 19,623 20,083 20,178 20,539 21,284 22,415

Key Financial Indicators

Current Ratio (Current Assets/Current Liabilities) 0.43 0.42 1.65 1.60 1.55 1.51 1.54 1.59 1.65 1.75 1.92

Debt/(Debt + Equity) 2570% 203% 49% 54% 56% 57% 56% 55% 53% 51% 48%

Debt Service Cover Ratio (EBITDA/Debt Service)

(1.7) 2.1 0.9 0.8 0.9 0.9 1.0 1.1 1.2 1.4 1.6

Gross Margin (Gross Profit/Revenue) 15% 17% 20% 21% 23% 25% 26% 27% 28% 29% 30%

Return (EBITDA) on Capital Employed 84.7% 14.7% 3.6% 3.4% 4.1% 4.9% 6.0% 7.1% 8.3% 9.3% 10.4%

Return (EBIT) on Assets 3.0% 8.7% 3.5% 2.1% 2.5% 2.9% 3.5% 4.6% 5.9% 7.3% 8.8%

Return (PBT) on Equity (0.4%) (15.2%) 1.7% (1.8%) (1.4%) (1.2%) (0.1%) 1.2% 2.9% 4.5% 5.9%



Appendix 4.4 DPDC Projected Profit and Loss Accounts (TK mill) – at 6% per annum sales growth Actual Projected

Year ended 30 June 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Energy Sales (GWHs) 3,871 3,915 4,150 4,399 4,663 4,943 5,239 5,554 5,887 6,240 6,614

Operating Revenue Energy Sales 13,040 13,600 15,645 16,584 17,579 18,634 19,752 20,937 22,193 23,524 24,936 Other Operating Income 209 166 188 199 211 224 237 251 266 282 299

13,249 13,766 15,833 16,783 17,790 18,857 19,989 21,188 22,459 23,807 25,235 Cost of Electricity 11,237 11,481 12,722 13,184 13,626 14,134 14,713 15,365 16,096 16,914 17,774 Gross Profit 2,012 2,285 3,110 3,599 4,164 4,723 5,276 5,823 6,363 6,893 7,461 Staff Costs (excluding severance costs) 745 826 947 1,253 1,174 1,122 1,101 1,080 1,061 1,042 1,024 Other Operating Costs 168 228 266 282 299 317 336 356 377 400 424 Maintenance Costs 626 250 330 330 501 596 668 709 717 724 731 Provision for bad and doubtful debts - - 317 336 356 377 400 424 449 476 505 Severance Costs - - - - - - - - - - - Depreciation 312 328 387 814 964 1,167 1,307 1,366 1,341 1,315 1,290 Others Total Operating Costs 1,850 1,633 2,246 3,015 3,293 3,579 3,812 3,935 3,946 3,957 3,974

Operating Profit 162 653 864 584 871 1,144 1,465 1,888 2,417 2,935 3,487 Non operating income 183 142 63 66 70 75 79 84 89 94 100 Dividend Income - 191 Earnings Before Interest and Tax 345 986 927 651 941 1,218 1,544 1,972 2,506 3,030 3,587

Interest Expense 280 406 470 987 1,223 1,453 1,568 1,601 1,545 1,474 1,400 Margin before extraordinary items 66 580 457 (336) (282) (235) (25) 371 961 1,556 2,187 Extraordinary items (16) 460

Profit / (Loss) for the Year 49 1,039 457 (336) (282) (235) (25) 371 961 1,556 2,187 Income Tax - 0 160 - - - - 130 336 545 765 Profit / (Loss) after tax 49 1,039 297 (336) (282) (235) (25) 241 624 1,011 1,422



Appendix 4.5 DPDC Projected Balance Sheets (TK mill) – at 6% per annum sales growth Actual Projected

As at 30 June 2006 2007 Opening 2008 2009 2010 2011 2012 2013 2014 2015 2016

Utility Plant-in-Service 18,778 18,920 20,732 34,490 40,007 47,327 52,874 56,019 56,628 57,162 57,693 58,223 Accumulated Depreciation ( 7,252) ( 7,579) ( 7,579) ( 7,966) ( 8,780) ( 9,744) ( 10,911) ( 12,219) ( 13,584) ( 14,926) ( 16,241) ( 17,531) Fixed Assets 11,527 11,341 13,153 26,524 31,227 37,583 41,963 43,800 43,044 42,236 41,452 40,693 Project in Progress 14,381 16,972 13,758 5,518 7,320 5,547 3,145 609 533 531 531 531 Investment 2,432 2,183 1,140 1,140 1,140 1,140 1,140 1,140 1,140 1,140 1,140 1,140 Cash 2,644 2,701 201 ( 1,303) ( 1,563) ( 1,538) ( 1,474) ( 1,078) ( 397) 545 1,785 3,485 Accounts receivable - Consumers 9,687 6,545 4,834 3,911 4,146 4,395 4,658 4,938 5,234 5,548 5,881 6,234 Accounts receivable - Other 3,094 3,152 977 188 199 211 224 237 251 266 282 299 Accounts receivable - VAT 1,064 989 794 794 794 794 794 794 794 794 794 794 Provision for Bad & Doubtful Debts ( 1,478) ( 1,478) 0 ( 317) ( 652) ( 1,008) ( 1,385) ( 1,785) ( 2,209) ( 2,658) ( 3,134) ( 3,639) Advances to Contractors & Suppliers 894 953 922 922 922 922 922 922 922 922 922 922 Prepaid & Other Expenses 406 406 2 2 2 2 2 2 2 2 2 2 Advance Income Tax 29 0 0 0 0 0 0 0 0 0 0 Advances to Employees 216 217 207 207 207 207 207 207 207 207 207 207 Stock & Stores 1,215 1,070 2,044 2,044 2,044 2,044 2,044 2,044 2,044 2,044 2,044 2,044 Other Assets 2,265 1,401 401 401 401 401 401 401 401 401 401 401 Current Assets 20,007 15,985 10,383 6,849 6,500 6,430 6,393 6,682 7,250 8,072 9,185 10,750 TOTAL ASSETS 48,346 46,481 38,433 40,030 46,187 50,700 52,640 52,232 51,967 51,979 52,307 53,113 Equity 11,804 12,272 9,471 10,661 12,328 13,569 14,263 14,383 14,503 14,623 14,743 14,863 Net Surplus/(Deficit) ( 32,156) ( 25,673) - 297 ( 40) ( 321) ( 556) ( 580) ( 339) 285 1,296 2,718 Appraisal Surplus 5,995 5,995 5,995 5,995 5,995 5,995 5,995 5,995 5,995 5,995 5,995 5,995 Deposit Works Fund 502 550 381 381 381 381 381 381 381 381 381 381 Capital & Reserves ( 13,841) ( 6,843) 15,847 17,333 18,664 19,623 20,083 20,178 20,539 21,284 22,415 23,956 Government Loan 7,055 5,703 5,703 6,187 6,941 7,411 7,516 7,208 6,845 6,440 6,035 5,694 Foreign Loan 7,346 7,815 7,815 10,777 14,932 17,941 19,232 18,940 18,439 17,783 17,040 16,282 Long Term Liabilities 14,401 13,518 13,518 16,963 21,873 25,352 26,749 26,148 25,284 24,223 23,075 21,976 Security Deposit - Consumers 1,487 1,594 1,333 1,333 1,333 1,333 1,333 1,333 1,333 1,333 1,333 1,333 GPF/CPF 97 124 124 124 124 124 124 124 124 124 124 124 PensionFund 110 123 123 123 123 123 123 123 123 123 123 123 Medium Term Liabilities 1,694 1,841 1,580 1,580 1,580 1,580 1,580 1,580 1,580 1,580 1,580 1,580 Security Deposit - Contractors & Suppliers 252 241 218 218 218 218 218 218 218 218 218 218 Taxes and Duties 531 531 ( 0) 160 - - - - 130 336 545 765 Current Portion of Long Term Liabilities 1,141 683 547 547 547 547 547 547 547 547 547 547 Bank Loan 10 10 ( 0) ( 0) ( 0) ( 0) ( 0) ( 0) ( 0) ( 0) ( 0) ( 0) Accounts Payable - BPDB & PGCB 31,613 28,494 5,615 2,120 2,197 2,271 2,356 2,452 2,561 2,683 2,819 2,962 Accounts Payable - Others 3 4 4 4 4 4 4 4 4 4 4 4 Accounts Payable - Contractors & Suppliers 655 656 328 328 328 328 328 328 328 328 328 328 Uncollected VAT 1,046 971 776 776 776 776 776 776 776 776 776 776 Other Liabilities 9,101 5,367 - - - - - - - - - - Under Deduction on DSL 1,740 1,008 - - - - - - - - - - Current Liabilities 46,091 37,965 7,489 4,154 4,071 4,145 4,230 4,326 4,565 4,893 5,238 5,602 TOTAL LIABILITIES AND CAPITAL 48,346 46,481 38,433 40,030 46,187 50,700 52,641 52,232 51,967 51,979 52,307 53,114



Appendix 4.6 DPDC Projected Cash Flow (TK mill) – at 6% per annum sales growth Projected

Year ended 30 June 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Cashflows from Operating Activities Profit / (loss) for year 49 1,039 457 (336) (282) (235) (25) 371 961 1,556 2,187 Adjustments : Depreciation 312 328 387 814 964 1,167 1,307 1,366 1,341 1,315 1,290 Provision for Bad Debts - - 317 336 356 377 400 424 449 476 505 Financial Charges 280 406 470 987 1,223 1,453 1,568 1,601 1,545 1,474 1,400 Provision for Pensions 304 286 269 259 257 254 252 249 246 Other

641 1,774 1,934 2,087 2,531 3,022 3,507 4,016 4,548 5,070 5,628 Working Capital Changes Stores (57) 974 - - - - - - - - - Trade Debtors (1,121) 3,142 923 (235) (249) (264) (280) (296) (314) (333) (353) Other Receivables (816) (58) 789 (11) (12) (13) (13) (14) (15) (16) (17) Trade Creditors and Other Payables 867 (3,119) (3,495) 77 74 85 96 109 122 136 143

(1,127) 938 (1,782) (169) (187) (192) (197) (202) (207) (213) (226) Cashflows after Working Capital (485) 2,712 152 1,918 2,344 2,830 3,311 3,814 4,341 4,857 5,402 Additions to Deferred Credit Security Deposits Received Employee Retirement Benefits Paid (304) (286) (269) (259) (257) (254) (252) (249) (246) Financial Charges Paid 280 406 (1,031) (1,361) (1,598) (1,706) (1,678) (1,634) (1,576) (1,505) (1,431) Tax Paid (160) - - - - (130) (336) (545) Cashflows from Operations (205) 3,118 (1,184) 110 477 865 1,376 1,925 2,383 2,767 3,180

Cashflows from Investing Activities Sale of Fixed Assets Capital Expenditure (1,884) (2,484) (4,956) (6,946) (5,172) (2,892) (500) (500) (500) (500) (500)

(1,884) (2,484) (4,956) (6,946) (5,172) (2,892) (500) (500) (500) (500) (500) Cashflows from Financing Activities Equity injection 614 468 1,189 1,667 1,241 694 120 120 120 120 120 Receipt of Long Term Loans 919 3,767 5,279 3,931 2,198 380 380 380 380 380 Repayments of Long Term Loans (884) (321) (369) (452) (801) (980) (1,244) (1,441) (1,528) (1,479)

1,533 (416) 4,635 6,576 4,721 2,090 (480) (744) (941) (1,028) (979)

Increase / (Decrease) in Cash and Equivalents during Year

(556) 218 (1,504) (259) 25 64 396 681 942 1,240 1,700

Cash at beginning of Year 201

(1,303) (1,563) (1,538) (1,474) (1,078) (397) 545 1,785

Cash and Cash Equivalents at end of Year 2,644 201 (1,303) (1,563) (1,538) (1,474) (1,078) (397) 545 1,785 3,485



Appendix 4.7 DPDC Projections Summary – using Power System Master Plan sales growth Actual Projected

Year ended 30 June 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Units Sold (GWhs) 3,871 3,915 4,361 4,854 5,403 5,970 6,591 7,276 8,026 8,852 9,693


Revenue *TK mill) 13,249 13,766 16,639 18,520 20,612 22,777 25,146 27,761 30,620 33,774 36,982


EBITDA (TK mill) 475 981 1,379 1,707 2,392 3,148 3,943 4,819 5,770 6,770 7,818

EBIT (TK mill) 345 986 1,059 966 1,509 2,071 2,735 3,563 4,550 5,588 6,674

Profit Before Tax (TK mill) 49 1,039 589 (21) 286 618 1,167 1,961 3,005 4,114 5,274

Cashflow Summary

Net Cash from Operating Activities (TK mill) (205) 3,118 (1,136) 293 953 1,542 2,278 3,034 3,803 4,548 5,344



Increase / (decrease) in cash (TK mill) (556) 218 (1,457) (77) 501 740 1,297 1,790 2,362 3,020 3,865









Debt/(Debt + Equity) 2570% 203% 49% 53% 55% 55% 54% 51% 48% 45% 41%

Debt Service Cover Ratio (EBITDA/Debt Service) (1.7) 2.1 1.0 1.0 1.2 1.3 1.5 1.7 1.9 2.2 2.7




Return (PBT) on Equity (0.4%) (15.2%) 2.2% (0.1%) 0.9% 1.9% 3.4% 5.3% 7.5% 9.3% 10.6%



Appendix 4.8 DPDC Projected Profit and Loss Accounts (TK mill) – using Power System Master Plan sales growth

Actual Projected Year ended 30 June 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Energy Sales (GWHs) 3,871 3,915 4,361 4,854 5,403 5,970 6,591 7,276 8,026 8,852 9,693



Operating Profit 162 653 993 893 1,428 1,981 2,636 3,453 4,429 5,454 6,528 Non operating income 183 142 66 73 81 90 99 110 121 133 146 Dividend Income - 191 Earnings Before Interest and Tax 345 986 1,059 966 1,509 2,071 2,735 3,563 4,550 5,588 6,674

Interest Expense 280 406 470 987 1,223 1,453 1,568 1,601 1,545 1,474 1,400 Margin before extraordinary items 66 580 589 (21) 286 618 1,167 1,961 3,005 4,114 5,274 Extraordinary items (16) 460

Profit / (Loss) for the Year 49 1,039 589 (21) 286 618 1,167 1,961 3,005 4,114 5,274 Income Tax - 0 206 - 100 216 408 686 1,052 1,440 1,846 Profit / (Loss) after tax 49 1,039 383 (21) 186 402 759 1,275 1,953 2,674 3,428



Appendix 4.9 DPDC Projected Balance Sheet (TK mill) – using Power System Master Plan sales growth Projected


Utility Plant-in-Service 18,778 18,920 20,732 34,490 40,007 47,327 52,874 56,019 56,628 57,162 57,693 58,223 Accumulated Depreciation ( 7,252) ( 7,579) ( 7,579) ( 7,966) ( 8,780) ( 9,744) ( 10,911) ( 12,219) ( 13,584) ( 14,926) ( 16,241) ( 17,531) Fixed Assets 11,527 11,341 13,153 26,524 31,227 37,583 41,963 43,800 43,044 42,236 41,452 40,693 Project in Progress 14,381 16,972 13,758 5,518 7,320 5,547 3,145 609 533 531 531 531 Investment 2,432 2,183 1,140 1,140 1,140 1,140 1,140 1,140 1,140 1,140 1,140 1,140 Cash 2,644 2,701 201 ( 1,256) ( 1,333) ( 832) ( 91) 1,206 2,995 5,357 8,377 12,242 Accounts receivable - Consumers 9,687 6,545 4,834 4,111 4,575 5,092 5,627 6,212 6,858 7,564 8,343 9,136 Accounts receivable - Other 3,094 3,152 977 197 220 244 270 298 329 363 400 439 Accounts receivable - VAT 1,064 989 794 794 794 794 794 794 794 794 794 794 Provision for Bad & Doubtful Debts ( 1,478) ( 1,478) 0 ( 333) ( 703) ( 1,115) ( 1,571) ( 2,074) ( 2,629) ( 3,241) ( 3,917) ( 4,657) Advances to Contractors & Suppliers 894 953 922 922 922 922 922 922 922 922 922 922 Prepaid & Other Expenses 406 406 2 2 2 2 2 2 2 2 2 2 Advance Income Tax 29 0 0 0 0 0 0 0 0 0 0 Advances to Employees 216 217 207 207 207 207 207 207 207 207 207 207 Stock & Stores 1,215 1,070 2,044 2,044 2,044 2,044 2,044 2,044 2,044 2,044 2,044 2,044 Other Assets 2,265 1,401 401 401 401 401 401 401 401 401 401 401 Current Assets 20,007 15,985 10,383 7,089 7,129 7,760 8,605 10,012 11,924 14,413 17,574 21,530 TOTAL ASSETS 48,346 46,481 38,433 40,270 46,816 52,029 54,852 55,561 56,640 58,320 60,697 63,894 Equity 11,804 12,272 9,471 10,661 12,328 13,569 14,263 14,383 14,503 14,623 14,743 14,863 Net Surplus/(Deficit) ( 32,156) ( 25,673) - 383 362 548 950 1,708 2,983 4,936 7,611 11,039 Appraisal Surplus 5,995 5,995 5,995 5,995 5,995 5,995 5,995 5,995 5,995 5,995 5,995 5,995 Deposit Works Fund 502 550 381 381 381 381 381 381 381 381 381 381 Capital & Reserves ( 13,841) ( 6,843) 15,847 17,419 19,065 20,492 21,588 22,467 23,862 25,935 28,729 32,277 Government Loan 7,055 5,703 5,703 6,187 6,941 7,411 7,516 7,208 6,845 6,440 6,035 5,694 Foreign Loan 7,346 7,815 7,815 10,777 14,932 17,941 19,232 18,940 18,439 17,783 17,040 16,282 Long Term Liabilities 14,401 13,518 13,518 16,963 21,873 25,352 26,749 26,148 25,284 24,223 23,075 21,976 Security Deposit - Consumers 1,487 1,594 1,333 1,333 1,333 1,333 1,333 1,333 1,333 1,333 1,333 1,333 GPF/CPF 97 124 124 124 124 124 124 124 124 124 124 124 PensionFund 110 123 123 123 123 123 123 123 123 123 123 123 Medium Term Liabilities 1,694 1,841 1,580 1,580 1,580 1,580 1,580 1,580 1,580 1,580 1,580 1,580 Security Deposit - Contractors & Suppliers 252 241 218 218 218 218 218 218 218 218 218 218 Taxes and Duties 531 531 ( 0) 206 - 100 216 408 686 1,052 1,440 1,846 Current Portion of Long Term Liabilities 1,141 683 547 547 547 547 547 547 547 547 547 547 Bank Loan 10 10 ( 0) ( 0) ( 0) ( 0) ( 0) ( 0) ( 0) ( 0) ( 0) ( 0) Accounts Payable - BPDB & PGCB 31,613 28,494 5,615 2,228 2,425 2,631 2,845 3,085 3,355 3,658 3,999 4,341 Accounts Payable - Others 3 4 4 4 4 4 4 4 4 4 4 4 Accounts Payable - Contractors & Suppliers 655 656 328 328 328 328 328 328 328 328 328 328 Uncollected VAT 1,046 971 776 776 776 776 776 776 776 776 776 776 Other Liabilities 9,101 5,367 - - - - - - - - - - Under Deduction on DSL 1,740 1,008 - - - - - - - - - - Current Liabilities 46,091 37,965 7,489 4,308 4,299 4,605 4,936 5,367 5,916 6,583 7,313 8,061 TOTAL LIABILITIES AND CAPITAL 48,346 46,481 38,433 40,270 46,816 52,029 54,852 55,562 56,641 58,320 60,697 63,894



Appendix 4.10 DPDC Projected Cash Flow (TK mill) – using Power System Master Plan sales growth Actual Projected

Year ended 30 June 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Cashflows from Operating Activities Profit / (loss) for year 49 1,039 589 (21) 286 618 1,167 1,961 3,005 4,114 5,274 Adjustments : Depreciation 312 328 387 814 964 1,167 1,307 1,366 1,341 1,315 1,290 Provision for Bad Debts - - 333 370 412 456 503 555 612 675 740 Financial Charges 280 406 470 987 1,223 1,453 1,568 1,601 1,545 1,474 1,400 Provision for Pensions 304 286 269 259 257 254 252 249 246 Other

641 1,774 2,082 2,437 3,155 3,953 4,802 5,738 6,755 7,828 8,950 Working Capital Changes Stores (57) 974 - - - - - - - - - Trade Debtors (1,121) 3,142 724 (464) (517) (535) (585) (646) (706) (779) (793) Other Receivables (816) (58) 780 (22) (25) (26) (28) (31) (34) (37) (38) Trade Creditors and Other Payables 867 (3,119) (3,387) 196 207 214 239 270 302 342 342

(1,127) 938 (1,883) (291) (335) (346) (374) (407) (438) (475) (488) Cashflows after Working Capital (485) 2,712 199 2,146 2,820 3,607 4,428 5,331 6,317 7,353 8,462 Additions to Deferred Credit Security Deposits Received Employee Retirement Benefits Paid (304) (286) (269) (259) (257) (254) (252) (249) (246) Financial Charges Paid 280 406 (1,031) (1,361) (1,598) (1,706) (1,678) (1,634) (1,576) (1,505) (1,431) Tax Paid (206) - (100) (216) (408) (686) (1,052) (1,440) Cashflows from Operations (205) 3,118 (1,136) 293 953 1,542 2,278 3,034 3,803 4,548 5,344



1,533 (416) 4,635 6,576 4,721 2,090 (480) (744) (941) (1,028) (979)

Increase / (Decrease) in Cash and Equivalents during Year

(556) 218 (1,457) (77) 501 740 1,297 1,790 2,362 3,020 3,865

Cash and Cash Equivalents at beginning of Year 201 (1,256) (1,333) (832) (91) 1,206 2,995 5,357 8,377 Cash and Cash Equivalents at end of Year 2,644 201 (1,256) (1,333) (832) (91) 1,206 2,995 5,357 8,377 12,242



Appendix 4.11 DPDC Projections Summary – at 3% per annum sales growth

Actual Projected

Year ended 30 June 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Units Sold (GWhs) 3,871 3,915 4,032 4,153 4,278 4,406 4,539 4,675 4,815 4,959 5,108


Revenue *TK mill) 13,249 13,766 15,385 15,846 16,322 16,811 17,316 17,835 18,370 18,921 19,489


EBITDA (TK mill) 475 981 1,179 1,232 1,546 1,874 2,165 2,456 2,751 3,016 3,290

EBIT (TK mill) 345 986 853 481 646 773 926 1,161 1,482 1,776 2,077

Profit Before Tax (TK mill) 49 1,039 383 (507) (577) (680) (642) (440) (63) 302 677

Cashflow Summary

Net Cash from Operating Activities (TK mill) (205) 3,118 (1,210) 11 225 460 795 1,146 1,514 1,868 2,120



Increase / (decrease) in cash (TK mill) (556) 218 (1,531) (358) (227) (341) (185) (99) 73 340 641









Debt/(Debt + Equity) 2570% 203% 50% 54% 57% 58% 58% 58% 57% 55% 53%

Debt Service Cover Ratio (EBITDA/Debt Service) (1.7) 2.1 0.9 0.7 0.8 0.7 0.8 0.9 0.9 1.0 1.1




Return (PBT) on Equity (0.4%) (15.2%) 1.4% (2.7%) (3.0%) (3.6%) (3.5%) (2.4%) (0.3%) 1.1% 2.3%



Appendix 4.12 DPDC Projected Profit and Loss Account – at 3% per annum sales growth Actual Projected

Year ended 30 June 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Energy Sales (GWHs) 3,871 3,915 4,032 4,153 4,278 4,406 4,539 4,675 4,815 4,959 5,108



Operating Profit 162 653 793 418 581 707 857 1,090 1,409 1,701 2,000 Non operating income 183 142 61 63 65 66 68 70 73 75 77 Dividend Income - 191 Earnings Before Interest and Tax 345 986 853 481 646 773 926 1,161 1,482 1,776 2,077

Interest Expense 280 406 470 987 1,223 1,453 1,568 1,601 1,545 1,474 1,400 Margin before extraordinary items 66 580 383 (507) (577) (680) (642) (440) (63) 302 677 Extraordinary items (16) 460

Profit / (Loss) for the Year 49 1,039 383 (507) (577) (680) (642) (440) (63) 302 677 Income Tax - 0 134 - - - - - - 106 237 Profit / (Loss) after tax 49 1,039 249 (507) (577) (680) (642) (440) (63) 196 440



Appendix 4.13 DPDC Projected Balance Sheet – at 3% per annum sales growth Actual Projected


Utility Plant-in-Service 18,778 18,920 20,732 34,490 40,007 47,327 52,874 56,019 56,628 57,162 57,693 58,223 Accumulated Depreciation ( 7,252) ( 7,579) ( 7,579) ( 7,966) ( 8,780) ( 9,744) ( 10,911) ( 12,219) ( 13,584) ( 14,926) ( 16,241) ( 17,531) Fixed Assets 11,527 11,341 13,153 26,524 31,227 37,583 41,963 43,800 43,044 42,236 41,452 40,693 Project in Progress 14,381 16,972 13,758 5,518 7,320 5,547 3,145 609 533 531 531 531 Investment 2,432 2,183 1,140 1,140 1,140 1,140 1,140 1,140 1,140 1,140 1,140 1,140 Cash 2,644 2,701 201 ( 1,330) ( 1,688) ( 1,915) ( 2,256) ( 2,441) ( 2,540) ( 2,467) ( 2,126) ( 1,485) Accounts receivable - Consumers 9,687 6,545 4,834 3,801 3,915 4,032 4,153 4,278 4,406 4,538 4,674 4,814 Accounts receivable - Other 3,094 3,152 977 182 188 194 199 205 211 218 224 231 Accounts receivable - VAT 1,064 989 794 794 794 794 794 794 794 794 794 794 Provision for Bad & Doubtful Debts ( 1,478) ( 1,478) 0 ( 308) ( 625) ( 951) ( 1,287) ( 1,634) ( 1,990) ( 2,358) ( 2,736) ( 3,126) Advances to Contractors & Suppliers 894 953 922 922 922 922 922 922 922 922 922 922 Prepaid & Other Expenses 406 406 2 2 2 2 2 2 2 2 2 2 Advance Income Tax 29 0 0 0 0 0 0 0 0 0 0 Advances to Employees 216 217 207 207 207 207 207 207 207 207 207 207 Stock & Stores 1,215 1,070 2,044 2,044 2,044 2,044 2,044 2,044 2,044 2,044 2,044 2,044 Other Assets 2,265 1,401 401 401 401 401 401 401 401 401 401 401 Current Assets 20,007 15,985 10,383 6,716 6,160 5,730 5,179 4,778 4,457 4,302 4,406 4,805 TOTAL ASSETS 48,346 46,481 38,433 39,897 45,847 49,999 51,426 50,327 49,174 48,208 47,529 47,168 Equity 11,804 12,272 9,471 10,661 12,328 13,569 14,263 14,383 14,503 14,623 14,743 14,863 Net Surplus/(Deficit) ( 32,156) ( 25,673) - 249 ( 257) ( 834) ( 1,514) ( 2,157) ( 2,597) ( 2,660) ( 2,464) ( 2,024) Appraisal Surplus 5,995 5,995 5,995 5,995 5,995 5,995 5,995 5,995 5,995 5,995 5,995 5,995 Deposit Works Fund 502 550 381 381 381 381 381 381 381 381 381 381 Capital & Reserves ( 13,841) ( 6,843) 15,847 17,285 18,446 19,110 19,124 18,602 18,281 18,338 18,654 19,214 Government Loan 7,055 5,703 5,703 6,187 6,941 7,411 7,516 7,208 6,845 6,440 6,035 5,694 Foreign Loan 7,346 7,815 7,815 10,777 14,932 17,941 19,232 18,940 18,439 17,783 17,040 16,282 Long Term Liabilities 14,401 13,518 13,518 16,963 21,873 25,352 26,749 26,148 25,284 24,223 23,075 21,976 Security Deposit - Consumers 1,487 1,594 1,333 1,333 1,333 1,333 1,333 1,333 1,333 1,333 1,333 1,333 GPF/CPF 97 124 124 124 124 124 124 124 124 124 124 124 PensionFund 110 123 123 123 123 123 123 123 123 123 123 123 Medium Term Liabilities 1,694 1,841 1,580 1,580 1,580 1,580 1,580 1,580 1,580 1,580 1,580 1,580 Security Deposit - Contractors & Suppliers 252 241 218 218 218 218 218 218 218 218 218 218 Taxes and Duties 531 531 ( 0) 134 - - - - - - 106 237 Current Portion of Long Term Liabilities 1,141 683 547 547 547 547 547 547 547 547 547 547 Bank Loan 10 10 ( 0) ( 0) ( 0) ( 0) ( 0) ( 0) ( 0) ( 0) ( 0) ( 0) Accounts Payable - BPDB & PGCB 31,613 28,494 5,615 2,060 2,075 2,084 2,100 2,124 2,156 2,194 2,240 2,288 Accounts Payable - Others 3 4 4 4 4 4 4 4 4 4 4 4 Accounts Payable - Contractors & Suppliers 655 656 328 328 328 328 328 328 328 328 328 328 Uncollected VAT 1,046 971 776 776 776 776 776 776 776 776 776 776 Other Liabilities 9,101 5,367 - - - - - - - - - - Under Deduction on DSL 1,740 1,008 - - - - - - - - - - Current Liabilities 46,091 37,965 7,489 4,069 3,949 3,957 3,974 3,998 4,030 4,068 4,220 4,399 TOTAL LIABILITIES AND CAPITAL 48,346 46,481 38,433 39,897 45,847 49,999 51,427 50,328 49,174 48,209 47,529 47,168



Appendix 4.14 DPDC Projected Cash Flow (TK mill) – at 3% per annum sales growth

Actual Projected

Year ended 30 June 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Cashflows from Operating Activities Profit / (loss) for year 49 1,039 383 (507) (577) (680) (642) (440) (63) 302 677 Adjustments : Depreciation 312 328 387 814 964 1,167 1,307 1,366 1,341 1,315 1,290 Provision for Bad Debts - - 308 317 326 336 346 357 367 378 390 Financial Charges 280 406 470 987 1,223 1,453 1,568 1,601 1,545 1,474 1,400 Provision for Pensions 304 286 269 259 257 254 252 249 246 Other

641 1,774 1,852 1,898 2,206 2,536 2,836 3,137 3,442 3,718 4,003 Working Capital Changes Stores (57) 974 - - - - - - - - - Trade Debtors (1,121) 3,142 1,034 (114) (117) (121) (125) (128) (132) (136) (140) Other Receivables (816) (58) 795 (5) (6) (6) (6) (6) (6) (7) (7) Trade Creditors and Other Payables 867 (3,119) (3,555) 14 9 17 24 31 39 46 47

(1,127) 938 (1,726) (105) (114) (110) (107) (103) (100) (96) (100)

Cashflows after Working Capital (485) 2,712 126 1,793 2,092 2,426 2,730 3,034 3,342 3,622 3,903 Additions to Deferred Credit Security Deposits Received Employee Retirement Benefits Paid (304) (286) (269) (259) (257) (254) (252) (249) (246) Financial Charges Paid 280 406 (1,031) (1,361) (1,598) (1,706) (1,678) (1,634) (1,576) (1,505) (1,431) Tax Paid (134) - - - - - - (106) Cashflows from Operations (205) 3,118 (1,210) 11 225 460 795 1,146 1,514 1,868 2,120



1,533 (416) 4,635 6,576 4,721 2,090 (480) (744) (941) (1,028) (979)

Increase / (Decrease) in Cash during Year (556) 218 (1,531) (358) (227) (341) (185) (99) 73 340 641 Cash at beginning of Year 201 (1,330) (1,688) (1,915) (2,256) (2,441) (2,540) (2,467) (2,126) Cash at end of Year 2,644 201 (1,330) (1,688) (1,915) (2,256) (2,441) (2,540) (2,467) (2,126) (1,485)



Appendix 4.15: DPDC Draft Business Plan

DRAFT High Level business Plan V0.1 1ALL FINANCIALS AND TARGETS UNDER REVIEW OCTOBER 2007

Dhaka Power Distribution Company (DPDC) Business Plan Presented November 2007

(Originally produced in 2005, reviewed & updated)

Draft - targets to be reviewed, refined and signed on to at early meeting of new Executive

Corporatisation of Dhaka Electric Supply Authority

ADB TA No. 3978- BAN

THIRD DRAFT


DPDC Draft Business Plan Contents

• Background

• Vision

• Mission

• Key External Performance Measures

• Key Internal Objectives

• Proposed High Level Organisational Structure and Staffing

• Financial headlines

• Financial Model Summaries

• Financial Action Plan

• Human Resources Action Plan

• Technical Actions Plan

• Operations Action Plan



DRAFT High Level business Plan V0.1 3

DPDC Business PlanBackground

DPDC has been established as a Corporatised Electricity Distribution Company in Dhaka, ultimately to serve the customers currently served by DESA. DPDC has a desire to develop into a company that is respected in Bangladesh for the quality of service it delivers to its customers and for the Corporate Governance and codes of ethics and probity under which it operates. Through its success it will demonstrate the benefits of Corporatisation for all stakeholders, and particularly for the people of Bangladesh.

The Directors of DPDC recognise the challenges in achieving this transformation. They commit to working in co-operation with all stakeholders to deliver this vision, actively seek and welcome the constructive input of Government, Shareholders, Advisors, Donors, Suppliers, Customers, Trades Unions and, most importantly, Staff in taking the vision forward.

The Directors commit to achieving the highest standards of safety and health of DPDC employees and the public, taking a responsible approach to environmental issues and improving the training, facilities and general working conditions in the company, whilst operating as a business creating and improving shareholder value.


DPDC Business PlanVision

… an adequate supply of electricity to the people of Dhaka which is

affordable, and continuous, delivered by an organisation which respects

the environment, the health, safety and welfare of its staff and operates to

the highest standards of corporate governance and business ethics …




DPDC Business PlanMission

DPDC will develop and operate its network and processes to enable it to effectively deliver to its customers a supply of electricity that is:

Reliable

Affordable

Accessible to all

In a way that is sustainable in business, ethical and environmental terms.

This will be achieved through effective development of its people, effective communication of the corporate goals and proper recognition of achievement


DPDC Business PlanKey External Performance Measures

• Achieve a 5% Return (EBIT) on existing Operational Assets within 5 years

• All new capital expenditure to be justified on the basis of achieving a return greater than the cost of capital

• Create and maintain a positive cashflow from Year 1

• Maintain a debt service cover ratio of 1.3

• Maintain a gearing ratio (debt/(debt plus equity) below 60% over first ten years

• By 2012 support all network investment from own balance sheet (i.e self financing ratio > 100%

• Publish and Implement Guaranteed Standards of Customer Service• Reduce Customer Interruptions by 20% p.a.• Reduce Customer Interruption Time by 30% p.a.

(measurement systems must be introduced)

• Implement Safety Systems to ensure that within three years there are zero accidents causing absence from work of greater than three days

• Reduce system losses by at least 1% per annum




DPDC Business PlanKey Internal Objectives

• Manage Collection ratio to a level of 99%

• Develop a business plan and annual capex and opex budgets for each managed unit by 31 March 2008

• Achieve Operating costs to business plan targets within first year of operation

• Implement capital investment appraisal and authorisation process by 30 March 2008

• Implement organisational structure to deliver key performance measures by 1 April 2008

• Implement training programmes to address all key skills shortages by 1 April 2008

• Deliver headcount reductions necessary to achieve operating cost targets by 2106, taking into account salary award and predicted future awards.

• Implement proposals to address Guaranteed and Overall Standards of Customer Service by 1 January 2009

• Implement network maintenance programme by 1 January 2009


DPDC Business Plan Financial Headlines

• Assumed unit sales increase of 2% per annum

• Reduce outstanding Receivables to 2 months revenues

• Reduce system losses by 0.75% per annum from current value to target value of x%

• In addition to the current Projects in Progress, invest capital of ~ x MTk per annum to maintain network performance

• Commit annual expenditure of ~ x MTk on routine network maintenance



DPDC Business PlanKey Assumptions

• Three sales growth scenarios

– High - per Power System master Plan 9.5 -11.4% per annum

– Medium - 6% per annum

– Low – 3% per annum

• System losses – phased reduction from 25%to 13% by 2016

• Revenue per unit sold Tk 3.77

• Cost per unit purchased Tk 2.34

• Capital Expenditure – Tk 20 billion over 1st four years


Key Points about the Proposed Organisation• The preferred method of approach is to appoint the Managing Director and Executive

Directors and ensure that they contribute to the design of the new organisation for DPDC and are party to the appointment of their own subordinate managers. The Directors should ‘own’ the organisation structure that is put in place, since it is they who will be accountable for its performance.

• The principles which should guide the development of the new organisation are set out in two previously circulated reports:

– Board Composition, Structure and Governance 7 June 2005 Reference DESA_DL_HR90– Organisation Review 16 June 2005 Reference DESA_DL_HR91

• The final report will expand on these discussion documents

• The organisation chart presented below contains some features that are common and others that distinguish it from the approach adopted in previous power sector corporatisations. The new structure is based on

– Equipping DPDC to operate as an autonomous, commercial entity– Greater devolution of authority, fewer levels of management command in the structure– Fewer, larger operating units– Anticipating developments in the application of IT and the adoption of new working

methods




An organogram designed to deliver the change – key points

• Operations Director. It is recommended that a Director is appointed who has responsibilities for the management of field resources. Given the scale of the changes that have to be introduced to the way work is allocated, executed and accounted for, a Board level appointment is recommended.

• Technical Director. This Board level appointment will be responsible for the planning, design, operation and maintenance of the network. Evidence indicates that the planning and execution of essential technical functions often take second place to short term operational pressures – which has consequences for the long term performance of the network and value of the asset.

• Human Resources has been structured as a separate function, headed at the highest level, given its pivotal role in supporting change management and developing the capability of those working for DPDC. Unless this is adopted DPDC has little chance of success.

• MIS. This has been allocated to the Finance Director on the grounds that in the short to medium term (1 to 5 years), the focus will be on finance and commercial systems and reporting. For the longer term, this role may be separated out as a function head reporting direct to the Managing Director.


Key Points about the Proposed Organisation

• New or rapidly changing areas of work relating to regulation and regulatory reporting, tariff formulation, connection charges and related ‘commercial’ activities have been allocated to the Finance Director. As more commercial relationships develop between the new sector corporate entities, this may be separated out as a distinct function reporting direct to the Managing Director.

• Company Secretarial (including Companies’ Act compliance, legal, governance) and Administrative work (including property) has been grouped under one function head.

• DPDC will be required to meet tough technical, financial and commercial objectives. These will have to be met in a difficult and complex political environment. For the time being it is assumed that the corporate affairs/public relations/stakeholder relations functions will be undertaken by the MD with a small staff.

• In support of the proposed organogram, draft job descriptions for the Executive Directors and Function Head posts, together with their direct reports, have been prepared.



Proposed OrganisationBoard, Executive Team and Head Office

DPDC Board

Chairman

Managing Director (1)

Non executive members

• Independent• Government/

shareholder

Procurement Committee

HR Committee

Audit Committee

Engineering Director (2)

Operations Director (3)

Finance Director (4)

HR Director (5)

Company Secretary (6) GM, Audit (14)

DGM, Public Relations (15)

GM, Systems Development (7)

GM, Systems Operations (8)

GM, Procurement & Contracts (9)

GM, Network Operations (10)

GM, Customer Services (11)

GM, Finance and Accounts (12) GM, HR (13)

DGM, Tariffs and Pricing

DGM, System Plan and Design

(16)

DGM, Major Projects (17)

DGM, Policy & Standards (18)

DGM, System Control (19)

DGM, System Protection (20)

DGM Grid O&M (21)

DGM, Procurement & Contracts (22)

See Circle level organogram

DGM, Network Ops x 8 (23)

DGM, Customer Services x 8

(26)

DGM, Health, Safety and Envir

(24)

DGM, Security (25)

DGM, Mgt Accounting (28)

DGM, Corp Financial

Planning (27)

DGM, MIS (29)

DGM, Training and Dev (30)

DGM, Employee

Relations (31)

DGM, Administration

(32)

Chief Medial

Officer (-)

DGM, Regulation (33)


Board ‘Modus Operandi’

ChairmanNon-Exec Directors

Managing Director

Operations Director

Technical Director

Finance Director

Co Sec/Administration

HR & Admin Director

Internal Audit

DPDC Board

HR Sub Committee

Audit Sub Committee

The Board should oversee the operations of DPDC through the

formation of Sub Committees with delegated authorities, rather than the full Board exercising detailed day-to-

day control of the executive




Proposed OrganisationCircle level and field resources

Key characteristics of the proposed organisation• Eight (8) Circles• Work functionally organised into field operations

(technical) and customer service (commercial)• The boxes represent critical functions – they may not

necessarily be discrete sections in every Circle

See organogram for Board, Executive Team and Head Office

DGM, Field Operations

DGM, Customer Service

Field resource management

Security

Overhead lines and cables Substation plant

New connections to the network/ augmented

supplies

Metering Meter readingCustomer records

Billing Collection

Technical work• Operation and maintenance of the Circle's power

distribution network. To include both routine, planned preventive maintenance and dealing promptly and efficiently with the restoration of supplies following incidents/faults.

• Planning for and connecting new customers.Resourcing

• Each Circle to consist of not less than four primary substations.

• Target staffing 1xXEN and 1xSAE (or equivalent under the new service rules) per primary substation.

• Staff levels based on work volumes per substation.

Commercial work• Set up and maintenance of customer records,

obtaining readings of electricity consumption, prepare and deliver bills, collect monies.


DPDC Business Plan Financial Model

• An high level financial model has been prepared under ADB TA 3978-BAN to summarise the financial implications for the successor DESA business over 10 years.

• The following pages present the ‘headline’ output of the model.



DPDC Business PlanProfitability

-1000

0

1000

2000

3000

4000

5000

6000

2008 2009 2010 2011 2012 2013 2014 2015 2016

TK

mil

l

EBITDA(operational cashflow)EBIT

Profit Before Tax

DPDC Business PlanProfitability

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

2008 2009 2010 2011 2012 2013 2014 2015 2016

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%





DPDC Business PlanCashflow

-8000

-6000

-4000

-2000

0

2000

4000

2008 2009 2010 2011 2012 2013 2014 2015 2016

Year

TK

mil

l

Cash Flow

Capex

CumulativeCash Flow


Staffing Targets

• Setting a very detailed targets for staffing in DPDC is impractical at this stage. Overall targets have been proposed.

• For this draft plan, the following has been prepared:

– High level organisation. One chart for head office and one for a typical local unit.

– A broad overall estimate of the number of staff required in a future DPDC, depending on how aggressive the targets are when they are set. This is shown in the following slide.

• Alongside decisions on organisation the debate on approaches to implementing the new structure must continue. The approach to implementation needs to be informed by the work to be done on analysing the existing workforce. This will enable an assessment of the scope there is to achieve change by natural wastage – not replacing those who retire or leave, what type of early release scheme would be most effective were one to be introduced etc




DPDC Business PlanDraft Action Plans - Notes

• These action plans have been prepared on the basis that DPDC has been established as a legal corporate entity, with key Directors appointed and in post.

• They represent a first set of high level actions for the senior managers of DPDC to address. As the management team progressively takes control they will be expanded and refined. When agreed, they can be used as a management tool and reviewed at regular meetings by the senior management team to assess progress against target.

• The actions are all allocated to the highest level owners at this stage and one of the first steps should be to reallocate to the appropriate levels within each directorate / division as they are appointed, in accordance with a scheme of delegated authorities.

• Target dates that are realistic should be proposed and these should be reviewed at an early workshop to check cross dependencies between tasks and gain sign on to the business plan by all stakeholders.

• As new appointments are made, further detailed level action plans should be produced as control documents


DPDC Business PlanFinancial - Example Action Plan

Ref Action Owner Target Date

Completion Date

F1 Carry out business based review of all capital investment plans within DPDC FD

F2 Prepare operating budgets for all sections of DPDC targeting headline cost reductions FD

F3 Implement budget monitoring process at cost centre level FD

F4 Implement process for authorising capital expenditure at project level FD

F5 Prepare timely management accounts FD

F6 Identify all budget holders / controllers from delegated authority and ensure information flow FD

F7 Implement internal audit procedures FD

F8 Standardise meter reading, billing and collection arrangements FD

F9 Open appropriate banking arrangements FD

F10 Implement financial asset management process FD

F11 Review MIS requirements FD

F12 Implement MIS system to address business needs FD

F13

F14

F15

F16

F17

F18

F19

F20




DPDC Business PlanOperations - Example Action Plan


Completion Date

O1 Implement new structure OD

O2 Work with Technical Director to deliver technical requirements OD

O3 Work with Finance Director to deliver Finance requirements OD

O4 Implement staff communications plan OD

O5 Develop reporting processes to headquarters on achievement against targets OD

O6 Develop data gathering processes to report on GS / OS requirements OD

O7 Identify local equipment / transport and tools needs OD

O8 Develop local stores and material arrangements OD

O9 Prepare local programmes to deliver maintenance requirements OD

O10 Review ‘regional’ staff skills OD

O11 Develop staff development programme OD

O12 Nominate staff to receive technical training OD

O13 Nominate staff to receive financial training OD

O14 Implement regular safety briefings OD

O15 Implement regular business briefings OD

O16

O17

O18

O19

O20


DPDC Business PlanHuman Resources - Example Action Plan


Completion Date

HR1 Engage in Dialogue to reach understanding with stakeholders Power Secretary / MD DPDC

HR2 Appoint new Executive Directors in line with good corporate governance practice Power Secretary

HR3 Deliver Induction and Clear Brief to Executive Directors Power Secretary

HR4 Recruit high quality Managers in accordance with good practice Board

HR5 Confirm high Level Organisational Structure Board

HR6 Confirm Board ‘modus operandi’ (see document HR 90)

HR7 Carry out stakeholder briefings HR / Board / Unit Managers

HR8 Develop longer term communication plan HR / ManCom

HR9 Identify critical skills/expertise gaps Functional Heads

HR10 Develop internal staff assessment process HR Director

HR11 Prepare external recruitment process HR Director

HR12 Implement recruitment process HR Director

HR13 Complete key appointments HR / Board – HR

HR14 Confirm remaining organisation structure Directors

HR15 Develop long term plan for dealing with surplus staff based on review of existing staff profile HR Director / Board

HR16 Identify surplus staff and develop detailed plan for their utilisation HR / Directors / Board – HR

HR17 Develop training plan to address skills shortcomings of existing staff Directors

HR18

HR19

HR20




DPDC Business PlanTechnical - Example Action Plan


Completion Date

T1 Carry out accurate current condition assessment of asset TD

T2 Implement routine maintenance programme TD

T3 Identify detailed needs for operational expenditure TD

T4 Prepare process for authorising capital investment plans TD

T5 Complete compilation of accurate network asset register TD

T6 Produce and verify accurate single line network diagrams TD

T7 Implement effective Safety Rules TD

T8 Implement effective network operational procedures TD

T9 Produce appropriate standards and specifications for items on DESA-Co network TD

T10 Implement appropriate recording methods to report on Guaranteed and Overall Standards TD

T11 Implement effective, transparent and auditable procurement processes TD

T12 Develop metering specifications to support revenue collection improvements TD

T13 Implement / enforce DPDC standards of workmanship on network TD

T14 Implement technical losses review and set loss reduction programme TD

T15 Identify operational stock needs for routine business TD

T16 Implement process to deal with new connections to comply with Guaranteed Standards TD

T17 Implement technical training programme TD

T18 Develop and implement Environmental Policy TD

T19 Implement a standards / safety compliance audit process TD

T20 TD



Appendix 5.1: DESA - Existing Organogram

DY. DIRECTOR

* TEMPORARY POST AGAINST P.P.

M. ACCOUNTING

DY. DIRECTOR

F. ACCOUNTING

BUDGET

C.S.D

(DEV)

NOTE : S & D = SALES & DISTRIBUTION

XEN-7

DY. DIRECTOR

DY. DIRECTAUDIT

CENTRAL NORTH SOUTH FINANCEDY. DIRECTOR DY. DIRECTOR DY. DIRECTOR DY. DIRECTOR

SHAMIBAG DEMRADIRECTOR

XEN-6 AUDIT

S.GONJ

XEN-5 XEN XENS & D S & D

S & D(SOUTH) SHRE.B. NAGAR AMRANGIRCH MAGBAZAR KHILGOAN B. BAZAR MANICNAGAR KAZLA

XENDIST.PLNG. S & D S & D S & D S & D S & D S & D S & D

XEN XEN-4 XEN XEN XEN XEN XEN XEN XEN

TEJGOAN SEGUNBAGICHA NARINDA MUGDHARARA JURAIN FATULLAHS & D S & D S & D RAO

(NORTH) METERING DIV. DHANMONDI PARIBAG

ADDL. DIRECTOR ADMINISTRATDIST.PLNG. SYS. PROT.& S & D S & D S & D S & D S & D

XEN XEN XEN XEN XEN XEN

SHAYAMPUR N.GONJ (WEST)PLNG. DY. DIRECT

XEN XEN XEN-3 XEN XEN

SATMASJID AZIMPUR TONGI (WEST) RAJARBAG BANSHAL BASABOS & D S & D S & D FINANCE

CORPOR. & PROGRM. DIVISION-2 DIVISION-5 DIVISION-6DEVELOPMENT S & D S & D S & D S & D S & D

XEN XEN ADDL. DIRECTORXEN/DD SYSTEM PLAN. GRID (SOUTH) DEVELOPMENT DEVELOPMENT

XEN XEN XEN XEN XEN XEN

N.GONJ( EAST) DY. DIRECTADMINISTRAT

XEN XEN XEN-2 XEN XEN XEN

JIGATOLA TONGI (EAST) KAKRAIL LALBAG KAMLAPUR POSTOGOLAS & D ACCOUNTS

PLANNING DIVISION-1 DIVISION-3 DIVISION-4 SHAMOLYS & D S & D S & D S & D S & D S & D

XEN ADDL. DIRECTORDESIGN PROJECT GRID (NORTH) DEVELOPMENT DEVELOPMENT DEVELOPMENT S & D

XEN XEN XEN XEN XEN XENXEN XEN XEN XEN-1 XEN XEN XEN XEN

PROJECTNARAYANGONJ FINANCE & ACCT P & S ANALYST ADMINISTRAT

POWER)AZIMPUR TONGI SEGUNBAGICHA LALBAG MOTIJHEEL POSTOGOLA

SR. SYSTEM DIRECTORCPD PLANNING GRID CIRCLE SCADA (9TH & 10TH (GIETC) OTHER SATMASJID

SE (CS) SE (CS) SE (CS) SE (CS) DIRECTOR DIRECTORSE* SE SE (CS) SE (CS) SE (CS) SE (CS)

Dy. DIRECTOR Dy. DIRECTORCOMM COMM

DIRECTOR SE SE SE SE*

SECRETARYDY. DIRECTOR DIR. ADMN NORTH SOUTH SR. MEDICAL

ADMINISTRATION OFFICER

CHIEF ENGINEER NORTH SOUTHADDITIONAL ACE ACE

ENGG & COMM FINANCE ADMINISTRATION

ADDITIONAL GM GM

DHAKA ELECTRIC SUPPLY AUTHORITY(ORGANOGRAM SHOWING POSITION DOWN TO XEN / DD & EQUIVALENT)

CHAIRMAN

MEMBER MEMBER MEMBER

C.S.D( REVENUE)

MEDICAL OFFICER (N)

MEDICAL OFFICER (S)

SYS.ANA. =2DD/PROG. =4



Appendix 5.2: Permanent Employees - Listed by Designation

Sl. Job Title Grand Total

1 General Manager 1

2 Additional Chief Engineer 1

3 Superintending Engineer 14

4 Executive Engineer 61

5 Sub Divisional Engineer 95

6 Assistant Engineer 46

7 Director, Admin 1

8 Additional Director, Admin 1

9 Deputy Director, Admin 4

10 Assistant Director, Admin 9

11 Director, Finance & Accounts 2

12 Additional Director, Finance & Accounts 3

13 Deputy Director, Accounts 10

14 Assistant Director, Finance & Accounts/ Internal Audit & Commercial 27

15 Deputy Director, Duty Free & Store Management 1

16 Store Officer 4

17 Senior Medical Officer 1

18 Medical Officer 2

19 System Analyst 1

20 Programmer 2

21 Computer Operation Supervisor 1

22 Assistant Programmer 2

23 Sr. Computer Operator 1

24 Sub-Assistant Engineer 192

25 Accountant 44

26 Data Entry Supervisor 1

27 Upper Division Assistants 81

28 Assistant Accountant 34

29 Senior Accounts Assistant 183

30 Steno-Grapher 23

31 Steno-Typist 26

32 Lower Division Assistant Cum Typist 75

33 Sr. Data Entry Control Operator 10

34 Computer Operator 3

35 Data Entry/Control Operator 14

36 Junior Accounts Assistant 90

37 Complain Supervisor-D 7

38 Complain Supervisor-C 4

39 Complain Supervisor-B 14




40 Complain Supervisor-A 7

41 Foreman-D 4

42 Foreman-C 18

43 Foreman-B 38

44 Foreman-A 48

45 Lineman-C 127

46 Lineman-B 275

47 Lineman-A 286

48 Electrician-C 33

49 Electrician-B 15

50 Electrician-A 35

51 Switch Board Attendant (SBA)-D 48

52 Switch Board Attendant (SBA)-C 89

53 Switch Board Attendant (SBA)-B 50

54 Switch Board Attendant (SBA)-A 44

55 Supervisor (Data / Consumer) 6

56 Assistant Supervisor (Data / Consumer) 21

57 Senior Meter Inspector 20

58 Meter Inspector 60

59 Meter Reader 123

60 Equipment Operator 18

61 Driver 124

62 Cable Jointer-D 1

63 Cable Jointer-C 6

64 Cable Jointer-B 1

65 Cable Jointer-A 6

66 Store Keeper-C 10

67 Store Keeper-B 19

68 Store Keeper-A 30

69 C.A. Cum L.D.A. 7

70 Transport Supervisor 6

71 Tempo Driver 22

72 Security Supervisor 7

73 Pesker 2

74 Meter Mechanic-B 7

75 Meter Mechanic-A 2

76 Painter-C 1

77 Painter-B 1

78 Chainman 2

79 Gestetner Operator 2




80 Welder-B 1

81 Power Plant Attendant 1

82 Turner-B 1

83 Fitter-C 1

84 Fitter-B 1

85 Telephone Operator 1

86 Pump Operator 1

87 Pharmacist 3

88 Draftsman-B 2

89 Sr. Staff Nurse 1

90 Jr. Staff Nurse 3

91 Lineman Helper 95

92 Electrician Helper 7

93 Cable Jointer Helper 9

94 M.L.S.S. 73

95 Sweeper 30

96 Gardener 3

97 Security Guard 112

98 Estimator

99 Security Inspector

100 Dispatch Rider

101 Process Server

102 Assistant Sub Inspector

103 Surveyor

104 Security Sub Inspector

105 Amateur Welder-A

106 Carpenter-B

107 Masson-B

108 Painter

109 Launch Driver

110 Speed board Driver

111 Black Smith-C

112 Black Smith-B

113 Carpenter-A

114 Masson-A

115 Plumber-A

116 Assistant Launch Driver

117 Auto Electrician

118 L.D.A. Cum Record Keeper

119 Fiter-A




120 Liftman-A

121 Draftsman-C

122 J.A.A Cum Typist

123 Constable

124 Storage Helper

Grand Total 3057



Appendix 5.3: Permanent Employees - Listed by Pay (according to national scale)

Number of Employees Scale NPS'05

Number of Employees

Sanctioned Posts Technical Non-Technical

Class

2 19,300-22,100/- 1 General Manager 1 1 Class I

3 16,800-20,700/- 1 Additional Ch. Engr 1 1 Class I

Director, Admin 1 1

Director, Finance & Accounts 2 2

4 15,000-19,800/- 16

Superintending Engineer 13 13

Class I

Additional Director, Admin 1 1

Additional Director, Finance & Accounts

3 3

Deputy Director, Accounts 10 10

Deputy Director, Admin 4 4

Deputy Director, Duty Free & Store Management

1 1

Executive Engineer 59 59

5 13,750-19,250/- 79

System Analyst 1 1

Class I

Assistant Director, Admin 5 5

Assistant Director, Finance & Accounts/ Internal Audit

14 14

Computer Operation Supervisor 1 1

Programmer 1 1

Store Officer 2 2

6 11,000-17,650/- 108

Sub Divisional Engineer 85 85

Class I

Assistant Engineer 34 34 Class I

Foreman D 1 1 Class III

Sub-Assistant Engineer 5 5 Class II

7 9,000-15,480/- 41

Switch Board Attendant - D 1 1 Class III

Accountant 1 1 Class II

Assistant Accountant 1 1 Class III


1 1 Class I

Data Entry/Control Operator 1 1 Class III

Pharmacist 2 2 Class III

Senior Data Entry Control Operator

9 9 Class III

8 7,400-13,240/- 39



Assistant Accountant 1 1 Class III

Assistant Director, Admin 4 4 Class I


12 12 Class I

Assistant Engineer 4 4 Class I

9 6,800-13,090/- 133

Assistant Programmer 2 2 Class I




Number of Employees


Class

Foreman D 1 1 Class III

Medical Officer 2 2 Class III

Senior Computer Operator 1 1 Class I

Steno-Grapher 6 6 Class III

Store Officer 2 2 Class I


Switch Board Attendant - D 2 2 Class III

Upper Division Assistant 20 20 Class III


Assistant Accountant 26 26

Cable Jointer D 1 1

Complain Supervisor - B 1 1

Complain Supervisor - C 2 2

Complain Supervisor - D 2 2

Computer Operator 1 1

Class III

Data Entry Supervisor 1 1 Class II

Draftsman - B 1 1

Equipment Operator 1 1

Foreman C 18 18

Foreman D 2 2

Senior Accounts Assistant 6 6

Senior Data Entry Control Operator

1 1

Steno-Grapher 11 11

Steno-Typist 7 7

Class III


Supervisor (Data/Consumer) 6 6

Switch Board Attendant - C 2 2

Switch Board Attendant - D 5 5

Transport Supervisor 1 1

10 5,100-10,360/- 216

Upper Division Assistant 2 2

Class III

11 4,100-8,820/- 322 Assistant Accountant 4 4 Class III

Asst.Supervisor (Data/Consumer)

21 21

Complain Supervisor - A 1 1


Complain Supervisor - D 5 5

Computer Operator 2 2

Driver 89 89


Foreman B 36 36

11 4,100-8,820/- 322

Pharmacist 1 1

Class III




Number of Employees


Class


Senior Staff Nurse 1 1

Steno-Grapher 2 2

Steno-Typist 4 4

Store Keeper C 4 4

Switch Board Attendant - B 4 4






Cable Jointer C 5 5


Complain Supervisor - C 2 2

Draftsman - B 1 1

Driver 30 30

Electrician - A 1 1


Foreman A 47 47

Foreman B 2 2

Junior Accounts Assistant 2 2

Lower Division Assistant / Typist 47 47

Meter Inspector 6 6

Meter Mechanic - B 5 5

Painter - B 1 1

Painter - C 1 1

Power Plant Attendant 1 1


Steno-Grapher 4 4

Steno-Typist 11 11

Store Keeper A 1 1

Store Keeper B 7 7

Store Keeper C 5 5

Switch Board Attendant - A 22 22




Turner - B 1 1


12 3,700-8,060/- 337

Welder - B 1 1

Class III

13 3,500-7,500/- 434 C.A Cum L.D - A 7 7 Class III




Number of Employees


Class


Driver 5 5



Meter Inspector 52 52

Meter Reader 112 112

Pesker 1 1

Security Guard 1 1 Class IV

Security Supervisor 2 2


Senior Meter Inspector 20 20

Store Keeper A 2 2

Store Keeper B 4 4

Store Keeper C 1 1




Tempo Driver 18 18


Class III

13 3,500-7,500/- 434 Upper Division Assistant 12 12 Class III

Complain Supervisor - A 6 6

Data Entry/Control Operator 13 13

Electrician - C 32 32

Fitter - C 1 1

Foreman A 1 1


Junior Staff Nurse 1 1

Lineman B 1 1

Lineman C 127 127


Meter Mechanic - A 2 2

Meter Reader 3 3

Class III


Steno-Typist 4 4

Store Keeper A 2 2

Store Keeper B 7 7




14 3,300-6,940/- 248

Tempo Driver 2 2

Class III

Cable Jointer B 1 1

Electrician - B 15 15

15 3,100-6,380/- 342

Fitter - B 1 1

Class III




Number of Employees


Class

Gestetner Operator 1 1


Lineman A 1 1

Lineman B 256 256

Lineman Helper 1 1 Class IV

Meter Inspector 2 2

Meter Reader 5 5 Class III



Store Keeper A 7 7



Tempo Driver 2 2

Class III

Cable Jointer A 3 3 Class III

Cable Jointer Helper 4 4 Class IV

Electrician - A 11 11 Class III

Electrician Helper 1 1 Class IV

Gestetner Operator 1 1

Junior Staff Nurse 2 2

Lineman A 78 78

Lineman B 5 5

Class III

Lineman Helper 36 36

M.L.S.S. 3 3 Class IV

Meter Mechanic - B 2 2

Pump Operator 1 1 Class III



Store Keeper A 17 17 Class III

16 3,000-5,920/- 252

Sweeper 5 5 Class IV

Cable Jointer A 3 3 Class III

Cable Jointer Helper 4 4 Class IV



Gardener 3 3 Class IV

Lineman A 193 193

Lineman B 12 12 Class III




17 2,850-5,410/- 323


18 2,600-4,870/- 66 Cable Jointer Helper 1 1 Class IV




Number of Employees


Class

Chainman 2 2 Class IV



Lineman A 8 8 Class III



Security Guard 7 7 Class IV 18 2,600-4,870/- 66



Lineman A 3 3 Class III



19 2,500-4,590/- 31


2800-5410 1 Lineman A 1 1 Class III

3400-6625 3 Sub-Assistant Engineer 3 3 Class II

4300-7750 1 Assistant Engineer 1 1 Class I

4800-8160 1 Sub-Assistant Engineer 1 1 Class II

900-1530 1 M.L.S.S. 1 1 Class IV


Cable Jointer C 1 1 Class III



Lineman Helper 4 4


Meter Reader 2 2

Class III


Store Keeper A 1 1

22

Telephone Operator 1 1 Class III

Total 3018 3018 1696 1322



Appendix 5.4: Allocation of Permanent Employees by Department or Organisational Unit

SI Department / Division Job Title Number of Employees

1 9th & 10th Power Project Superintending Engineer 1

2 Additional Chief Engineer-Planning and Design

Lower Division Assistant / Typist 1

Additional Director, Admin 1

Assistant Director, Admin 4

Deputy Director, Admin 1

Director, Admin 1

Driver 9


M.L.S.S. 4

Security Guard 4

Security Supervisor 2

Steno-Grapher 1

Steno-Typist 1

Store Officer 1

3 Administration Directorate

Upper Division Assistant 9

Accountant 1

Assistant Accountant 2

Assistant Director, Finance & Accounts/ Internal Audit 1

Deputy Director, Accounts 1


M.L.S.S. 1

Security Guard 1

Senior Accounts Assistant 2

Additional Director, Finance & Accounts 1

Driver 1

4 Ahid

Junior Accounts Assistant 1

Accountant 1



5 Ahid-North


Accountant 1


M.L.S.S. 1


6 Ahid-South


Accountant 34


7 BOB Division





Assistant Engineer 36

Asst.Supervisor(Data/Consumer) 20

C.A Cum L.D - A 7

Cable Jointer A 4

Cable Jointer B 1

Cable Jointer C 5

Cable Jointer D 1

Cable Jointer Helper 5

Complain Supervisor - A 7

Complain Supervisor - B 14

Complain Supervisor - C 4

Complain Supervisor - D 7

Driver 86

Electrician - A 28

Electrician - B 13

Electrician - C 26

Electrician Helper 7

Equipment Operator 11

Executive Engineer 25

Fitter - B 1

Fitter - C 1

Foreman A 44

Foreman B 36

Foreman C 14

Foreman D 3

Gardener 1

Gestetner Operator 1


Lineman A 281

Lineman B 269

Lineman C 122

Lineman Helper 91


M.L.S.S. 39

Meter Inspector 60

Meter Mechanic - A 2

Meter Mechanic - B 7

Meter Reader 122

Painter - B 1

7 BOB Division

Painter - C 1




Pesker 1

Power Plant Attendant 1

Pump Operator 1

Security Guard 64


Senior Meter Inspector 20

Steno-Grapher 2

Steno-Typist 17

Store Keeper A 29

Store Keeper B 12

Store Keeper C 7

Sub Divisional Engineer 54

Sub-Assistant Engineer 152

Supervisor(Data/Consumer) 6

Sweeper 20

Switch Board Attendant - A 41

Switch Board Attendant - B 46

Switch Board Attendant - C 84

Switch Board Attendant - D 47

Tempo Driver 22

Transport Supervisor 1

Turner - B 1


Welder - B 1


Security Guard 10


Store Keeper B 2

Store Keeper C 1

Store Officer 1


8 C.S.D-Development

Sweeper 1

Sub-Assistant Engineer 1 9 C.S.D-Revenue



Security Guard 9

Store Keeper B 1

Store Keeper C 1

10 Central Storage and Keeping

Store Officer 1

11 Chairman's Office Steno-Grapher 1




12 Corporate Planning Upper Division Assistant 1

Draftsman - B 1

Driver 1

Steno-Grapher 1


13 Corporate Planning and Design

Superintending Engineer 1

14 Court-1 Upper Division Assistant 2

15 Court-2 Lower Division Assistant / Typist 2

Lower Division Assistant / Typist 2 16 Court-3


17 Court-4 Lower Division Assistant / Typist 2

Additional Ch. Engr 1




18 Customer Care


Asst.Supervisor(Data/Consumer) 1



Driver 3


Gardener 2

Gestetner Operator 1



M.L.S.S. 11

Security Guard 3



Steno-Grapher 9

Steno-Typist 1

Store Keeper B 1


Sweeper 6


18 Customer Care


19 Designing Division Executive Engineer 1

Accountant 1

Driver 3

20 Development Division-1

Electrician - B 1





Foreman B 1

Foreman C 1

Lineman A 2



Steno-Typist 1

Store Keeper C 1




Driver 2



Foreman A 1

Foreman C 2

Lineman C 1


M.L.S.S. 1





Chainman 1

Driver 2


Foreman B 1

Foreman C 1


M.L.S.S. 4


Steno-Typist 1



Sweeper 1



Accountant 1


Cable Jointer C 1

Chainman 1


Driver 2






Steno-Typist 1





Electrician - A 1

Electrician - C 1






Accountant 1

Driver 2


M.L.S.S. 1

Security Guard 2


Steno-Typist 1




26 Distribution Planning Draftsman - B 1

27 Distribution Planning Division-South


Superintending Engineer 1 28 ER-3 and Other Projects


29 Executive Engineer, Grid Central

Security Guard 2


M.L.S.S. 1

Security Guard 4

30 Executive Engineer, Workshop


Assistant Engineer 1 31 Executive Engineer-1, Project Planning


32 Executive Engineer-2, System Planning and Programming


Executive Engineer 1 33 Executive Engineer-3, Distribution Planning


Executive Engineer 1 34 Executive Engineer-4, Distribution Planning


35 Finance and Accounts Accountant 2





Driver 1


M.L.S.S. 1

Steno-Grapher 1



Directorate

Director, Finance & Accounts 1

Accountant 1 36 GIETC


Security Guard 1 37 GM, North


38 GM, South Upper Division Assistant 1

Driver 2

Electrician - A 1

Electrician - B 1

Electrician - C 1



Lineman B 1





39 Grid Central


Accountant 1

Security Guard 5


Steno-Typist 1


40 Grid Circle

Sweeper 2

40 Grid Circle Upper Division Assistant 1

Cable Jointer Helper 1 41 Grid Division

Switch Board Attendant - D 1

Cable Jointer A 2


Driver 2

Electrician - A 1

Electrician - C 2

42 Grid Division, North





Foreman A 1

Lineman B 1

Lineman C 1


Security Guard 2






Driver 1

Electrician - A 4

Electrician - C 1


Foreman A 1

Lineman A 1

Lineman B 2

Lineman C 2

Lineman Helper 1


M.L.S.S. 2

Security Guard 3




43 Grid Division, South




Director, Finance & Accounts 1

Driver 1

44 Internal Audit Directorate

Steno-Grapher 1

Junior Staff Nurse 3

Medical Officer 2

Pharmacist 3

45 Medical Center

Senior Staff Nurse 1

General Manager 1

M.L.S.S. 1

46 Member 's Office (Engineering and Commercial)

Steno-Grapher 1

47 Member's Office (Administration)

Steno-Grapher 1

48 Member's Office (Finance) Steno-Grapher 1




Assistant Programmer 2

Computer Operation Supervisor 1

Computer Operator 3

Data Entry Supervisor 1

Data Entry/Control Operator 14


Programmer 1

Sr. Computer Operator 1

Sr. Data Entry Control Operator 10

System Analyst 1

49 MIS and Computer Division


50 Motijheel Circle Store Keeper B 2

51 Narayanganj-West Sub Divisional Engineer 1

52 Other Projects Senior Accounts Assistant 1


Steno-Typist 1


53 Planning and Design


53 Planning and Design Upper Division Assistant 1

54 Planning and Development Directorate


Sub Divisional Engineer 1 55 Planning Division


56 Postogola Circle Senior Accounts Assistant 1


Deputy Director, Duty Free & Store Management 1


M.L.S.S. 1


Steno-Grapher 1

Store Officer 1


57 Purchase and Store Management Directorate


58 Ramna Upper Division Assistant 1

59 Satmosjid Circle Steno-Grapher 1


Driver 2

Electrician - C 1


Foreman A 1

60 Scada P.O.S Circle

Foreman D 1




Lineman B 1

Lineman C 1

Lineman Helper 1

M.L.S.S. 1

Security Guard 2





Switch Board Attendant - A 2



Telephone Operator 1





Steno-Grapher 1


M.L.S.S. 1

61 Secretariat


Lower Division Assistant / Typist 1 62 Secretary, DESA


63 Superintending Engineer- Planning and Design


64 Superintending Engineer- Planning Circle

Steno-Grapher 1

65 Superintending Engineer, Customer Care-Narayanganj Circle


Upper Division Assistant 1 66 Superintending Engineer, Grid Circle


Lower Division Assistant / Typist 1 67 Superintending Engineer, Motijheel Circle


68 Superintending Engineer, Tejgaon Circle


Lower Division Assistant / Typist 1 69 Superintending Engineer, Workshop


70 Superintending Engineer, Workshop- Grid Central


71 Superintending Engineer-Azimpur Circle


72 Superintending Engineer-Other Projects

M.L.S.S. 1




73 Superintending Engineer-Planning and Development


74 Superintending Engineer, Satmosjid Circle


75 System Planning and Design

Driver 1

Driver 1


76 System Planning and Programming


Executive Engineer 1 77 System Protection and Metering Division, North


Executive Engineer 1 78 System Protection and Metering Division, South


Switch Board Attendant - A 1 79 Tejgaon Circle


Driver 2

Lineman Helper 1

Steno-Typist 1

Store Keeper A 1

80 Workshop


Grand Total 3018



Appendix 5.5: Permanent Employees - Age



Appendix 5.6: Permanent Employees - Length of Service



Appendix 5.7: Permanent Employees - Pattern of Retirements



Appendix 5.8: Permanent Employees - Education and Qualifications



Appendix 5.9: Proposed Organisation - Board and Head Office Functions

OrganogramBoard, Executive Team and Head Office

DPDC BoardDPDC Board

Chairman

Managing Director (1)



shareholder


HR Committee

Audit Committee

Engineering Director (2)

Operations Director (3)

Finance Director (4)

HR Director (5)

Company Secretary (6) GM, Audit (14)

DGM, Public Relations (15)

GM, Systems Development (7)

GM, Systems Operations (8)

GM, Procurement & Contracts (9)

GM, Network Operations (10)

GM, Customer Services (11)

GM, Finance and Accounts

(12)GM, HR (13)

DGM, Tariffs and

Pricing

DGM, System Plan and

Design (16)

DGM, Major Projects (17)

DGM, Policy & Standards (18)

DGM, System Control (19)

DGM, System Protection (20)

DGM Grid O&M (21)

DGM, Procurement & Contracts (22)

See Circle level organogram

DGM, Network Ops

x 8 (23)

DGM, Customer Services x 8

(26)

DGM, Health, Safety and Envir (24)

DGM, Security

(25)

DGM, Mgt Accounting (28)

DGM, Corp Financial

Planning (27)

DGM, MIS (29)

DGM, Training and Dev (30)

DGM, Employee

Relations (31)

DGM, Administration

(32)

Chief Medial

Officer (-)

DGM, Regulation

(33)

Note:Detailed descriptions may be found in a separate booklet. For ease of reference numbers in ( ) refer to the number of the job description.The role and functions of the Chairman are described in the report on Governance and Board Organisation.



Appendix 5.10: Proposed Organisation - Field Activities

OrganogramCircle level

Key characteristics of the proposed organisation• Eight (8) Circles• W ork functionally organised into field operations

(technical) and custom er service (comm ercial)• The boxes represent critical functions – they m ay

not necessarily be discrete sections in every Circle

See organogram for Board, Executive Team and Head Office

DGM , Field Operations

DGM , Customer Service

Field resource m anagem ent

Security

Overhead lines and

cablesSubstation plant

New connections to the network/ augm ented

supplies

Metering Meter readingCustom er

recordsBilling Collection

Technical work• Operation and m aintenance of the Circle's power

distribution network. To include both routine, planned preventive m aintenance and dealing prom ptly and efficiently with the restoration of supplies following incidents/faults.

• Planning for and connecting new custom ers.Resourcing

• Each Circle to consist of not less than four prim ary substations.

• Target staffing 1xXEN and 1xSAE (or equivalent under the new service rules) per prim ary substation.

• Staff levels based on work volum es per substation.

Commercial work• Set up and m aintenance of custom er records,

obtaining readings of electricity consum ption, prepare and deliver bills, collect monies.



Appendix 6.1: Bulk Metering and Customer Service Terms of Reference (ToR)

Metering

Project Ref

Source Work Area/Task Resp’ble

Team*

MET1 ToR VI.8 (i)

Investigate transmission network configuration, including generation and distribution take off points and appraise the adequacy of existing metering and communication systems.

Com (P)

Note: Whilst this is now included in the work being carried out by Power Cell, BPI has provided an overview of the existing Bulk Metering arrangements within its final report.

Customer Service Project

Ref Source Work Area/Task

Resp’ble Team*

CS1 ToR 7(i) Review existing customer service processes and procedures.

CS (P) Com, MIS and MA (S)

CS2 ToR 7(ii)

Prepare new customer service processes covering inter alia customer connections, customer billing, customer account queries, customer complaint handling, and customer service performance standards.

CS (P) Com, MIS and MA (S)

CS3 ToR 7(ii) Analyse existing structure supporting customer service management

CS (P) Com (S)

CS4 ToR 7(iii) Propose new organisational structure to deliver revised customer service requirements.

CS (P) Com and HR (S)

CS5

ToR 7(iii) Define required training in customer service standards; processes and procedures, information systems and organisation.

CS (P) Com and HR (S)

*Where (P) indicates the primary responsibility for delivery and (S) indicates a secondary responsibility



Appendix 6.2: DESA’s Customer Service Initiatives

DESA has introduced several initiatives during the past two years in order to improve the quality of the service it offers to its customers, some of which have been promulgated by the current government.

Several of the initiatives are aimed at reducing the peak demand on DESA’s electricity network, thus reducing the need for load shedding which is necessary due to the overall lack of generation in the country.

As noted in the main body of this report, BPI’s domestic Consultant team members have been pleased to observe these improvements in action, both as customers of DESA and as Consultants working with DESA’s personnel.

DESA’s initiatives are as follows:

The Government’s decision to disconnect all neon signs and bill board lighting has been implemented, thereby saving 2 MW of load in the peak hour;

The Government’s decision to close supermarkets, chain shops and big shops after 8 pm has been implemented, thereby saving 50 MW of load;

A Peak hour restriction has been imposed on heavy industries, especially steel and re-rolling mills in the evening peak, thereby saving 80 MW of load;

The Government’s decision for holiday staggering has been implemented in industrial areas to reduce the overall peak demand;

WASA has been instructed to use its own generator during the peak hour to save about 20 MW of load;

DESA has estimated that the use of energy efficient lamps and fittings can save about 150 MW of load and is actively promoting their use;

DESA has prepared load shedding schedules and has instigated a system of advising customers in advance of supply interruptions via SMS text messaging;

DESA is working with the Bangladeshi Banks to establish dedicated paying-in booths at branches where DESA’s customers can be better served. BPI has commented upon this in the main body of the report, questioning how long the Banks will be prepared to provide this service to DESA / DPDC free of charge;

Historically, energy accounts were prepared at DESA’s centralised computing centre in Gulshan. There were many customer complaints about the accuracy of their energy bills and timely bill correction was not possible. Accordingly DESA has decided to decentralise its billing system and several of its S&D Divisions have already changed to a decentralised arrangement as noted in the main body of this report. This has led to a reduction in the number of customer complaints regarding energy accounts and their accuracy; and

In order to better serve its customers, DESA has established ‘one-point’ Customer Service desks in each of its S&D Divisions. Customer reaction is reported to be favourable as DESA’s experienced personnel can deal with the customer compliant / enquiry on the same day.



Several of the initiatives were highlighted in the address delivered by DESA’s chairman in a presentation he delivered to a public audience in Dhaka on 18 July 2007. BPI understands that the presentation and DESA’s initiatives were well received.

BPI considers that its observations and recommendations contained in the main body of this report build upon these initiatives and add further impetus to DESA’s / DPDC’s drive for improved customer service processes.



Appendix 6.3: Notes of visit to Azimpur S & D Division

Four Divisions are using their own stand-alone software for meter reading, account billing and account collection activities; Azimpur is one of them.

Categories of Customer

A Residential 19384C Small industrial 607D Mosque / Manir 149E Commercial 1874F Medium voltage 41J Street light / water pump 22

Total 22077

Meter Reading

Meter reading billing cycle is prepared and the Meter Reading Sheet (MRS) is printed for every month from the Division’s own computer

Meter reader takes the meter reading and enters it in the meter reading book, fills up the MRS in the office and submits it to the supervisor as per reading cycle

Meter reader also reports about defective meter, illegal service connection, broken seal etc

Supervisor checks the reading and sends the MRS to the Division’s computer inputting team for data entry according to the billing batch

Account Billing

Division’s computer prints the bill after data entry as per billing cycle and the bill is sent to the supervisor

Supervisor checks the bill and hands over to meter reader for bill delivery

Any amount in arrear is shown on the monthly bill

Account Collection

Bill payments are collected through different bank branches (total of eight)

Division collects the Daily Collection Sheet (DCS) next morning and sends it to the Division’s accountant

Division’s accountant keeps note and hands over the DCS to Division’s computer inputting team along with paid vouchers

After data entry Division’s computer team sends back the DCS and vouchers to the Division’s accountant. DCS and vouchers are properly kept for records

System Loss

System loss is monitored by 11 kV feeder

An SDE/AE is normally in change of the feeder



New Service Connection

DESA has introduced a booklet for new service connections including all forms and a letter required for the process

The customer collects the booklet from a one point service centre and submits application together with the payment of the necessary fees

The service centre gives applicant a receipt with date of next contact

The application is sent for load sanction, if approved it needs clearance whether any arrears bill or any kind of default exists in the premises relating to electricity use

After clearance, a demand note is given to the customer for service connection within fixed time

Customer pays the demand note in the bank

After receiving the paid vouchers a customer census form is completed and sent to the computer team for data entry

The customer service connection is provided, the meter sealed and information sent to the computer team for data entry

After data entry it is checked and cross checked before an MRS is printed and included in the monthly billing cycle

New customers added into the process cannot get a bill for 2/3 months

Customer Service

A one-point customer service centre is in operation. One SDE was found attending the desk for receiving complaints.

The following complaints/requests are normally received at the customer service centre:

Disconnection and reconnection of service

Meter replacements

Normal new connection.

Temporary connection

Bill correction

Miscellaneous

O & M functions (Customer Service)

The Division has the following installations

An 11 kV switching station at Azimpur

A complaint centre at Azimpur

A control room at Hatirpul

Customer complains about power failure at the complaints centre or the control room either in person or by telephone

The complaint with its nature is recorded



Fuse gang or trouble shooting gang attends the complaint depending on its nature

Complaint centre has one fuse gang that attends in the evening

Control room has the following trouble-shooting gangs

o Two in the morning

o One in the evening and

o Two at night

System Maintenance

The Division is responsible for the 11 kV switching station at Azimpur

They maintain the distribution network under their control

Faulted transformers are replaced

Reporting (Reports are sent to GM with a copy to SE)

Daily Monthly Collection Monthly Operating Data (MOD) Disconnection Feeder wise system loss Reconnection Monthly energy export / import



Officers and Staff working in the Azimpur Division

Sl No Designation Permanent Casual 01 Executive Engineer 01 0 02 S.D.E 0 0 03 Assistant Engineer 02 0 04 Assistant Director Accounts 0 0 05 S A E 04 0 06. Accountant 0 0 07 Assistant Accountant 02 0 08 Supervisor Data 01 0 09 Assistant Supervisor 0 0 10 Foreman – B 0 0 11 Cable Jointer – C 0 0 12 Assistant Accountant 0 0 13 S. B. A. – D 0 0 14 S. B. A. – C 0 0 15 S. B. A. – B 03 0 16 S. B. A. – A 02 01 17 Senior Meter Inspector 02 0 18 Store Keeper – B 01 0 19 UDA 01 0 20 UDA Accounts 04 0 21 Equipment Operator 0 0 22 Meter Inspector 02 01 23 Driver 04 02 24 L.D.A. 03 0 25 L. D. A. Cum Typist 03 01 26 J. A. A. 0 0 27 Meter Reader 0 08 28 Meter Mechanics – A 0 0 29 Helper 17 16 30 Typist 0 0 31 M.L.S.S. 0 0 32 Sweeper/Cleaner 02 02 33 Lineman – C 01 0 34 Lineman – B 10 0 35 Lineman – A 03 0 36 Photocopier Operator 0 0 37 Electrician – C 01 0 38 Electrician – B 0 0 39 Tempo Driver 01 0 40 Painter 0 0

Totals 70 31



Appendix 6.4: Notes of visit to Narayangonj (East) S & D Division

Narayangonj (East) Division has online connection with DESA’s centralised computer centre for customer accounting activities.

Categories of Customer A Residential 14210C Small industrial 1272D Mosque / Manir 107E Commercial 6556F Medium voltage 110J Street light / water pump 14 Total 22269

Meter Reading

Meter reading billing cycle is prepared and the Meter Reading Sheet (MRS) is printed for every month



Supervisor checks the reading and sends the MRS to the computer inputting team for data entry according to the billing batch

Account Billing

Central computer centre processes the data

Bill is printed from the central computer centre as per billing cycle and sends the bill to the supervisor

Supervisor checks the bill and hands over to meter reader for bill delivery.

Any arrears bill is shown on the monthly bill

Lack of co-ordination between the Division and central computer centre has been reported

Support service from the centralised computer centre for dealing with complaints is not efficient

Account Collection

Bill payments are collected through different bank branches (total of nine)


Division’s accountant keeps note and sends the DCS to the computer inputting team along with paid vouchers



After data entry the computer inputting team sends back the DCS and vouchers to the Division’s accountant. DCS and vouchers are properly kept for records

System Loss

System loss is monitored by 11 kV feeder













Customer Service




Meter replacements



Bill correction

Miscellaneous





Two 33/11 kV substations at Khanpur and Mondolpara

Three complaint centres at Club Station, Mondolpara and Nitaygonj

A control room at Killarpul




The complaint centres have one fuse gang each

The Division has four break-down gangs


o One in the evening and

o One at night

The Division also has one substation gang

System Maintenance

The Division is responsible for the 33/11 kV substation maintenance at Khanpur and Mondolpara


Faulted 11kV / LV transformers are replaced





Officers and Staff working in the Narayangonj (East) Division


Totals 109 30



Appendix 6.5: Notes of visit to Shatmasjid S & D Division

Shatmasjid Division has online connection with DESA’s centralised computer centre for customer accounting activities

Categories of Customer A Residential 25467C Small industrial 188D Mosque / Manir 103E Commercial 2034F Medium voltage 46J Street light / water pump 29

Total 27867

Meter Reading

Meter reading billing cycle is prepared and the Meter Reading Sheet (MRS) is printed for every month




Account Billing


Bill is printed from the Division’s computer as per billing cycle and sends the bill to the supervisor




Support service for dealing with complaints in respect of computer problem is not efficient

Account Collection

Bill payments are collected through different bank branches (total of eight)





After data entry the computer inputting sends back the DCS and vouchers to the Division’s accountant. DCS and vouchers are properly kept in binding form for records

System Loss

System loss is monitored by 11 kV feeders













Customer Service




Meter replacements



Bill correction

Miscellaneous





An 33/11 kV substations at Shatmasjid

An 11 kV switching station at Asad gate

One complaint centre at Noorjahan Road

A control room at the office compound




The 11 kV switching station does not have any trouble shooting gang

Complaint centre has one fuse gang that attends in the evening

Control room has the following trouble-shooting gangs


o Two in the evening and

o One at night

System Maintenance

The Division is responsible for the 33/11 kV substation maintenance at Shatmasjid







Officers and Staff working in the Shatmasjid Division

Sl No Designation Permanent Casual01 Executive Engineer 01 0 02 S.D.E 01 0 03 Assistant Engineer 01 0 04 Sub Assistant Engineer 05 0 05 Accountant 02 0 06 Assistant Accountant 02 0 07 Supervisor Data 01 0 08 Foreman – D 0 0 09 Foreman – C 0 0 10 Foreman – B 03 0 11 Foreman – A 0 0 12 Cable Jointer 0 0 13 Estimator 0 0 14 Assistant Supervisor Data 0 0 15 S. B. A. – D 02 0 16 S. B. A. – C 06 0 17 S. B. A. – B 0 0 18 S. B. A. – A 01 01 19 C, S. – D 0 0 20 C. S. – B 0 0 21 Senior Meter Inspector 01 0 22 Store Keeper – B 0 0 23 Store Keeper – A 01 0 24 U. D. A 01 0 25 Senior Account Assistant 04 01 26 Senior Account Assistant Cum Cashier 01 0 27 Typist 01 0 28 Equipment Operator 01 0 29 Meter Inspector 04 0 30 Electrician – C 01 0 31 Electrician – B 02 0 32 Electrician – A 0 0 33 Lineman – C 07 0 34 Lineman – B 0 0 35 Lineman – A 15 0 36 Driver 02 01 37 L. D. A Cum Typist 0 02 38 Tempo Driver – A 02 02 39 Junior Accounts Assistant 05 03 40 Meter Reader 06 11 41 Meter Mechanic – B 0 0 42 Pump Operator 0 0

43 Security Guard 03 03



Sl No Designation Permanent Casual44 Helper 04 19 45 Sweeper Cum Cleaner 01 01 46 M. L. S. S. 02 01 47 Computer Operator 0 01 48 B. Dispatcher 0 01 49 Messenger 0 01 50 Gardener 0 01

Totals 89 49



Appendix 6.6: Notes of visit to Shiddirgonj S & D Division

Shiddirgonj Division has online connection with DESA’s centralised computer centre for customer accounting activities.

Categories of Customer A Residential 13229C Small industrial 497D Mosque / Manir 85E Commercial 916F Medium voltage 68J Street light / water pump 0

Total 14795

Meter Reading

Meter reading billing cycle is prepared and the Meter Reading Sheet (MRS) is printed for every month by the central computer centre




Account Billing


Bill is printed from the central computer centre as per billing cycle and sends the bill to the supervisor




Support service for dealing with complaints is not efficient

Account Collection

Bill payments are collected through different bank branches (total of five)





After data entry the computer team sends back the DCS and vouchers to the Division’s accountant. DCS and vouchers are properly kept for records

System Loss

System loss is monitored by 11 kV feeders













Customer Service




Meter replacements



Bill correction

Miscellaneous





Two 33/11 kV substations at Demra and Shiddirgonj

One complaint centre at Godnain

A control room operated in the office




The complaint centre has one fuse gang

The Division has five break-down gangs


o Two in the evening and

o One at night

The Division also has one substation gang

System Maintenance

The Division is responsible for the 33/11 kV substation maintenance at Khanpur and Mondolpara







Officers and Staff working in the Shiddirgonj Division


Totals 74 26



Appendix 7.1: High-Level MIS Work Plan Derived from

ToR Key Task Activity Resource Notes Status

MIS1 - Review existing financial management systems

Complete the ADB Financial Management Assessment Questionnaire

BPI Financial Team Completed

Identify & document all the existing DESA business functions / procedures / processes & their relationship to financial management

Make available the Standard Practice Instructions(SPI) produced from the FMU project

Lead - Prime Consultant for relevant department

In this context a function / procedure is the DESA defined activity and the process is the means by which the function / procedure is carried out.

Not Undertaken –

Business Process Re-

Engineering to be included in MIS Statement

of Requirements

Identify each business function and the Department which has the responsibility for carrying out the function

Relevant Domestic Expert & their DESA counterpart

e.g. Customer Services: what are the procedures for dealing with customer connections, meter reading, billing, account queries, complaints etc. and for measuring customer service performance standards etc.

Analyse each procedure by identifying the associated processes and the sequence in which they are performed

e.g. Identify each step within each process by which the DESA procedure is carried out and the information inputs to and outputs from each step

Produce department / function / process descriptions & information flow charts

Highlight all aspects associated with "financial management" - financial & accounting systems



Derived from ToR

Key Task Activity Resource Notes Status

Analyse each department by function / procedure / process to identify the relationships with the financial & accounting systems

To be carried out with the MIS & Finance work areas

Identify all information systems used and assess their performance

Collect and review the Standard Practice Instructions(SPI) produced from the FMU project

Completed

Identify the availability of existing management information and highlight any omissions and deficiencies

Sources of information: DESA, Power Cell, BERC

Completed

Existing DESA Information Systems (IS)

Lead – Domestic MIS Expert with DESA counterpart

Review the status of the Financial Management Upgrade (FMU) project

Completed

Identify and review each

IS

Record existing IS

hardware & software

Produce configuration /

network diagrams

MIS2(a) - Prepare draft requirements definition

Corporate Mission, Vision and Strategy

Lead – Project Director with Domestic HR Expert & DPDC Senior Management Team

Completed

Identify DPDC’s business

needs Assumed initially to be as existing

DESA requirements Completed



Derived from ToR


Identify key internal &

external DPDC drivers Assumed initially to be same as

existing DESA plus emerging BERC requirements

Completed

Identify DPDC’s corporate

objectives See Statement of Requirements

(SoR) below Completed

Identify senior management information required for assessing objectives

Assumed initially to be as existing DESA management requirements

Completed

Identify data / information required to provide senior management with appropriate information

Lead – Domestic MIS Expert with DESA counterparts

Suggested reporting regime Completed

Produce Statement of Requirements (SoR) for senior management information

International & Domestic MIS Experts and with reviewed DESA counterpart

Based on current performance indicators and measurements derived from DESA’s Commercial Operations Statistics and Power Cell PIs

Completed

Departmental Performance Indicators (PI)

Domestic HR Expert with DPDC Senior Management Team

Requires business functional model to correspond to existing business structure and proposed Organogram with information flows to provide the data / information to measure the Corporate PIs

Not formally undertaken

Identify department management information required for assessing department objectives

Assumed initially to be as existing DESA requirements

Completed

Identify data / information required to provide management with appropriate information

Domestic MIS Expert with DESA counterpart

Suggested reporting regime Completed

Produce Statement of Requirements (SoR) for management information

Domestic MIS Expert with DESA counterpart


Completed



Derived from ToR


Produce draft requirements definition (comprehensive SoR)

International & Domestic MIS Experts and reviewed by DESA counterpart


Completed

MIS2(b) - Prepare Statement of Requirements (SoR)

Lead - International MIS Expert

High-level Functional Design Specification (FDS)

Completed

Outline ICT systems, services and end user requirements

Domestic MIS Expert

To be reviewed with DESA IT Centre management

Ongoing

MIS3(a) - Review options for the provision of the Financial MIS (FMIS)

Lead - International MIS Expert

Completed

Available government owned utilities

Domestic MIS Expert

Completed

Availability, costs &

benefits & implementation plan

Existing within DESA Domestic MIS

Expert Completed



New systems Domestic MIS

Expert Ongoing





Derived from ToR


MIS3(b) - Recommendation Report

International MIS Expert

Completed

Draft & Final report Produce and review Domestic MIS

Expert Ongoing

MIS4 - Procurement Process (Compliance with ADB procedures)

To be confirmed See note below

Understand ADB procedures

Produce Bid Documentation

MIS5 - Bidder Queries


Assist in dealing with bidder's queries

Prepare Addendum as necessary

MIS6 - Evaluate bids & technical specification


MIS7 -Implementation guidance


MIS8 - MIS & Business process support


Notes: The tasks in italics were included when the project had an elapsed time of 14 months. If it is now to be completed within 6 months, it will

not be possible to undertake the ‘implementation’ part of the original ToR



Appendix 7.2: Brief History of the Financial Management Upgrade (FMU) Project

The Financial Management Upgrade (FMU) project was originally conceived in late 1994 to establish, by 2008, a common computerised accounting and financial management system to improve the operational efficiency throughout the Bangladesh Electricity Power Sector.

The Bangladesh Power Development Board (BPDB) and Dhaka Electric Supply Authority (DESA) jointly undertook the FMU project under the Technical Assistance (TA) 2004-BAN financed by the Asian Development Bank (ADB). The approach was to introduce the systems into BPDB and DESA in three phases.

Phase 1

Phase 1 of the project was started in November 1994 and completed in June 1996, resulting in a successful pilot project to computerise the billing and customer accounting systems for about 20,000 customers at each of the BPDB Agrabad and Chittagong commercial offices and the DESA Paribag commercial office.

The success of Phase 1 enabled outline system designs to be produced and a functional specification to be prepared leading to an Invitation to Tender (ITT) to be issued for the computer hardware and software for Phase 2. In addition to the billing and customer accounting system the tender included the non-billing computerised activities necessary to establish an integrated accounting and financial management system (a total of 16 modules). A list of these Modules is shown in Table 1. The selected approach was based on the established Oracle Financial applications software and database management system. The implementation and customisation was undertaken by Beximco Computers Ltd. Provisional testing of each module was also completed during this phase.

Phase 2

Phase 2 was undertaken during 1997 to 2001, during which the billing and accounting for 200,000 customers was completed. However, the remaining non-billing modules were not implemented. An Inventory Management System (IMS) was implemented by Beximco Computers Ltd. for the DESA Procurement and Stores Division but as a standalone system.

Phase 3

Phase 3 was submitted in September 2002 as a proposal to extend the computerised billing system to include all DESA customers and to implement all the non-billing modules, including the IMS, and establish an integrated financial accounting system throughout DESA. The proposal was not accepted and its rejection by the GoB is believed to be on financial grounds.

Costs and Timescales

The total software cost was in the region of TK 5 Million to develop and test, and took about 2 to 3 years to complete Phase 1 and Phase2.

Conclusion

Despite the rejection to approve and finance Phase 3, the DESA IT Computer Centre had continued to roll-out the billing and customer accounting service, providing on-line facilities to some 25% of the S&D Offices with plans in place to include all Offices by the end of 2008. They also have a programme to introduce Bar Coded bills and establish more efficient data exchange with the Dhaka banking services. Unfortunately the



remaining modules have not been implemented and due to elapse time most likely will require re-testing to ensure their availability. This is currently estimated to cost in the region of TK18 Million (16 man-months of service) to be carried out over a 4 month period.

Module Name

Status

Billing and Consumer Accounting System

Implemented and operational for the last 6 years.

General Ledger System Not implemented

Accounts Payables (AP) System Not implemented

Accounts Receivables (AR) System Not implemented

Fixed Assets System Not implemented

Cash and Bank Management System Not implemented

Loan Capital Accounting System Not implemented

Energy Accounting System Not implemented

Purchase Management System Not implemented

Stores Accounting System Not implemented

Project Accounting and Job Costing System

Not implemented

Rechargeable Deposit Works (RDW) System

Not implemented

Annual Development Plan (ADP) System Not implemented

Revenue Budgeting System Not implemented

Management Information System (MIS) Not implemented

Inventory Management System

Standalone version operational for Tongi Stores

Table 1: Financial Management Upgrade List of Modules and Current Status



Appendix 7.3: Typical Distribution Utility Performance Monitoring Indicators

Sector Summary

S/N Indicator Unit

3 System Loss [Distribution] %

4 System Loss [Transmission] %

5 Billed [Retail] TK Million

6 Billed [Inter Utilities] TK Million

7 Collection [Retail] TK Million

8 Collection [Inter Utilities] TK Million

9 Total Operational Revenue TK Million

10 Operating Income TK Million

11 Total accounts Receivable TK Million

12 Collection / Bill Ratio %

13 Collection / Import Ratio %

Operational Summary Indicator

S/N Indicator Unit

4 Import GWh

5 Sales [Retail] GWh

6 Sales [Inter Utilities] GWh

7 Average Tariff [Retail ] [9 / 5] TK/kWh

8 Average Tariff [Inter Utility] [10 / 6] TK/kWh

9 Billed Amount [Retail ] TK Million

10 Billed Amount [Inter Utility] TK Million

11 Collection [Retail ] TK Million

12 Collection [Inter Utility] TK Million

TK Million 13 Account Receivable [Retail ]

Eq. Month

14 System Loss %



Operational Summary Indicator

S/N Indicator Unit

15 Collection Bill Ratio [11 / 9] %

16 CI Ratio [15 * (1.0 - 14)] %

Category wise Account Receivable 17

Category Unit

TK Million A Government

Eq. Month

TK Million B Autonomous/Semi Government

Eq. Month

TK Million C Private

Eq. Month

TK Million D Inter Utilities

Eq. Month

Financial Summary Indicator

S/N Indicator Unit

1 Power Purchase [Import] GWh

2 Power Sales / Retail Sales GWh

3 Purchase Tariff / Buying Rate TK/kWh

4 Sales Tariff / Average Tariff Rate TK/kWh

5 Sales Revenue TK Million

6 Other Operating Revenue TK Million

7 Total Operating Revenue [5 + 6] TK Million

8 Energy Cost (Fuel Cost) TK Million

9 Power Purchase Cost TK Million

10 Wheeling Cost TK Million

11 O & M Expenses TK Million

12 Depreciation TK Million

13 Other Operating Expenses TK Million

14 Total Operating Expenses [8 ~ 13] TK Million



Financial Summary Indicator

S/N Indicator Unit

15 Operating Margin [7 - 14] TK Million

16 Non Operating Revenue TK Million

17 Financial Expenses TK Million

18 Net Income [15 + 16 - 17] TK Million

19 Gross Fixed Assets TK Million

20 Accumulated Depreciation TK Million

21 Net Fixed Assets [19 - 20] TK Million

22 Total Current Assets TK Million

23 Other Asset TK Million

24 Total Assets [21 ~ 23] TK Million

25 Long Term Liabilities TK Million

26 Medium Term Liabilities TK Million

27 Current Liabilities TK Million

28 Total Liabilities [25 ~ 27] TK Million

29 Equity TK Million

30 Retained Earning TK Million

31 Total Equity [29 + 30] TK Million

32 Cash Collection TK Million

33 Capital Investment made TK Million

34 Working Capital TK Million

35 Principal repayment due TK Million

36 Actual Repayment TK Million

37 Interest Payment due TK Million

38 DSL Payment TK Million

39 Cash Flow from Operating Activity TK Million



Summary Report [Customer Information]

S/N Indicator Unit

1 Number of Customer Number

2 Number of Customers Disconnected Number

3 Number of Customer per km Number

4 Number of Customer per employee Number

5 Demand MW

Total length of 33 KV Overhead Lines Energized km

Total length of 11 KV Overhead Lines Energized km

Total length of 0.40 KV Overhead Lines Energized km

Total length of 0.23 KV Overhead Lines Energized km

Total length of all Overhead Lines Energized km

Total length of 33 KV Underground Lines Energized km

Total length of 11 KV Underground Lines Energized km

Total length of 0.40 KV Underground Lines Energized km

Total length of 0.23 KV Underground Lines Energized km

Total length of all Underground Lines Energized km

6

Total length of all Lines Energized km

Utility Monitoring Indicators – Ratio

S/N Indicator Unit

1 Return on Asset %

2 Return on Equity %

3 Operating Ratio %

4 Current Ratio %

5 Debt Equity Ratio %

6 Debt Service Coverage Ratio %

7 Self Financing Ratio %



Utility Monitoring Indicators – Ratio

S/N Indicator Unit

8 Collection Efficiency %

9 System Loss %

Standard Formula: For Ratio Calculation

S/N Indicator Calculation

1 Return(EBIT) On Asset [ROA] Operating Income / Gross Fixed Asset

2 Return (PBT) On Equity [ROE] Net Income / Total Equity

3 Return (EBITDA) on Capital Employed

EBITDA / (Equity + Long-term debt)

4 Operating Ratio [OR] Total Operating Expenses / Total Operating Revenue

5 Current Ratio [CR] Total Current Assets / Total Current Liabilities

6 Debt Equity Ratio Total LTD / Total Equity

7 Debt Service Coverage Ratio [Operating Income + Depreciation] / [Principal +

Interest]

8 Self Financing Ratio 1Cash flow from Operating Activity / Avg. of Last 3 yrs

Investment Program

9 Collection Efficiency Collection / Total Sales

10 Gross Margin

Gross Profit / Revenue

1Cash flow from Operating Activity = Net Income + Depreciation + Working Capital requirement -

Principal Repayment



Appendix 7.4: Examples of Departmental Information Key Performance Indicators and Measurements

Indicator Unit Customer

Information Financial

Information HR

Information Operational Information

Technical Information

Assets (Fixed) Stores and Stocks TK Million √ √ √

Assets (Fixed) Operational TK Million √ √ √

Customer Magistrate Court Activities Number? √ √ √

Customer Meter Installation (Customer Category Wise)

% √

Customer Meter Installation (Pre-paid) (Customer Category Wise)

% √

Customer numbers - Commercial Number √

Customer numbers - Domestic Number √

Customer numbers - Government Number √

Customer numbers - Industrial Number √

Customer numbers - Irrigation Number √

Customer numbers - Other Number √

Customer numbers - Semi-Government Number √

Customers Disconnected Number √

Distribution Lines Energised at 11kV (Overhead)

km √ √

Distribution Lines Energised at 11kV (Underground)

km √ √

Distribution Lines Energised at 33kV (Overhead)

km √ √

Distribution Lines Energised at 33kV (Underground)

km √ √





Information HR



Distribution Lines Energised at 415V (Overhead)

km √ √

Distribution Lines Energised at 415V (Underground)

km √ √

Distribution Substations 11/0.415kV Number √ √

Distribution Substations 11/0.415kV MW √ √

Distribution Substations 33/11kV Number √ √

Distribution Substations 33/11kV MW √ √

Financial (Equity) TK Million √

Financial (Interest Payment Due) TK Million √

Financial (Investments) TK Million √

Financial (Retained Earnings) TK Million √

Financial (Sales Revenue) TK Million √

Financial (Stocks & Stores) TK Million √

Financial (System Loss) TK Million √ √ √

Financial (Wheeling Cost) TK Million √

Financial (Working Capital) TK Million √ √ √ √

Financial Account Receivable (Retail) TK Million √

Financial Accounts payable – BPDB & PGCB TK Million √

Financial Accounts payable – Contractors & Suppliers

TK Million √ √ √ √





Information HR



Financial Accounts Receivable - Autonomous / Semi Government

TK Million √

Financial Accounts Receivable - Government TK Million √

Financial Accounts Receivable - Inter Utilities TK Million √

Financial Accounts Receivable - Private TK Million √

Financial Accounts Receivable (Customers) TK Million √

Financial Accumulated Depreciation TK Million √

Financial Assets (Other) TK Million √

Financial Billed Amount (Inter Utilities) TK Million √ √

Financial Billed Amount (Retail) TK Million √ √

Financial Billing and Collection of Revenue % √ √

Financial Departmental Budgets TK Million √ √ √ √

Financial Capital Investment made TK Million √

Financial Cash Collection TK Million √

Financial Cash Flow from Operating Activity TK Million √

Financial Collection (Inter Utilities) TK Million √

Financial Collection (Retail) TK Million √

Financial Collection / Import Ratio % √

Financial Distribution Plant energised and in Service

TK Million √





Information HR



Financial Expenses TK Million √

Financial Liabilities (Current) TK Million √

Financial Liabilities (DSL Payment) TK Million √

Financial Liabilities (Long-term) TK Million √

Financial Liabilities (Medium-term) TK Million √

Financial Non-Operating Revenue TK Million √

Financial Operating Expenses (Other) TK Million √ √

Financial Operating Revenue (Other) TK Million √ √

Financial Operation and Maintenance Expenses

TK Million √ √

Financial Power (Energy) Purchase Cost TK Million √

Financial Power (Energy) Sales TK Million √

Financial Purchase Tariff (Buying Rate) TK / kWh √

Financial Repayment (Actual) TK Million √

Financial Repayment (Principal Due) TK Million √

Load Demand (Maximum) TK Million √ √

Load Consumption Pattern % change? √

Load Shedding (Division Wise) MW √ √

Load Shedding (Total) MW √ √





Information HR



Load Shedding Duration (Division Wise) Hours √ √

Load Shedding Duration (Total) Hours √ √

Number of Customer access to electricity by population (Division Wise)

% √ √

√

Number of Customers per Employee Number √

Number of Customers per km Distribution Network

Number √

Number of Employees (Full-Time) Number √

Number of Employees (Part- Time) Number √

Number of Employees per km Distribution Network

Number √ √ √

Power (Energy) Import from BPDB GWh √ √

Power (Energy) Sales (Inter Utilities) GWh √ √

Power (Energy) Sales (Retail Sales) GWh √ √

Power (Energy) Sales Tariff (Average Tariff Rate)

TK/kWh √ √

Power Factor % √ √

Power Factor Correction Capacity (Fixed) MVAr √ √

Power Factor Correction Capacity (Switched) MVAr √ √





Information HR



Project Status Planning stage Procurement stage Implementation stage Completed Deferred / delayed Cancelled

Number √ √ √ √

Projects (Estimated total costs to complete) TK Million √ √

Projects (Estimated months to complete) Number √ √

Projects (Financial progress) % √ √

Projects (Physical progress) % √

Projects (Total cost incurred to date) TK Million √ √

Projects (Total costs committed) TK Million √ √

Projects (Total funding – Foreign) TK Million √

Projects (Total funding – Local) TK Million √

Projects (Total funds released – Foreign) TK Million √

Projects (Total funds released – Local) TK Million √

Projects in Progress Number √ √ √

System Demand MW √ √

System Loss % √ √ √

System Loss MW √ √



Appendix 7.5: Illustration of Performance Targets

Measure Description Actual Target

Frequency of Measure

Explanation

Accounting

Profit Profit before tax (audited) TK Million Annual Should be the overriding financial measure but Regulator may reduce Company’s ability in this area Preset Target improvement year on year

Profit/turnover Per audited accounts % Annual

This will show the extent to which additional revenue is profitable –aim should be to maintain or improve Preset Target improvement year on year

Revenue Per audited accounts TK Million Monthly

The absolute level of revenue will partly measure Company’s ability in improving capacity, extending the network, reducing losses etc. and the ability to negotiate tariff increases with the Regulator Preset Target improvement year on year

Revenue/ employee

Per audited accounts TK Million Annual Partly measures Company’s efficiency Preset Target improvement year on year

Profit/ employee

Per audited accounts TK Million Annual Partly measures Company’s efficiency Preset Target improvement year on year

Profit/ assets

Profit before tax/total assets as per balance sheet

% Annual Partly measures the profitability of the Company’s assets Preset Target improvement year on year

Revenue/MWh Revenue per kWh delivered TK Million Annual Partly measures Company’s ability to negotiate increased tariffs Preset Target improvement year on year

Revenue/MW Revenue per MW of capacity TK Million Annual Partly measures Company’s ability to negotiate increased tariffs Preset Target improvement year on year

Profit/MWh Revenue per kWh delivered TK Million Annual Partly measures Company’s ability to negotiate increased tariffs Preset Target improvement year on year

Current ratio Current assets as a proportion of current liabilities

% Monthly

Measures Company’s management of: Current Assets i.e. cash, stock, debtors etc. Current Liabilities i.e. suppliers invoice etc. Should be 100% or above

Profit/MW Revenue per MW of capacity TK Million Annual Partly measures Company’s ability to negotiate increased tariffs





Explanation

Preset Target improvement year on year Variance against budgeted operating costs

Percentage deviation from pre set budget.

% Monthly Part of the Management Account Process Should be 0 or under spend unless adequate explanation

Variance against budgeted capital expenditure

Percentage deviation from pre set budget

% Monthly Part of the Management Account Process Should be 0 or under spend unless adequate explanation

Work in progress Value of work in progress TK Million Monthly

Measurement of the management of the current work in progress and it is important to convert expenditure into operational assets. It is also a monitor to avoid manipulation of CAPEX spend Should be kept to a minimum i.e. expenditure should be converted to operational capital ASAP

Work in progress as proportion of CAPEX

Value of in progress as a proportion of CAPEX for the period

TK Million Monthly

Measurement of the management of the current work in progress and it is important to convert expenditure into operational assets. It is also a monitor to avoid manipulation of CAPEX spend Should be kept to a minimum i.e. expenditure should be converted to operational capital ASAP

Capacity

Increase in capacity of network

Total capacity MW Monthly

Measures Company’s performance in increasing the capacity of the Network Preset Target increase

Increase in capacity of network

Total length of overhead lines km Monthly

Measures Company’s performance in extending the Network Measures Company’s performance in increasing the capacity of its network Preset Target increase

Incremental increase in capacity /capital expenditure

Length of live transmission lines added in period divided by the CAPEX for period

TK Million per km

Monthly

Partly measures Company’s ability to manage costs of improving the Network Measures Company’s performance in increasing the capacity of its network Preset Target based on budgets





Explanation

Technical and Commercial System Losses - 1

Losses as % of energy transmitted Total Metered Power Imported (GW) / Total Metered Power Sold (GW)

% Monthly

Partly measures Company’s ability to manage costs of improving the Network Measures Company’s performance in decreasing and managing the network losses Preset Target improvement year on year

Technical and Commercial System Losses - 2

Losses as % of the cost of energy transmitted Total Cost of Power Purchased (TK Million) / Total Collection of Power Sold (TK Million)

% Monthly

Partly measures Company’s ability to reduce commercial losses due to unaccounted energy use and theft. Company’s performance in decreasing and managing the network losses Preset Target improvement year on year

Asset Management

Maintenance programme

Completion of maintenance due % Monthly Partly measures Company’s efficiency in achieving planned maintenance work Preset Target improvement year on year

Distribution / Transmission System

Network analysis Independent Network analysis to highlight deficiencies in system

Report Bi Annually

Partly measures Company’s efficiency in identifying potential constraints within the Network and the ability to plan and implement such measures as to eliminate or reduce the impact of such constraints within an acceptable timescale

Availability

System availability

System availability %age % Monthly Partly measures Company’s efficiency in System Operations management of the Network Preset Target improvement year on year

Unplanned availability

System unavailability %age % Monthly Partly measures Company’s efficiency in System Operations management of the Network Preset Target improvement year on year

System Security

System interruptions

Total number of events involving a system interruption due to transmission network incident

Number Monthly Measurement for Reliability and Interruption Indices


Total number of events involving a system interruption due load shedding demands

Number (for comparison)

Monthly Measurement for Reliability and Interruption Indices





Explanation


Total number of events involving a system interruption due to distribution network incident




Total number of events involving a system interruption due to third party action (vandalism)




Unsupplied energy associated with events

kWhs Monthly Measurement for Reliability and Interruption Indices


Average event duration Minutes Monthly Measurement for Reliability and Interruption Indices

SAIDI System Average Interruption Duration Index

% Annually Benchmark measurement of reliability to compare nationally and internationally

SAIFI System Average Interruption Frequency Index


CAIDI Customer Average Interruption Duration Index


CAIFI Customer Average Interruption Frequency Index


Quality of Service Voltage excursions

Voltage excursions outside agreed limits

No. Monthly Measurement for Reliability and Interruption Indices

Frequency excursions

Frequency excursions outside agree limits

No. Monthly Measurement for Reliability and Interruption Indices

Billing Average time to produce customer invoice

Average time between end of month and production of Bills / invoices

Days Monthly Partly measures Company’s efficiency in its ability to bring cash Preset Target – should be [say] 5 working days

Invoice collection period

Average time to collect invoiced cash

Days Monthly

Partly measures Company’s efficiency in its ability to bring cash Preset Target – should be [say] 30 working days

Spares Management

Stock turnover rate

Value of Stock expressed as number of days usage (Stock value x 30) / stock used in month

No. of days equivalent

Monthly Partly measures Company’s efficiency in the management of stock and spares Preset Target





Explanation

Value of Stock turnover

Value of Stock used / value of stock held & used in month

% Monthly Partly measures Company’s effective control of stock and spares and of procurement system Preset Target – improvement year on year

Staff

Staff turnover Number of employees leaving as proportion of total numbers

% Monthly Partly measures staff morale Preset Target

Employee lost time through injury

Days lost Days Monthly Partly measures Company’s effectiveness in implementing Health and Safety processes Preset Target – reduction year on year

Employee lost time through sickness

Days lost Days Monthly Partly measures Company’s effectiveness in implementing Health and Safety processes Preset Target – reduction year on year

Training

Delivery of training

Employee audits to assess understanding and competence levels

% Quarterly

Partly measures Company’s effectiveness in implementing training and staff development programmes Preset Target

Public Safety

Members of public injured

Number of incidents where members of the public injured

No. Monthly Partly measures Company’s effectiveness in implementing Health and Safety processes Preset Target – reduction year on year

Reporting

Delivery of reports

Weekly reports – number of days after end of period reports finalised

Days Weekly Partly measures Company’s efficiency in the timely production of reports Preset Target

Delivery of reports

Monthly reports – number of days after end of period reports finalised

Days Monthly Partly measures Company’s efficiency in the timely production of reports Preset Target

Delivery of reports

Annual reports – number of days after end of period reports finalised

Days Annually Partly measures Company’s efficiency in the timely production of reports Preset Target



Appendix 7.6: A Typical Reporting Regime

Annual Reports

Annual Reports are produced for the Board, stakeholders and potential investors to understand the overall performance and viability of the company and to fulfil regulatory and legal requirements.

Annual Report Examples:

Business Plan, incorporating operating expenditure (OPEX) budgets and Capital expenditure (CAPEX) budgets;

5 Year Development Plan (for review and update);

Annual Report (including audited financial statements);

Operations (System) Performance and Quality of Service Report;

Engineering (Technical) Report;

Human Resources Report; and

Performance Evaluation Report.

Monthly and Weekly Reports

Monthly and Weekly Reports are produced for Directors and Senior Management to make them aware of the performance of the functions for which they have accountability and to provide the information to assist them in their decision making process.

Monthly Report Examples:

Tariff Income;

Billing and Collection Analysis;

Profitability;

Operating expenditure against budget (detailed) and variance analysis;

Capital expenditure against budget;

Work in progress;

Debtor analysis;

Creditor analysis;

Stock value;

System performance (including Reliability and Delivery Point Interruption Indices as per Distribution Code);

Progress with maintenance programme;

Equipment failures and major repairs performed;

Energy balance; and

System transformer loading.



Weekly Report Examples:

System performance;

Staff attendance; and

Project progress.

Daily Reports

Daily Reports are produced for Senior Management, Functional Managers and Supervisors to make them aware of the performance of the functions or activities for which they have responsibility and to provide the information to assist them in their decision making process.

Daily Report - Previous Day

Peak and minimum demand supplied via HV network;

Actual peak demand minimum demand constrained system marginal cost;

Daily units transmitted;

% System Losses;

Faults on Plant (by voltage);

Losses of supply from network;

Detail of Voltage and frequency excursions outside Distribution Code limits exceeding 5 minutes;

Incidences of demand control;

Violations of Planned System Constraints; and

Use of Public Services, (Fire, Police, Accident etc.).

Daily Report – Current Day

Revised estimated peak and minimum demand;

Revised Constrained System Marginal Cost prediction;

Predicted demand control measures;

Predicted Active System Constraints; and

System Alerts Issued.

On-demand Reports

It is normal practice to have a process in place which “automatically” initiates the production of a notification of the event or incident, following which an investigation may be conducted to produce a more detailed report. These reports provide information to the manager who is accountable for the particular function in which the event or incident occurred to enable them to initiate any necessary remedial actions. In addition, the process may require copies to be supplied to one or more interested parties in the management hierarchy who may have overall accountability for the particular type of event.



Examples:

Accident report;

System Disturbance Analysis report; and

Major incident report.

Ad-hoc Reports

There will always be a requirement to supply specific information to external bodies, for example the Government and the Regulator, on an ad-hoc basis and as such a formal procedure should be introduced to ensure that the production of such reports is appropriately authorised and recorded.

Exception Reports

Normally associated with project management or financial budget monitoring, exception reports may be generated to draw the attention of management and to provide them with an explanation when a major event has or is too likely to occur. For example the resources (time or money) associated with a project stage has fallen or is expected to fall outside, the pre-agreed boundaries (normally exceeding time or budgeted costs) or when a particular cost centre will exceed its budget allocation during a period without any chance of recovery at a later time. In both examples the main advantage of exception reports it that they alert manager early to enable them to make the appropriate decisions to mitigate the problem which may, in the case of a project, result in the cancellation of the whole project.



Appendix 7.7: Information and Communications Technology (ICT) Governance and Strategy1

Introduction

The discipline of ICT Governance derives from Corporate Governance2 and this paper has been prepared by the BPI Consultant to introduce the concept of ICT Governance which underpins that of Corporate Governance. The paper describes a methodology for developing a strategy by which ICT can respond to the business needs of the organisation and proposes a platform which can provide the appropriate ICT services and support. Finally a list has been provided of the potential benefits which can be achieved from implementing this approach to ICT Governance and Strategy.

During the past few decades Information and Communication Technology (ICT) has, in all business environments, moved from being seen as a service provider to become a strategic partner where ICT is viewed throughout successful organisations as a tool for increasing and improving business growth rather than just an expense. An external driving force in this movement has been due to increasing regulatory requirements3 – in the UK the Basel II, the European Commission’s Eighth Directive on auditing and the Freedom of Information Act and in the US the Sarbanes-Oxley Act.

The DPDC Board is ultimately responsible for all Corporate Governance and has such has the duty to ensure effective business control and avoid financial crises by introducing processes for accounting, financial reporting and auditing are in accordance with National and International standards, codes of best practices and, legal and statutory requirements. To ensure all DPDC business processes comply with these requirements the Board has the responsibility to ensure that the proper monitoring mechanisms and information security systems are in place through the development of an appropriate ICT Governance.

Developing an ICT strategy requires a process by which DPDC business needs can be identified. A methodology, which should be introduced to all DPDC departments, to identifying these business needs is proposed which will define the high level objectives and introduce a process for describing a framework by which these objectives can be achieved. The methodology and process described – producing mission and vision statements, setting departmental, group and individual objectives and performance assessment4 - should be applied in a transparent, fair and consistent manner throughout all DPDC functions if meaningful key business performance indicators and measurements are to be delivered through a Management Information System (MIS).

To deliver the appropriate ICT services and support a platform needs to be established which provides the technical environment and organisation by which data and information can be made readily available to those authorised access in order to carry out their business activities.

By adopting this approach DPDC ICT can successfully deliver, in the short to medium-term, those business transaction and information systems which fulfil the current requirements of


draft to be issued March 2008 2 Corporation of DESA – Board Composition, Structure and Governance - Report. Issued June 2005, revised and re-issued

September 2007 3 Articles giving a more detailed background can be found at www.itgovernance.co.uk and www.ft.com /pp/itgovernance 4 Objective Setting and Performance Management Processes



the non-operational (e.g. SCADA) DPDC business activities5 together with the necessary ongoing support and will establish the framework to support future business process improvements in the medium to long-term.

Corporate Governance

The Board is ultimately responsible for all aspects of Corporate Governance6 and as such has the duty to ensure effective business control and avoid financial crises by introducing processes for accounting, financial reporting and auditing which are in accordance with National and International Standards, codes of best practices and, legal and statutory requirements.

In addition to the regulatory requirements, business continuity and disaster recovery planning is a key governance responsibility. The UK Companies Act 2006 gives statutory force to what has long been the worldwide common law duty of directors, which is to exercise due care in relation to their companies. The Board is accountable for ensuring that the organisation has developed and tested business continuity and disaster recovery plans that deal with all the likely risks that face the organisation.

With the introduction of Corporate Governance the organisations Core Values will evolve over a period of time which will encourage all staff to adopt the appropriate mindset and business culture.

ICT Governance

ICT Governance7 deals primarily with the connection between business focus and the ICT management of an organization. It highlights the importance of ICT related matters in contemporary organizations and states that strategic ICT decisions are to be made by the Board, rather than handled by the Head of ICT or other ICT Managers. Well-defined control of ICT is a key contributor to business success and the following three considerations need to be addressed:

1. ICT Governance cannot be designed in isolation from any other key asset (e.g. Sales & Distribution, Operations, Financial, Human Resources (HR) and Audit etc.) Thus the individual or group must have an enterprise-wide view that is beyond ICT as well as credibility with all the company’s business leaders;

2. The person or group cannot implement ICT Governance alone. The Board or CEO must ensure that all managers are expected to contribute to ICT Governance as they would contribute to any other key asset; and

3. ICT assets are critical to the performance of most enterprises. The person or group owning the ICT Governance must understand what technology is and what technology is not capable of doing.

The Board can be expected to delegate an individual (i.e. CEO) or a group (e.g. Information Management Strategy Committee (IMSC) reporting to the Board) to be accountable for the

5 Due to the timescale of the current project the BPI Consultant has assumed that the information system required by the

business activities do not differ greatly from those identified in the ADB – 963 BAN Financial Management Upgrade (FMU) project

6 Corporate Governance embraces all departments of the organisation who will be required to introduce and apply applicable business rules and practices and to develop their own business strategies.

7 ICT Governance is a framework for the leadership, organizational structures and business processes, standards and compliance to these standards, which ensure that the organization’s ICT supports and enables the achievement of its strategies and objectives.



design, implementation and performance of the ICT Governance. The meeting of the IMSC may be only occurring quarterly and therefore it is normal for a hierarchy of sub-committees to be established which are closer to the business processes. An example of such a committee structure is given in Attachment 7.7.1.

ICT Governance highlights the importance of ICT related matters in modern organisations to assure that the investments in ICT generate business value and to mitigate those risks associated with ICT. This can be done by implementing an ICT organisational structure with clear roles for the responsibility of information, business processes, applications, infrastructure, etc., and through introducing and enforcing the appropriate technical standards and user policies.

Methodology for Developing an ICT Strategy

The Board will expect the ICT Strategy to be aligned to reflect the Corporate Strategy and all subsequent strategic planning result in high-level objectives which will effectively contribute to the business activities required to achieve the Corporate Objectives.8 To make it clear to all concerned, it is appropriate to publish a Mission Statement which expresses the fundamental purpose of ICT within the organisation, followed by a Vision Statement which sets out the direction and framework for the ICT department. The Vision Statement is for all ICT staff to understand what their individual and collective contribution makes to the success and development of the business.

ICT Mission Statement

The ICT Mission must be expressed by a meaningful statement which clearly outlines the purpose and high level objectives by which the department will effectively contribute to achieving the Corporate Objectives. An example of a Mission Statement is given in Attachment 7.7.2.

ICT Vision

To achieve the ICT Mission a framework containing a number of internal and external statements of intent, expressed in terms of systems and services need to be stated. Some examples are given in Attachment 7.7.3.

ICT Objectives

The next stage in this process is to express each of the statements of intent as one or more objectives9 for the departmental function who has the responsibility for the specific ICT service or system for which the statement of intent applies. It is normal to find that some statements of intent may apply to the department as a whole or may span more than one function / units within the department. Each of these objectives will need to be measured to assess their progress and the degree of achievement. This performance management, which should be introduced throughout DPDC, establishes a process by which key performance indicators (KPI) and metrics are defined for each objective then cascaded down through the hierarchy of the department by which all members of staff have personal performance targets for them to be fairly assessed. It is important that this process of

8 This process should be Company-wide and undertaken annually. Corporate Objectives are agreed by the Board as necessary

to achieve their Corporate Goals. These are reflected in those set as high-level departmental objectives by the appropriate Business Function(s). Each of these high-level objectives may be further expanded in objectives for each subordinate function and may ultimately be set at an individual staff level. This is a top-down process ensures that contributions are meaningful and performance measurements can be introduced to enable management to monitor progress to achieving the Corporate Goals.

9 A technique should be applied to each objective such as “ASTREAM” - Agreed, Specific, Time bound, Realistic, Empowering, Achievable, Measurable.



assessment applies to all levels throughout the department, including management, and the criteria for developing the performance measurement are transparent, fair and consistent throughout DPDC.

Availability of management information relating to such performance supports the various levels of managers and supervisors in their decision making processes. By providing management with a means of measuring individual, section and departmental performance the process will enable them to focus on particular functions or activities which require attention, either due to under achievement or setting the original targets too high. This presents management with the opportunity to apply business process improvement methods and to identify those staff that needs to improve and develop their performance through additional support and / or opportunities for training. A brief description of some training schemes has been given in Attachment 7.7.4.

Developing the ICT Strategy

ICT Systems, Services and User Facilities

The delivery and support of ICT services can be seen as being provided through three key interdependent functions - ICT systems, services and user facilities – and as such consideration must be given to the impact in each of these functions of any change. The need for change will be driven or influenced in three areas as illustrated in Figure 1.

Figure 1: ICT Drivers or Influences for Change

Corporate Requirements - the need to achieve overall corporate objectives. Taking the Company Mission Statement and Core Values as the starting point, the IMSC has established a set of KPIs which needs to be attained if the Company’s mission is to be achieved.

IC T S T R A T E G Y - IN F L U E N C E S

C o rp o ra te R e q u ire m e n ts

C u rre n tS y s te m s

N e w ITO p p o rtu n it ie s

P ro p o s e d S y s te m s & S e rv ic e s

C o rp o ra teO b jec tive s

K e y P e rfo rm a nc eInd ic a to rs

S ta te o fH e a lth

O p p o rtu n it ie s to e xp lo it IS /IT to g ive c o m p e tit ive

a d va n ta g e o rb u s ine s s Im p ro ve m e n ts

K e y B u s ine s sP ro c e sse s

N e e d fo rC ha ng e o r

R e p la c e m e n t



The identification of the KPIs and key business processes should form the foundation of all subsequent work on the consolidated portfolio of ICT systems and services. The extent to which a system or service could contribute to the support of a key business process will be a significant factor in the ranking of prospective ICT projects.

Current Systems - the need to ensure the continued good health of existing systems and services.

The state of health of existing systems and services has to be analysed by surveys and interviewing key managers and users, assessing technical quality and comparing with the “best” systems known to be available in similar electricity distribution organisations.

New ICT Opportunities - the need of the business to exploit ICT to assist in achieving individual targets.

ICT not only has a major role in supporting the business but can be pro-active in generating new opportunities which have yet to recognise and can be a key factor in improvement programmes such as business process re-engineering.

Consolidation of Requirements

The requirements identified in the three functions described above have been consolidated into four key areas as follows:

1. Information - covers knowledge management, record & document management, data management & content management.

2. Applications - business software applications and the strategy for developing these applications.

3. Organisation - covers the overall management and direction of ICT, governance issues, recommended organisational structure and roles and responsibilities for the key functions and required skills and training.

4. Technical Environment - deals with the information technology infrastructure to be deployed including security, business continuity,10 integrated application, operating platform, data network and communication requirements.

Information

The vision for the management and provision of information to users is to implement an information portal to provide access to both structured and unstructured information. This portal would address access to reports (MIS), reference material, templates, files, processes and procedures. The following recommendations are made to provide for this:

Business data and information should be viewed as a business critical asset and to ensure business continuity must be secure and protected. A daily routines for backing up and storing this data and information should be established together with maintaining a disaster recovery facility as part of a business continuity plan;

A data warehouse is established to store information sourced from the many business processes that will provide the data for the various reports which will aid management

10 Business continuity covers the disciplines of disaster management, disaster recovery and emergency planning. Many

companies throughout the world see this as the central part in complying with the regulatory requirements addressed by Corporate and ICT Governance.



and staff in their business decision making process. This data warehouse will be accessed through the intranet for structured, predefined reports and by reporting tools used by a limited number of end users;

The reporting requirements of the management team should be based on the key performance indicators (KPIs) for the individual business units to maximise the benefit to be achieved from the structured reports and reduce the number of ad hoc reports required;

The Intranet is developed to deliver information and knowledge within the organisation. This can be achieved through developing common formats to display information facilitating more user-friendly use of the intranet;

A content management tool is selected and implemented to fully exploit the intranet as a mechanism for sharing information with staff. This will provide the organisation with functionality such as search capabilities and automated publishing processes;

The requirements of exchange of data or information with external bodies such as BERC, Market Operator, Bank(s) etc., should also be explored and their requirements delivered through a secure extranet solution; and

XML should be adopted as the data exchange standard both between systems within the organisation and for transferring information to external bodies such as BERC etc.

Data Management

A number of key requirements have to be identified:

To minimise errors, confusion and duplication there is a requirement for data entry and validation of entry to occur only once;

There is a need for greater access to data by various applications to enable sharing and integration of information;

Managers and staff need better access to information. They need to be able to view, extract and analyse data to support them in their day to day activities; and

There is a need for greater flexibility to change systems and data to support future business requirements.

The basic elements of a data management strategy are:

All data will be regarded as a corporate asset;

Access to data will securely managed through a secure authorisation process;

The integrity and security of all data will maintained to ensure business continuity;

A corporate data dictionary will be employed to ensure consistent definitions of data;

Relational databases will be used, wherever possible; and

Appropriate national and international standards will be extended to ensure compliance with the strategy.

Corporate Data Dictionary

An overall data model will provide a framework for database design. This will define, at a high level, the corporate data items and their relationships. The corporate data dictionary



will implement this model, allowing future expansion of data into more detail and provide a single, consistent source for new systems.

Utilisation of this single data dictionary will be a powerful influence towards improved productivity, reduced errors and greater integration between different systems. Consideration will be given to ensure that the use of a common data dictionary does not restrict the company’s freedom to use any commercial or open-source software packages where beneficial.

Relational Database Techniques

The need to provide management information can be best met by the provision of relational databases that allow easy access to data with an easy-to-learn enquiry language. It is proposed to implement relational database management techniques.

Where current transaction processing systems (TPS) use conventional databases the most cost effective method of restructuring and / or conversion to a rational database will be considered.

In the past, database design has concentrated on the needs of individual systems. This approach has led to difficulties when other systems have needed to make use of such data causing performance problems or creating duplicate databases which often are not synchronised. In future, individual systems and database design will take into account the potential needs of other uses of data throughout the company. A standard database access method will be adopted to make it possible to access any data from any application regardless of which database management system (DBMS) is handling the data. To achieve this both the application and the DBMS should be open database connectivity (ODBC) compliant.

Applications

The application vision for the organisation is to develop systems and applications that are focused on the customer (e.g. individual staff member, unit, function, company etc.) and over time reduce the number of sub-systems being supported within the organisation. It is proposed that this vision is achieved through a number of recommended actions as follows.

Applications are designed and focused on the business units with component based architecture providing common components able to be re-used by business specific applications;

Where possible, package solutions should be purchased where the fit between the package and the business requirements is close (e.g. HR and payroll);

An ICT Steering Committee should be established with responsibility for prioritising ICT projects. This committee would comprise of ICT and business unit management who would consider the costs and benefits to the organisation of each project proposed as well as linkages with other projects and business units;

Each project should have a sponsor ensuring business ownership and responsibility for implementation and change management;

For any new systems or significant enhancements business process reviews should be carried out in advance of development to provide for streamlining or re-engineering of processes to achieve increased efficiencies through the new systems; and



The impact of a prolonged loss of each non-business critical application should be reviewed as part of the business continuity planning process.

Organisation11

A new organisation structure and appropriate resources are required to support the implementation of this strategy and to ensure the organisation utilises ICT to its full advantage. To ensure current best practice the guidelines as detailed in the Information Technology Infrastructure Library (ITIL) 12 IT Service Management have been used to ensure that the key functions for service delivery and service support are contained within the organisation. The ITIL guidelines provide a framework for IT Service Management and some main elements are shown in Attachment 7.7.5. Following this approach, to achieve an effective ICT organisation there are a number of undertakings to adopt as follows:

A new organisational structure providing more focus on the key activities of the ICT department. The structure recommended consists of the following groups:

o Management & Governance - fulfilled by senior management providing overall strategic direction with responsibility for the implementation of the strategy;

o Design Authority - responsible for developing ICT procedures, standards, the enterprise data model and applications architecture;

o Servicing Customers Group - proactively work with the business to determine their requirements and manage support through the provision of a helpdesk; and

o Projects Group - responsible for managing, developing and implementing new systems and technology projects.

A greater emphasis on ICT training across the organisation with increased business awareness for staff ICT development;

In conjunction with this new organisational structure a number of ICT roles are created within the business units at Headquarters, Circles and Divisional offices, and Revenue and Development stores.

These roles are as follows:

o Customer group which will be responsible for ensuring that systems and networks are available to the users;

o The introduction of a centralised helpdesk to provide first line support, by taking all calls and email requests from users;

o Functional liaison in each business unit with responsibility for identifying the ICT needs of their business unit and liaising with the Servicing Customer and Projects Groups to ensure implementation of these; and

o ICT Co-ordinators13 who will have the responsibility for championing ICT in Headquarters and Circles, identifying training and technology requirements, providing hands-on support, one-to-one training and working closing with central

11 BPI will present a paper proposing the establishment, in the medium to long-term, of an ICT Department within DPDC 12 Created in the UK by The Office of Government Commerce (OGC) 13 With suitable training and effective support this role may be undertaken by a non-member of the ICT Department



ICT to ensure effective use of ICT resources. If the demand is sufficient this may be a full-time role but in general it is seen as a part-time role.14

The responsibility for the security and protection of all the Company’s ICT assets (e.g. data, applications, etc.) should undertaken by a senior manager within the ICT organisation.

The new organisational structure will facilitate increased communication between the business and ICT and provide for improved planning and more focus on delivery of projects successfully and build a greater understanding of each party’s duties and responsibilities.

Technical Environment

There is a need to develop a robust technical environment capable of meeting the company’s future ICT needs whilst protecting existing investments. The future technical infrastructure must maximise the opportunities for competitive purchase of hardware, software and services and the integration of these with existing facilities. This can be achieved most effectively through the implementation of “open” systems and “open” standards.

The infrastructure can be considered to be made up of various hardware and software elements (DBMS, client/server and Web-based Intranet / Intranet technologies etc.) linked together by a data communications network. Open architecture interface will enable transparent access by applications which will accept direct input from Web forms, process the relevant queries and generate Web pages to present the requested output.

The adoption of a standards-based central ICT management platform will enable the proactive management of the whole of the ICT infrastructure delivering more cost-effective services.

The principle aim of the technical environment vision and recommendations is to increase consistency in the procurement and use of technology across the company’s organisation. The following recommendations are aimed at fulfilling this requirement:

The exchange of data between DPDC locations should be provide by way of a wide area network (WAN) using the most cost effective data communications services available. The capacity of the WAN will be dependent on the data traffic between any two sections. The provision of the WAN could be supported using the DPDC telecommunication network or provided by public telecommunication operators, offering data network services;15

Secure dial-up or internet connections should be considered for those locations with low usage or remote working16 requirements and for data exchange with external bodies which do not require permanent connection. In addition this option can also be consider for providing back-up links for business continuity and disaster recover;

Within offices industry standard local area network (LAN) should be provided;

14 The quantity of involvement could vary from full-time during the introduction of a new system or service to part-time after a

sufficient time for the system or service to become stable and when new users need support. 15 Consideration must be given to contract management with appropriate Service Level Agreements (SLA) 16 Locations without WAN permanent connections (i.e. authorised access from home or operational sites with telephone or internet

connections)



A standard desktop (image) should be developed centrally and rolled out to all staff and loaded on all new PCs with all staff using the same software and operating systems. Non-standard software will be allowed to be installed; and

Procurement guidelines should be established to ensure that only standard hardware is procured, possibly through centrally agreed drawdown contracts. Only approved hardware can be connected to the LAN and WAN and any non-standard hardware (e.g. PCs, printers) should be installed as “stand-alone” and should not be supported. The opportunity for outsourcing support and maintenance facilities17 should be explored.

Where necessary the appropriate technical standards and user policies should be made available and a process established to enforce their observance. A suggested list of such technical standards and user policies is given below:

Document Title

Administrator ID

Electronic Communication

Encryption and Transmission Standards

Group Wise Naming and Structure

Hardware & Software Purchasing

Internet & E-mail

Internet User Guidance

IT Physical Security

Password Standards

PC & Network Cabling Installation

PC/LAN User Guide

Privacy & Disclaimer

System Logging & Violation Reporting

Virus Protection Standard

17 Consideration must be given to contract management with appropriate Service Level Agreements (SLA)



Benefits

There are significant benefits in adopting the strategy and recommendations set out in this paper. It is not possible as part of the strategy to develop quantifiable benefits accruing from this strategy but below is highlighted the areas where the largest benefits should accrue:

Significantly improved service to customers (e.g. individual staff member, unit, function, company etc.) by:

o Redesigned business processes leading to improved effectiveness and efficiency within the organisation.

Improved ICT services by centralised ICT network management to deliver:

o Operational control of all ICT resources and database access, integrity and security;

o Company-wide standards which are defined and implemented (less potential for incompatibility in systems and more importantly data);

o Build and maintain a pool of experienced staff and shared resources (more likely to successfully achieve major in-house developments);

o Justification for sophisticated tools;

o Growth accommodated and controlled by small increases in total ICT size (no ‘big bang’, ‘evolution not revolution’);

o Reduction in duplication in effort, resources and experts;

o Economies of scale and overall organisational cost savings;

o Capacity to handle large and complex ICT projects (opportunity for staff to develop project management skills); and

o Support all departments associated with business process re-engineering (central provision is unbiased for all business processes).

Improved management policy and decision making through:

o Timely and accurate information;

o Mechanisms to monitor and manage the organisation’s KPIs; and

o The ability to share information and base business decisions on previous experience.

Improved delivery of ICT services and projects through:

o Formal planning and prioritisation processes in place;

o Increased focus of ICT resources on core competencies and the requirements of the organisation;

o Opportunities for outsourcing non-core activities (e.g. software support, PC & Printer maintenance, communications etc.); and

o Re-organisation of staff so that skills match roles.

Long-term gains in efficiency within ICT through:



o Business continuity in the event of a major disaster;

o Reduced support requirements for new applications;

o Standardised desktops, hardware and software;

o Increased business awareness by ICT staff;

o Greater understanding of ICT services by staff; and

o Greater flexibility of staff through the development of standard skills.

Recognition of a well organised and managed company, demonstrating effective Corporate Governance through transparent auditable financial processes which gives confidence to the long-term viability of the company and sets a good example throughout Bangladesh and the rest of the world.



Attachment 7.7.1: Examples of an ICT Committee and Sub-Committee Structure

Information Management Strategy Committee (IMSC). Chaired at CEO level with membership drawn from business functions with key central roles or majority responsibility for delivering the core business services;

o Take responsibility for the development and implementation of the company’s ICT Governance and Strategy including information security;

o Regularly review the company’s ICT Governance and Strategy to ensure alignment with Corporate Governance and Strategy;

o Develop and communicate18 the ICT strategic plan in line with Corporate business objectives;

o Promote closer collaboration between business functions in the implementation and development of ICT systems and services which deliver more integrated and interactive information;

o Review the performance of the IT Department and the benefits achieved through the IT systems and services, and;

o Approve and prioritise all major ICT projects (to some criteria/ threshold parameters).

Head of IT Committee (HITC) – To be chaired by the Head of IT, with membership drawn from the senior management of each business function;

o Responsible and reporting to IMSC;

o Ensure that the company’s Governance and Strategy is actively being implemented;

o Addressing the priorities determined by the IMSC;

o Provide leadership in ICT issues throughout the company;

o Identify strategic issues, and;

o Act as a forum for information exchange between all departments.

A steering committee that represents all end users and the IT department and to be chaired by the Development Services Manager with membership drawn from the management of each business function and / or representatives of specific user groups;

o Responsible and reporting to the Head of IT;

o Set IT policies, agree priorities and co-ordinate IT projects in line with HITC requirements;

o Ensure that the company’s Governance and Strategy is actively being implemented;

o Input to planning, budgeting, development and maintenance;

18 Publish company’s Governance and Strategy, Codes of Conduct, disciplinary rules for misuse of ICT, and the meeting outputs

from the IMSC, HITC and Steering committees.



o Encourage and embrace new ideas, and;

o Provide a means for problem and complaint handling.

Attachment 7.7.2: Example of an ICT Mission Statement

“To maintain business momentum by the effective delivery and operation of information systems, taking proactive interest in business activities and to give good leadership in all ICT issues in alignment with corporate strategy and objectives.”

Attachment 7.7.3: Examples of ICT Vision - Statements of Intent

Information and Communications Technology: "To maximise the use of ICT in the provision of services and in internal processes and systems."

Quality & Standards: "To set and promote world class standards in ICT processes, employment practices and training within a framework of total quality and continuous improvements."

Security: "To appoint an ICT security officer with responsibility for introducing measures to protect the organisation from software viruses and other threats.”

Corporate Image and Communications: "To ensure that our customers and key stakeholders are fully aware of the availability of our services and that the reputation of the organisation is consistent with the achievement of the organisation's objectives."

Communications with the Business Units: "To establish formalised structures to manage communication between the ICT Department and the business."

Communications within ICT Department: "To establish formalised structures to manage communication within the ICT Department."

Organisation Development: "To develop knowledge, skills and competencies of staff, to improve organisational structure and to develop a culture to support the achievement of objectives."

Career Development with ICT: "To develop and implement a formal career development and training plans to attract, develop, motivate and retain ICT staff."

User Support: "To put in place a formalised structure to provide efficient and effective support for the end user."

User Skills & Training: “To develop and implement a training programme that meets all users’ needs."

User Tools: “To provide users with the tools and knowledge to support their reporting requirements."

User Responsibilities: "To establish and communicate responsibility to users."

Customer Service: "To proactively measure and manage customer satisfaction."

Hardware and Software: "To put in place effective standards and policies for use of hardware and software."

Implement a Common Desktop: "To put in place a standard desktop throughout the organisation.”



Infrastructure: "To put in place a reliable, secure and flexible local and wide area network to support the current, interim and planned applications across the organisation."

Intranet: “To maximise the effectiveness and use of the Intranet as a means of accessing and sharing information within the organisation."

Future Developments: “To be aware of developments and enhancements in the exiting ICT systems and services.”

Attachment 7.7.4: Training Schemes

The type of ICT course and curriculum should be tailored to address an individual’s skill gap. The most cost effective delivery of such courses should be considered – “in-house”, on site or the company’s Training Centre(s), Local Educational Institutions, Supplier / Partner provide training, E-learning / Distant Learning etc., using internal / external trainers / instructors.

Induction Training

Develop a basic IT skills course to form part of the company’s induction training. Typical items to include are:

Desktop, Email, Intranet internet usage policies;

Use of the Intranet;

Electronic file management; and

Helpdesk and support procedures.

Basic PC Training

Develop a basic PC training course for all staff to provide a minimum level of IT literacy required to perform their work.

Just-in-Time Training

This training should be prepared and delivered in advance of any new or modified system going live and it should be focused on ensuring that “users” are fully aware of the functionality of the new or modified system. The format and content of such training should involve both ICT and the business unit involved with the system. The use of Trained ICT Trainers (ICT Champions?) from within the business unit should be considered to deliver specific training on the new systems.

Task Oriented Training

This type of training is highly focused and normally for a short period of time for both ICT and business training to address a specific skill gap.

Assessment of Training Requirements and Training Plans

It should be the responsibility of all Business Unit Managers to ensure that all members of their staff have adequate training to carry out their work cost effectively and to the benefit of the company.

Performance monitoring and the use of skills gap analysis should be undertaken on a regular basis to identify courses and individuals’ development training needs. It should be



the responsibility of the Business Unit Manager to ensure that such training has been planned, completed and assessed for effectiveness.

Attachment 7.7.5: Information Technology Infrastructure Library (ITIL)19

• International best practice from a number of sources;

• A coherent set of guidelines that have been adopted across governments worldwide and are increasingly being deployed internationally by the private sector;

• Growth driven by outsourcing and the idea that internal IT departments are also service providers who have to deliver particular levels of service to meet the needs of internal business customers;

• Service delivery

o Service level management;

o Availability management;

o Performance and capacity management;

o Business continuity planning;

o Financial management.

• Service support

o Configuration and asset management;

o Incident control and help desk;

o Problem management;

o Change management;

o Release management.

• Plus: security, application management, ICT infrastructure management, software asset management and planning

19 Created in the UK by The Office of Government Commerce (OGC)



Appendix 7.8: Developing an Information and Communication Technology Department

Introduction

From the Information and Communications Technology (ICT) Governance and Strategy paper20 the high-level specification of the components of the four key areas (Information, Applications, Organisation and the Technical Environment) have yet to be finalised. This paper only describes an approach for developing an organisational structure for an ICT Department by implementing the relevant organisational and functional elements described in the ICT Governance and Strategy paper. However, any description of an organisation cannot be complete without reference to the three remaining key areas.

The future ICT Department will underpin the demands impose with the introduction of Corporate Governance21 by the Dhaka Power Distribution Company (DPDC) and must be able to provide and maintain effective ICT systems and services for the company’s non-operational (e.g. SCADA) business activities.22 The paper details, in generic terms, the ICT management and staffs evolving roles and responsibilities for the key ICT functions. Other issues covered are those necessary to develop good relationship with their customers (users) through effective communications and providing them with appropriate training. Finally a recommendation is tabled for consideration as to a framework for an ICT Department which, when fully established, will ensure the effective delivery and support of ICT systems and services for DPDC’s business activities. An ICT organisational structure with clear roles for the responsibility of information, business processes, user support, applications and infrastructure.

Evolution of ICT Departments

Traditionally, information system and technology departments were mainly technology driven service providers that focused on four major functions:

Managing computer operations;

Staffing, training and developing ICT skills;

Providing technical and end-user support; and

Managing system development and ICT projects.

The value of data and information to any modern day company is vital to its operations, development and financial success. Consequently, the supporting information systems (IS), data networks and communications infrastructure have become business critical elements where the failure of one or more elements, even for a relatively short time, could have a disastrous impact on the company.

More recently, the ICT department has moved from being a service provider to a strategic partner where ICT is viewed as an essential tool for maintaining and increasing business


draft to be issued March 2008 21 Corporation of DESA – Board Composition, Structure and Governance - Report. Issued June 2005, revised and re-issued

September 2007 22 Due to the timescale of the current project the BPI Consultant has assumed that the information system required by the

business activities do not differ greatly from those identified in the ADB – 963 BAN Financial Management Upgrade (FMU) project



growth rather than just an expense. This has resulted in a number of additional functions to be undertaken:

Information leadership;

Partnering with the executive to achieve business objectives;

Educating non-ICT managers about ICT;

Educating ICT staff about the business;

Business services support and development;

Actively involved with business process re-engineering;

Incorporating Internet and E-commerce into the business;

Web management;

Integrated portfolio management; and

Quality and performance management.

As a result of this evolution, the prominence of the ICT department within a company has been elevated from just a reporting unit to that of a functional department reporting at Senior Management or Director level. The responsibilities of the Head of ICT have been elevated from that of a Technical Manager to those expected at a more senior management level. By aligning ICT planning with the company’s objectives, ICT has become a key player in evaluating business issues and a major role decision making.

The New Role for the ICT Department and its Management

To reflect this new role the internal structure of the ICT department has to change with new and greater business and customer (user) focus. The ICT department’s own key issues also change to become aligned with the company’s business objectives.

As the ICT department matures within an organisation three major roles of ICT management emerge as follows:

Maintaining the business momentum (MBM) is concerned with managing the service providers by interpreting the business operational requirements needed to maintain their momentum. A key requirement of this role is the monitoring and measuring of the performance of the existing ICT services;

Improving business results (IBR) is concerned with business outcomes as the result of the using a particular IS. This achieved by assessing the performance of the system and determining the benefits delivered. A key requirement of this role is the ability to work with the business to understand their needs and their use of data and information with the objective of identifying process improvement opportunities which can be translated into IS solutions, measurable in business terms; and

Information leadership (IL) is to create competitive capacity through the introduction of new products or services by focusing on real business issues, with an external bias, and the ability to convey the significance to the rest of the company. This can be especially an important role in a regulatory environment.



These major roles result in the higher-level management responsibilities requiring different skills and attributes. A table summarising these requirements for these major roles has been produced in Attachment 7.8.1.

Establishing Effective ICT Systems, Services and Support

To ensure that ICT services, essential to enable business functions to effectively operate, are delivered and supported by an efficient ICT Department. To achieve this, the company will need to assign adequate resources to create and maintain such a Department as a business unit which will be able to deliver ICT systems and services at appropriate levels of service to all the company’s business functions. In addition to this major role there will be a requirement to ensure that business needs are translated into ICT solutions in a sensible and aligned manner to improve business results. These requirements can be addressed by dividing the responsibility into three major functions:

1. Service Delivery - to successfully deliver and maintain operational services;

2. User Support - to provide appropriate support to the users; and

3. Future Services - to successfully plan and deliver new projects.

This approach is illustrated in Figure 1 which shows the three major functions and associated high-level sub-functions.

Figure 1: Example of a Structure for an ICT Department Showing Key Functions



The three higher-level management roles may in some organisations overlap each other, with differing emphasis applied during the development of both the business and the ICT Department. The responsibility for each of these roles tends to be apportioned to ICT Senior Management. The role of MBM being that of the ICT Services Support Manager, that of IBR assigned to the ICT Services Development Manager and IL normally resting with the Head of ICT.

The Head of ICT should establish and maintain a department which has and retains adequate resources with the appropriate skills and experience to:

Proactively provide the information leadership role to create competitive capacity through the introduction of new products, services and markets by focusing on real business issues, with an external bias, and the ability to convey the significance to the rest of the company;

Maintain the business momentum and improve business results by organising and developing the enterprise-level delivery and support of all ICT requirements of internal clients. Ensure that all internal clients’ expectations will be met and internal and external resources will be optimised while delivering required levels of services to ensure efficient use of resources, and;

Establish and develop the department’s structure to ensure that its operation is in alignment with the business objectives of the organization. Provide the management and administrative direction and support for daily operational activities of the department through defining and implementing ICT policies, procedures, best practices, resource allocation, and internal controls.

From the high-level functional requirements, a model organogram showing all the major functions has been produced and is shown in Figure 2.



Figure 2: Model Organogram for an ICT Department

Attachment 7.8.2 gives some examples of roles & responsibilities23 which should be found in a model ICT Department. In practice it is normal to combine some of these roles & responsibilities under the management or supervision of one sub-function.

ICT Department Staff Skills

Before specialising, all staff should have a common foundation with a good basic ICT awareness and of the role that they perform within the department and its connection with the business. This will give all staff an understanding of their roles and responsibilities and the need for effective teamwork. A general understanding of the technical environment in which the ICT is operating will provide a sound foundation on which individual specialist skills can be applied. A list of such elements of a technical environment is given in Attachment 7.8.3.

As importantly, they should have a reasonable understanding of their company’s business activities and all the associated processes. This will give all staff an appreciation that they are customer-driven rather than technically driven. They will appreciate that new business process opportunities can emerge from this customer orientated focus, encouraging them to identify new processes crossing previous functional boundaries. This could lead to dramatic advantages to the company in improving business processes. 23 Generic roles and responsibilities derived from the ITIL framework guidelines



There should be a process in place to develop the company’s user population to be made aware of the role of ICT, including any limitation. As ICT impacts more on the business procedures, processes and activities, users need to understand better the service issues and give support both in the implementation and operations. The need for good and effective communications between ICT staff and users is essential.

Delivering ICT Services and Support to DPDC

ICT in DPDC

The DPDC Board have the duty to ensure effective business control and avoid financial crises by introducing processes for accounting, financial reporting and auditing are in accordance with National and International standards, codes of best practices and, legal and statutory requirements.24 As importantly, for DPDC to operate effectively as a modern electricity distribution company all the various levels of management require relevant, accurate and timely information to assist them in their daily management of the function(s) for which they are accountable and to support them in their decision making. Both these key requirements can only be achieved by the provision of a reliable Management Information System (MIS), effective transaction processing (TPS) and formal processes covering all the non-operational DPDC business activities.

The approach described above can be applied to any company whose Board are fully committed, together with their Senior Management, to embrace information technology and who acknowledge the benefits which can be derived from introducing effective ICT systems and services into their business. The successful of such an undertaking requires the establishment of an ICT Department which is resourced with people who have the appropriate skills and experience and with the right attitude and commitment to supporting the success of the company.

Current DESA ICT Support Structure

DESA’s current ICT infrastructure, business processes and information systems are not consistent across the company and, expect for the FMU25 Billing and Customer Accounting System and to some extend the Tongi Stores System, have been provided as predominantly standalone systems with little if any integration. Databases have been created in various formats that do not readily enable effective integration or direct access for management information. A high percentage of data inputs and outputs are manual and paper-based resulting in work being often replicated and subject to errors. No corporate data network exists as such, and so most management information is communicated non-directly and can result in long delays which can have a major impact on the management decision making process.

The current DESA Headquarters ICT Department high-level functional structure is shown in Figure 3.

24 Corporate Governance 25 Financial Management Upgrade



Figure 3: Current IT Centre Organogram

It appears that the DESA IT Centre currently only operates and supports the FMU Billing and Customer Accounting System and is in the process of completing the provision of remote facilities to total of 26 Divisions. To further improve the payment system a project has been submitted for approval to introduce bar-codes on each bill. The IT support structure, at the IT Centre, Headquarters and within the Circles seems to have evolved to reflect the current situation with the associated staff providing the best service possible with limited “tools”. With the lack of central policies some Divisions have embraced technology to a greater degree than others and established their own standalone LAN systems with office based applications. Under this “fragmented” approach the IT “department” has had limited influence in directing DESA to adopting a standard technology platform and consistent business processes in all offices which has had a detrimental impact on the company in restricting process development. Compiling the majority of management information and reports involves manually transcribing data from one source to another for processing or presenting. This process is subject to incorrect data being entered and creating of errors in the process which may not be recognised.

Current Applications

The suite of application modules which were purchased as part of the FMU projected are listed in Attachment 7.8.4. Although at time of installation it is believed that all the modules were tested and accepted the status of only two are operational. It would be necessary to



re-install and configure the application modules and setup and test the validity as an integrated financial suite.

Current Technical Environment

The schematic of the current technical environment is given in Attachment 7.8.5 and shows the various components which provide the billing and customer accounting service to 14 Divisions. An ongoing programme will extend this service to a total of 26 out of the 32 DESA Divisions. The remaining 6 appear to be operating their own billing and customer accounting system.

At many locations there are numerous items of IT desktop equipment (PC, printers etc.) running office software. A survey had been initiated during December 2007 to collect details of all such items from each location and as yet a number of returns are still outstanding.

Proposed ICT Systems and Services

There are two options currently being considered for the provision of ICT systems and Services to support DPDC’s business activities throughout the company:

Retaining the operational FMU modules and fully implement the complete FMU financial suit with the introduction of additional modules26 (e.g. Human Resources (including Payroll), Plant Maintenance Management, Project and Contract Management etc.); or

Specifying the requirements for a complete new ICT system which will provide all the services originally planned to be provided by the FMU project plus the same additional modules as above.

To enable company-wide use the systems a data network will be included in each option providing authorised access to those services applicable to particular business functions. To make more effective use of information for business management a process will be included to generate reports from a single system which will ensure that data contained in all reports is consistent and easily auditable.

To protect the IT investment already made by DESA, all existing IT items will, where applicable, be included in the network.

Proposed ICT Organisational Framework

The proposed ICT organisational framework shown in Figure 4 includes senior management positions, functions and sub-functions which should provide DPDC to establish, over a reasonable period of time, an effective ICT Department. Some of the sub-functions may not be served in-house but outsourced to specialist ICT company’s however, the responsibility for the preparation, performance monitoring and contract management must be within the department.

Actual staff numbers and grades may vary to match the resource needs during the various stages of the development of the systems and the delivery and support of the services. This process requires forecasting and planning skills as well as project management skills to ensure the appropriate number of staff with the right skills are available during the particular periods of time. Some staff may be required to undertake specific roles for a

26 The requirement for additional modules should come from the various business functions.



long-term whilst others may only be required for scheduled periods (e.g. during particular stages of a project).

There is throughout the world, including Bangladesh, a very high demand for skilled ICT. To ensure recruitment and / or retention of the right people the DPDC Board should consider those posts with business critical duties to be established as full-time positions.

Figure 4: Proposed ICT Organisational Framework



Attachment 7.8.1: Emerging Major Roles of ICT Management27

Maintain Business Momentum (MBM)

Improve Business Results (IBR)

Information Leadership (IL)

Purpose of the role

Availability & stability

Operations & efficiency

IT outputs

Business outcomes not IT outputs

Involvement with business improvement

Create new business

Interpret technology, increase business understanding & drive aligned change

What drives the

role?

Deliver IT when & where it is needed

Service levels dictate MBM activities

Deliver improved business results, not just systems

Be involved in business content

External focus converted into internal change

New capacity to complete

Activity areas by

role

Manage supply of IT

Service management

IT performance management

IT finance management

IT reporting

Business case review & follow-up

IT solutions

Business measurements of IT contribution

Information content

Operate at organisation’s boundaries

Interpret trends & events

Change business & IT thinking

Outputs

IT infrastructures

Applications maintenance & support

IT security & continuity

Benefits realisation

Translate needs/ opportunities into technology designs

Data-mined business opportunities

New products, markets & competencies

Strategic models, frameworks & understanding

People attributes

of role mastery

Management of IT momentum

Supplier management

Reporting

Management & achievement of business results

Vision & judgement

Influence & drive

27 Reprinted from “What business really wants from IT” written by Terry White – Table 3.1 The three roles of IT demand

management, 2004, with kind permission from Elsevier



Attachment 7.8.2: Examples of Roles & Responsibilities28 in a Model ICT Department

Head of ICT ideally has either a seat on or at least a route into the company’s Board / Senior Management team as a significant amount of the role may be in dealing with corporate ICT issues;

Services and Support Manager – has overall responsibility for the day-to-day management and operations of all operating ICT services;

Support Services Manager – has overall responsibility for all service support activities, which will involve a high re-active element. (Most likely to have a relatively large number of staff and thus will require good people management skills);

Services Delivery Manager - has overall responsibility for the delivery of all services, which will involve monitoring performance against delivery targets and quality of service agreements. (Most likely to have a relatively small number of staff and will require good communication and negotiating skills);

Services Development Manager – (outside the scope of ITIL) (Most likely to have a small number of staff, some highly skilled in applications support and application development, with others experienced in projects). There is scope for outsourcing some sub-functions as specific projects then the emphasis will be on the skills of initiating, scoping, tendering, evaluating and managing projects;

Project Manager – (outside the scope of ITIL) IT project management skills and experience. Needs good organisational and communications skills. (It would be an advantage if some or all members of the project team come from the existing ICT team even if only undertaking the project assurance role;

ICT Service Continuity Manager – this role will responsibility for ICT service continuity should form part of the company’s Business Continuity Team. The role can be combined with Availability and Capacity Management and with a security role. (the latter if seeking security accreditation i.e. BS7799);

Test Manager – ITIL defines the need for an independent testing function. (Best fits under Service Delivery where it can be independent of both change, configuration and release functions);

Service Level Manager – responsible for managing all Service Level Agreements (SLAs) and Operational Level Agreements (OLAs) (may have a customer relationship / account management role which has the responsibility for SLA review meetings and feedback on service quality);

Business Analyst – needs IT experience with in-depth knowledge of the company’s business processes. Acts as a translator between IS developers and users enabling a greater understanding of business problems and appropriate solutions. Also has the responsibility to ensure strategic business objectives and user requirements are understood and appropriately addressed by the technical members of the team;

System Analyst / Developer – specialising in analysing and designing information systems. Normally has some programming skills with a good knowledge of business

28 Generic roles and responsibilities derived from the ITIL framework guidelines



processes and good communication skills. (Will spend a lot of time with users to understand their requirements and to determine how best to meet their needs). Requires the ability to use specialised analysis and design tools;

Telecommunications / Network Specialist – needs a high level of technical skills and experience (degree / professional level for demanding mission-critical section);

System Operations Specialist – needs a high level of technical skills. Often specialises in particular technical hardware and related software areas;

Webmaster / E-Commerce Specialist – requires appropriate programming skills and experience with a good knowledge of the company’s business processes in order to link what a user (client) has displayed with other areas within the company (normally databases);

Technical Support – responsible for the technical support and maintenance of all the systems (servers, operating and storage systems etc.) (should have responsibility for capacity and availability if roles do not exist elsewhere);

IT Helpdesk – the number of staff required will depend on the nature of the incidents, average calling handling time and user work patterns. Service Desk Operators will initially deal with incidents and provide first line support. If the incident cannot be resolved (whilst the user is on the ‘phone or requires further work and/or detailed knowledge) then it is passed on to the Second Line support staff to deal with;

Problem Management – responsible for both reactive root-cause analysis and proactive trend analysis and incident / problem prevention. (may be a part-time role or merged with other roles e.g. Capacity and service continuity management but not with Service Desk where there may be a conflict of interest in objectives and timescales);

Operations management – responsible for all operations activities such as work scheduling, data back-up etc;

Network Support management - (some responsibility for network availability and capacity will exist so close relationship with Availability/Capacity in Service Delivery);

Service Delivery management – responsible for all service delivery activities and should include a strong active element and longer-term planning role;

Availability and Capacity Management – (the role can be shared with IT Service Continuity and retained under Service Delivery) responsibility for the day-to-day and longer-term planning activities. (ITIL places responsibility for keeping up to date with new technology with capacity management);

Financial management – responsibility for overall financial control including budgeting, IT accounting and if applicable charging. Procurement / purchasing may also come under this role. (Administrative support required. Role may report directly to Head of IT and include responsibility for financial planning and management of the development group);

Security and Audit – (not specifically covered in ITIL) the role is under Service Delivery as a separate function or combined with Availability Management; and

Contracts / Procurement Management – the role comes under Financial Management and will have links between procurement and configuration management to ensure



that all new assets are labelled and included in the configuration management database (CMDB);

Database Administration– needs a high level of technical skills and experience in one or more types of database hardware and software. Is able to design and manage databases for maximum efficiency and effectiveness by achieving integrated, non-redundant databases that can be shared throughout the company. Good communication skills required, enabling user requirements to be interpreted and delivered. (The data is an asset which is vital for day-to-day operations and for strategic objectives); and

Change, configuration and release management – (processes are closely linked so should come under one reporting structure) the seniority aspects required in the role can be done by one person with day-to-day activities devolved to administrative staff.

Attachment 7.8.3: A List of Elements in a Typical ICT Technical Environment

Client/server application development lifecycle – tasks and deliverables in the various phases focusing on the analysis, technology definition, initial and detailed designs and testing phases;

Computer concepts and operating systems – characteristics and purposes of basic computer architecture components. Importance of Open System environments and fundamentals of operating systems;

Data communications – introduction to the various infrastructure concepts, Intranet and Internet and essential components of networking, networking operating systems and security aspects;

Distributed computing – a basic knowledge of software and hardware components required to establish a distributed infrastructure;

Programming – basic understanding of programming concepts and development;

Graphical User Interface (GUI) development – introduction to the features and functionality of integrated development environment (IDE) for GUI development using an appropriate programming language;

Client/Server programming – introduction to the client/server model and an understanding of the development of client/server software development for enterprise and database related applications. Client-side development using user-defined objects and transaction management and the generation of management information system (MIS) reports using reporting tools; and

Structured Query Language (SQL) – understanding the importance of SQL as a database manipulation, definition and control language and the use of both interactive and embedded SQL commands.



Attachment 7.8.4: FMU Application Modules and Implementation Status

Module Name Status

Billing and Customer Accounting System Implemented and operational










Project Accounting and Job Costing System Not implemented

Rechargeable Deposit Works (RDW) System Not implemented




Inventory Management System for Tongi Stores Operational



Attachment 7.8.5: Schematic of the Current DESA IT Facilities Providing the Billing & Customer Account Service



Appendix 7.9 DPDC Computerised Systems Statement of Requirements

1 Introduction

The Corporatisation of the Dhaka Electricity Supply Authority (DESA) has resulted in the formation of the Dhaka Power Distribution Company (DPDC) which will be required to function as an autonomous corporate entity, operate more commercially. The newly formed DPDC will initially function with the current business processes, formerly operated by DESA. However, it will evolve and develop these processes, together with those associated with additional functions, to the rules and standards of a well run private sector company.

DPDC has adopted a strategy to establish an effective Information and Communications Technology (ICT) platform which will deliver the appropriate computerised systems and services to enable these business processes to evolve and develop. Corresponding to the introduction of such computerised systems and services, DPDC will be required to undertake a programme of business process re-engineering (BPRE) to ensure that activities positively support and improve the day to day business and the quality of the service to its customers.

One of the critical success factors for DPDC will be the introduction of an effective Management Information System (MIS) especially in the areas of business performance and financial management. This will provide managers and supervisors at all levels within the company with meaningful, accurate and timely information that will assist them in their decision making processes.

One of the challenges to be faced will be that of maintaining business outputs whilst updating, replacing and introducing new systems and services. This will be during a period when organisational changes are taking place that could affect working practices, individuals’ roles and responsibilities and staff numbers; the benefits of which are dependent upon the effective provision of the computerised systems and services.

In addition to the successful supply and installation of the computerised systems and services, a key to successfully meeting this challenge will be the effectiveness of the implementation process. In turn, this will depend upon several factors, including: the clarity in definition and documentation of each activity associated with each process, a well designed training programme and an appropriate method for monitoring the performance and development of the DPDC staff involved.

The complex nature of introducing a company-wide computerised system requires the design, supply and implementation to be contained within a single (turnkey) contract. To fulfil this requirement the procurement process will follow the Asian Development Bank Procurement Guidelines for Two-Stage Bidding.

Items which are “mandatory” will be followed by (M) and those deemed “desirable” will be followed by (D).



2 Glossary of Terms and Abbreviations Abbreviation Full Description

ABB Asea Brown Boveri ac Alternating Current

ADB Asian Development Bank ATM Asynchronous Transfer Mode AVR Automatic Voltage Regulation

BPDB Bangladesh Power Development Board BPI British Power International

BPRE Business Process Re-Engineering bps bits per second BS British Standard

CAT 5e Catalogue 5 ( ANSI UTP 100Mhz) CDN Corporate Data Network cps characters per second CSV Comma Separated Value dB(A) Decibel (A weighted) DBMS Database Management System DESA Dhaka Electric Supply Authority

DESCO Dhaka Electricity Supply Company DOS Disk Operating System

DPDC Dhaka Power Distribution Company dpi dots per inch

DVD-RW Digital Video Disk- Read Write E1 European digital (2.048 Mbps) connection

ECC Error Checking and Correction EMS Energy Management System EN European Union standard

Ethernet IEEE 802.3 Standard LAN protocol FMIS Financial Management Information System FMU Financial Management Upgrade Gb Gigabyte

GHz Giga Hertz GIS Geographical Information System GoB Government of Bangladesh HDD Hard Disk Drive HR Human Resources

HTML Hypertext Mark-up Language Hz Hertz (cycles per second) ICT Information and Communication Technology ICT Information and Communication Technology

IEEE Institute of Electrical and Electronics Engineers IS Information Systems

ISO International Standards Organization IT Information Technology

ITT Invitation to Tender Kb Kilobyte km Kilometre



Abbreviation Full Description kV Kilovolt

LAN Local Area Network lpm lines per minute Mb Megabyte MIS Management Information System

MTBF Mean time between failures NAS Network Attached Storage NIC Network Interface Card NMC Network Management Centre NOS Network Operating System NQL New Quality Letter OCR Optical character Recognition

ODBC Open Database Connectivity OGC Open Geo-spatial Consortium OLE Object Linking and Embedding OS Operating System PC Personal Computer PCI Peripheral Component Interconnect PDF Portable Document Format PTO Public Telephone Operator RAID Redundant Array of Independent (Inexpensive) Disks RAM Random Access Memory RAO Regional Accounts Office

RDBMS Relational Database Management System RISC Reduced Instruction-Set Computer RS Recommended Standard

RTF Rich Text Format S&D Sales and Distribution SAN Storage Area Network SAS Serial Attached SCSI

SATA Serial Advance Technology Attachment SCADA Supervisory Control and Data Acquisition

SCSI Small Computer System Interface SDRAM Synchronous Dynamic RAM

SLA Service Level Agreement SNMP Simple Network Management Protocol SQL Structured Query Language TA Technical Assistance

TCP/IP Transmission Control Protocol / Internet Protocol ToR Terms of Reference TPS Transaction Process Systems tps transactions per second

UHF Ultra-High Frequency UPS Uninterruptible Power Supply USB Universal Serial Bus UTP Unshielded Twisted Pair VPN Virtual Private Network WAN Wide Area Network



3 Background

DPDC is responsible for the distribution and supply of electricity to a large proportion (approximately 600 m2) of Dhaka as shown in Attachment 7.9.1. Electricity is purchased from the Bangladesh Power Development Board (BPDB) at 132kV and supplied through five BPDB 132/33 kV Grid Substations into the DPDC power network. The DPDC network assets consist of: thirty-two 33/11 kV Main Distribution Substations, twenty-two 11 kV Switching Stations and 7,504 11/0.4 kV distribution transformers; 248 km of 132 kV transmission lines and cables; 275 km of 33 kV sub-transmission lines and cables; and 6,017 km of 11 kV / 0.4 kV lines and cables. The total number of consumers is currently 625,000, with an expected growth of approximately 2% per annum over the next five years. DESA operates an ABB SCADA system to monitor its control the power network using communications provided by microwave and UHF radio links. The SCADA and any specific operational IT systems are outside the scope of this project, which is considering only the commercial business processes and systems.

3.1 Organisational Structures

DESA functional management was organised in a 3-tier hierarchical structure – Head Office, 2 Zones and 8 Circles with a total of 32 Divisions. A list of all the office locations is given in Attachment 7.9.2. It is envisaged that over a period of time and with the appropriate processes and systems in place the operational (day to day) decision making will, as far as practicable, be devolved down to Circle level. This would result in DPDC having a 2-tier structure with management centred at the Head Office and retaining the 8 Circles and 32 Divisions. A proposed organogram for DPDC’s Head Office is given in Attachment 3 and for the Circle level in Attachment 7.9.4. The accountability for the engineering, business and core support functions is listed in Attachment 7.9.5.

3.2 Current Information Technology (IT) Systems

The current information systems within DESA originate from a Financial Management Upgrade (FMU) project initiated some 10 years ago and based on the Oracle Financial suite. The original objective of the project was to implement all the associated modules to provide DESA with an integrated financial management system. A block diagram illustrating this is provided in Attachment 7.9.6.

A significant amount of work was undertaken during the FMU project to produce Standard Practice Instructions for each of the DESA business processes in preparation for customising and implementing the suite as an integrated financial management system. However, only two modules were implemented: Billing and Customer Accounting, which is currently being rolled out to provide on-line service to all 32 Divisions; and Inventory Management for the Tongi Development and Revenue Stores.

The failure to implement the remaining non-billing modules has placed the majority of DESA’s business processes at a disadvantage by having to rely on utility packages running on standalone PCs and manual paper-based systems. This current situation has contributed to inefficiencies in the use of resources and the lack of delivering effective management information.



The level of computer literacy throughout DESA has not been formally assessed and the relatively low number of PC’s per number of staff involved with the business function is of concern. However, it can be assumed that staff that has access to a PC in their daily activities will have a reasonable level of computer skills. There is a high-level of computer skills and competence at the IT Computer Centre associated with the billing and accounting system.

3.3 Future Information and Communications Technology (ICT) Systems

The major driving force to ensure that DPDC is provided with effective ICT systems is to achieve one of the Government of Bangladesh (GoB) objectives for the Power Sector, that is to ensure that all commercial functions are computerised in such a manner as improve revenue collection and, through corporate governance, make sure that all systems are auditable and open to scrutiny.

It is important that an appropriate ICT platform is established in a relatively short period of time in order to deliver the appropriate computerised systems and services that will enable DPDC to function as an autonomous corporate entity and to effectively operate commercially. The availability of such computerised systems and services will affect all DPDC’s functions and business processes to varying degrees and will, over a period of time, bring benefits to the operations and business aspects of the company. These benefits will be achieved through improved financial control, improved management and decision making, more effective use of assets and, more importantly, provide opportunities for staff to attain or improve their IT skills and thereby play their part in contributing to the success of the company and that of Dhaka.

The staff at the IT Computer Centre will need to evolve from the traditional roles of service provider (technology driven) to that of greater business and customer focus (business objective and user driven) which will require different skills and attitudes.

4 Summary of Requirements

The proposed solution shall take into account the current information systems and analyse the suitability for enhancing or replacing the whole or particular hardware or software elements. Those critical DPDC business processes must be retained, fully operational, until full acceptance has been attained and business continuity can be guaranteed.

The organisation will, over a period of time, evolve from the current DESA structure into that as seen required for the new DPDC. It has been assumed that initially DPDC will retain the existing functions currently carried out at the various office locations. As such the proposed solution shall be able to accommodate any major rationalisation requirements.

In general, all items of hardware and software must be well proven in the market place and able to be installed and implemented without any major modification or subsequent development. All such items must conform and comply with the appropriate national and international standards and certifications and be readily available in Bangladesh with effective in-country on-going support.

The first-stage of this procurement shall be viewed as a “request-for-proposals” and is intended to provide pre-qualified suppliers the opportunity to offer solutions which



fulfil the functional requirements with the minimum performance conditions without imposing strict technical specifications.

Centred on the existing Computer Centre, the basic concept shall be for continuation of the current client / server environment, establishing a secure intranet supported over a corporate data network which provides authorised access to the appropriate applications applicable to the various office-based business functions and activities. To ensure a high-level of business continuity business critical applications and databases will be duplicated and accommodated in a purpose built back-up facility at the Head Office.

With the current requirement to undertake the bulk printing of consumer bills at individual S&D offices and with the concern over the availability and quality of communication links, consideration shall be given to the distribution and storage of particular databases and the issues associated with managing, back-up, archiving and recovery procedures. This approach will have a significant impact in the second-stage of this procurement which shall specify both the type and capacity of particular hardware items (e.g. PCs, servers, LAN and WAN) as low, middle or high-level with the appropriate technical specification requirements.

5 Existing IT Systems and Facilities

5.1 Existing Systems

At the DESA Head Office, Dhaka, there are about 70 PCs some of which are connected on small LANS, normally only to share access to an internet gateway. The procurement function has an Inventory Management system (FMU module) with a dial-up facility for the exchange of data with the Development Stores and the Revenue Stores located in Tongi, Gazipur.

The main computing facilities are located at the DESA Computing Centre, Gulshan-1 but these only operate the customer billing and accounting process through the central system and provide an on-line service for remote access by the Sales and Distribution (S&D) offices located in each Division. There are connections to the Head Office, the Region Accounts Office (RAO), at Motijheel and the Commercial Office at Dhanmondi. A schematic diagram illustrating the associated data network is given in Attachment 7.9.7.

Other business processes are handled as manual paper-based systems with the use of utility packages spreadsheets running on standalone PCs. These processes include:

Asset management;

Budgeting;

Customer Service;

Distribution;

Engineering;

Financial and management accounting;

Human Resource management and staff records;



Management information and commercial operations reports;

Payroll;

Purchasing and payments;

Sales; and

Work planning and job costing.

5.2 Computer Centre

The DESA Computer Centre has the responsibility for implementing and maintaining the billing and customer accounting system. With limited resources, the Computer Centre management has been able to implement a programme that will extend this system, as an on-line facility, to all of the S&D offices in each of the 32 Divisions thereby completing a major objective of the original FMU project. They have also recognised an opportunity for making the system more effective by adding a bar-code to identify each bill. This action will improve the bank based processes by reducing the degree of errors and speeding up the exchange of information.

The high-level functional structure within the current DESA Headquarters Computer Centre is shown in Figure 1.

Senior System Analyst - 1

System Analyst - 2

Deputy Director(Admin) - 1

Programmer - 3 Computer OperatorSupervisor- 1

Assistant Director(Accounts) - 1

AssistantProgrammer - 6

SeniorComputer

Operator - 1

Computer Operator - 5

Data Entry ControlSupervisor- 3

Senior Data EntryControl Supervisor- 12

Data Entry ControlOperator- 20

Senior System Analyst - 1

System Analyst - 2

Deputy Director(Admin) - 1

Programmer - 3 Computer OperatorSupervisor- 1

Assistant Director(Accounts) - 1

AssistantProgrammer - 6

SeniorComputer

Operator - 1

Computer Operator - 5

Data Entry ControlSupervisor- 3

Senior Data EntryControl Supervisor- 12

Data Entry ControlOperator- 20

Figure 1: DESA Headquarters Computer Centre High-level Functional Structure



In order to realise governance the DPDC Board has adopted the strategy to implement and maintain effective computerised systems and services. One of the requirements to ensure that the future ICT platform can be successfully maintained will be for the ICT Department to evolve and develop from its present role to those suitable for supporting all the associated ICT systems and services. As the Department will have the responsibility for the delivery and support it would be right that it’s team has involvement in the design and implementation of the ICT systems and services. Since ICT projects are normally complex it would be prudent for the ICT Department to establish a formal project management process such as PRINCE 2 (Projects In Controlled Environments).

5.3 Existing Hardware and Software

It appears that there is no overall IT procurement policy in DESA and, as such, the degree of computerising particular business processes has been as effective as it could be. The quantity and quality of hardware and software has not been formally assessed. It should be noted that some of the key items were installed some 10 years ago as part of the original project and may not be considered suitable. However, to protect the IT investment made by DESA, all existing items, where applicable, will be included in the future scheme.

Maintenance and operational support of the major items of hardware and software are outsourced to local IT Organisations.

A list of the current hardware used within DESA is given in Attachment 7.9.8. This list may not be complete as a number of returns from an IT survey are still outstanding.

A list of the main software used in DESA is shown in Table 1. However, there may be other software packages yet to be identified as a number of returns from an IT survey are still outstanding.

Operating System Server UNIX (AIX)

Desktops Windows 98

Data Base Management System (DBMS)

Oracle Database Version 7.3

Business Applications Oracle Financial and non-Financial modules

See Attachment 9

Utility Packages

Microsoft Word

Microsoft Excel

Microsoft PowerPoint

Microsoft Access

Tools Internet Explorer

Table 1: List of Main Software



5.4 Critical Elements of the Existing IT Systems

The Billing and Customer Accounting process, which forms a critical part of the revenue cycle, is well support by the DESA Computer Centre. This process, and to some extend the Stores (Inventory) Management system, is currently functioning and delivering the required service. The billing system and stores systems are of value to DPDC and must be viewed as ongoing assets and where appropriate the user interface and presentation should be retained.

Where viable, the databases associated with the billing and stores systems should be retained. Through the establishment of Strategic Business Units (SBU) a programme was initiated for the Identification, Verification, Valuation and Recording of Fixed Assets (IVVR). The current status (progress) of this database has yet to be ascertained.

The topology and capacity of the current data network may be required to be reviewed in order to relocate the backup facilities away from the Computer Centre to the Head Office. This will provide DPDC with increased data security and enable business continuity in the event of a prolonged interruption of the business critical services based at the Computer Centre. The standards and protocols of the current telecommunication services should be retained.

5.5 Business Continuity

It is essential that, during any stage of implementation, the operation and commercial business of DPDC are not interrupted and, where necessary, the new processes work in parallel with the existing processes until cutover. The implementation methodology must be such as to prove all functionality aspects of the system and services before becoming operational. A phased approach shall be devised and agreed in line with the business priorities of DPDC.

6 Functional Requirements

6.1 General Scope of Work

The main objective of the work is to provide DPDC with effective computerised systems to enable the company to operate more commercially through the adoption of modern business functions that are operated to National and International rules, regulations and standards.

The functional structure of DPDC is being evolved to facilitate the changes necessary to enable DPDC to fulfil its mission and develop into a cost-effective and efficient distribution company. An essential component to the success of these changes is the provision of integrated Transaction Process Systems (TPS) with associated databases, a Management Information System (MIS) together with an appropriate data network.

These major changes will not be achieved without considerable business process re-engineering together with the associated training, taking all the appropriate levels of DPDC staff from their current systems and working practices, which are mainly standalone with a high number of manual activities, to the effective usage of the new systems.

DPDC will benefit from the required systems by:



Introducing and establishing modern company-wide business processes and practice standards;

Enabling all levels of DPDC’s management access to relevant and accurate information in a timely manner;

Providing all levels of DPDC’s management with the tools to enable them to manage, plan, and make decisions which will support the development of DPDC into a commercially viable, world-class distribution company; and

Providing a platform for DPDC to develop and continuously improve its business processes and practices.

6.2 Organisational Structure

The current functional management is organised in a 3-tier hierarchical structure – Head Office, Zones and Circles with Divisions. It is envisaged that, over a period of time and with the appropriate processes and systems in place, the operational (day to day) decision making will, as far as practicable, be devolved down to Circle level. This would result in DPDC having a 2-tier structure with management centred at the Head Office and retaining the Circles and Divisions. A proposed organogram for DPDC Head Office is given in Attachment 7.9.3 and for the Circle level in Attachment 7.9.4. The accountability for the engineering, business and core support functions is listed in Attachment 7.9.5.

6.3 Locations

DPDC has a number of non-operational locations throughout Dhaka, housing the offices for the: Head Office, Computing Centre, 8 Circles, 32 Divisions, Region Accounts Office (RAO), Development Stores and Revenue Stores. A list of all the office locations is given in Attachment 7.9.2.

Currently the data network uses public telephone operator (PTO) dial-up and point-to-point leased circuits. A schematic diagram illustrating the data network that supports the billing and customer accounting service is shown at Attachment 7.9.7.

6.4 Business Functions

The current accountability for the engineering, business and core support functions is listed in Attachment 7.9.5. For DPDC to function as a more autonomous corporate entity and behave in a commercial manner it will need to develop additional functions. For example:

Audit processes to meet the required standards of probity and corporate governance;

Compliance to legal and regulatory requirements;

Corporate and legal services;

Performance Management; and

Public Relations.



6.5 Suitability of Existing IT Systems

Details of the existing information systems, hardware and software are given in Section 4 of this report. To protect the investment made, an examination of all the existing items shall be made and, where applicable, be included in the future scheme.

6.6 Proposed IT Systems and Services

In any proposed solution, all elements of IT equipment, operating software and associated techniques, terminals (desk-top PC/workstation), peripheral hardware, (thick/thin) client/server techniques, relational database(s), data warehousing and database management system techniques etc.) shall be from established and proven technologies.

The proposed IT systems and services can be considered to consist of three major elements:

Information Systems - Transaction Process Systems (TPS) and Management Information Systems (MIS) (e.g. enterprise / integrated business applications software) and utility packages;

IT Equipment - hardware and operating software (e.g. desk-top PCs / workstations and peripheral hardware including servers and data storage, and with the appropriate software); and

The Corporate Data Network (CDN) - (LAN and WAN, and where appropriate supporting telecommunications equipment).

6.6.1 Information Systems

In addition to the functional support that transaction process systems provide, access will be required to their associated databases by the MIS to enable performance monitoring and report generation for DPDC’s management.

The core business processes and support functions involve the collection, recording, storing and processing of data and information. The associated transaction process systems (TPS) software shall cover the core processes and support functions, for example:

Asset Management;

Contract Management;

Documentation Management;

Finance and Accounting;

Human Resources (including Payroll);

Maintenance Management;

Materials planning and inventory control and management;

Procurement;

Project Management; and



Stores and stock management.

The list above is not definitive and any solution offered shall have the flexibility to add additional business applications or modules without any major re-configuration.

Where applicable, graphical user-friendly interfaces shall be required together with a suitable structured query language (SQL) and report generator incorporating a degree of visual programming to simplify the design of input and output formats. A report regime shall be established to provide periodic reports and the facility for on-screen display and print-out of ad-hoc reports shall be available.

The option shall be considered to update the PC operating system and basic utility packages as listed in Table 1. Where compatible, to protect past investments, existing applications and software assets, could be used and integrated within the proposed corporate scheme.

All business applications shall be from proven software: modular and fully interoperable, and able to function seamlessly in a complete enterprise portfolio that is suitable for an electricity distribution utility and energy market business. Associated WEB modules shall be included.

All applications shall be able to be ported onto any of the current and proven operating systems. For example:

HP – UX;

IBM – AIX;

Linux – Red Hat or SUSE

Microsoft Windows– NT and Advance Server;

SUN – Solaris; and

UNIX.

6.6.2 IT Equipment

DESA / DPDC has made a large investment in IT equipment over recent years. Attachment 7.9.8 provides a list of IT equipment currently available at each location. To protect this investment, it shall be surveyed to establish compatibility and suitability for inclusion in the proposed solution.

Only peripherals and PCs with Pentium 4 processors (equivalent or better), installed from 2003 shall be considered suitable. Depending on the proposed solution, consideration shall be given to the likelihood that, over a period of time, the majority of the existing PCs could be replaced by workstations to provide a more manageable and secure environment.

The main data storage shall be established at DPDC’s Computer Centre with appropriate local data storage and distributed applications to ensure continuity of Divisional functions in the event of a major failure of their communications link. Data storage will be accomplished using the most appropriate technique(s) to provide the necessary access, a very high degree of data security and automatic backup in line with modern business continuity practices. In the proposed solution, the availability of disaster recovery facilities at the Head Office shall be considered.



In general, the Technical Requirements indicate minimum specifications for the separate items of hardware, however the various server functions are currently grouped under one server heading. The proposed solution shall consider the function of each server and the “normal” capacity of such items as low, middle and high end servers.

Consideration shall be given to the accommodation and environment within which the equipment will be operated and to the availability of secure electrical power to enable a controlled “shut-down” in the event of the loss of the main power supply.

A list, by location, of the generic type and estimated quantity of the additional IT equipment required is given at Attachment 7.9.10. Some items, notably those associated with the current billing and customer accounts system, exist and shall be considered for inclusion in any proposed solution – refer to Attachment 7.9.8.

6.6.3 Corporate Data Network (CDN)

The proposed corporate data network (CDN) shall interconnect DPDC’s Computer Centre and Headquarters with all the non-operational locations throughout Dhaka. The CDN may be connected other significant operational locations (e.g. SCADA Operations and Maintenance) to extend such services as Email etc. and give access to specific applications. The telecommunications elements of the WAN will initially be provided by a mixture of services from internal and national carriers. A list of all the current locations being considered is given at Attachment 7.9.2.

Key sites shall be interconnected via a wide area network (WAN), which shall carry all inter-site traffic and at each site a local area network (LAN) shall provide the local connectivity.

In the proposed solution, consideration shall be given to future requirement for added resilience to the current communications network. (i.e. star-topology with the DESA Computer Centre as the hub) This can be considered as a medium-term strategy. One option may be to establish high-speed connections between hubs located at key locations (e.g. Computer Centre, Head Office and the SCADA Building) and transferring a proportion of the current links to form stars-topologies at such hubs. This concept is illustrated at Attachment 7.9.11. Where practical, consideration may be given some of the links being provided via DPDC’s private microwave and UHF radio networks.

The WAN shall be transparent to all applications giving the ability to provide LAN-like connectivity allowing wide-area thick/thin client/server performance to be optimised. This shall allow any mix of applications that run over LAN or storage networks and support TCP/IP and storage protocols.

The fundamental underlying infrastructure shall be the deployment of Web enabled 3 tier services. Clients shall securely access data through middle tier applications that are accessed from individual PCs or thin client browser front-ends. This intranet Web portal shall allow the easy access of information and on-line transaction processing from various applications and shared network components over the geographically separated business units, located at sites throughout the DPDC region of Dhaka.

Examples of some features of the Web portal are:



A single point to act as the means for accessing all business information systems;

Access control to allow single sign-on and the means to enable staff to subscribe to specific systems, content and services;

A means of enabling staff to communicate (e.g. Email, messaging, blogs etc.); and

A means of enabling documentation to be managed (i.e. authoring, approval, version control, scheduled publishing, indexing and searching).

Complete management and administration of the network and devices shall be centralised with real-time access to provide consistent, accurate and timely information for control, security and to minimise risk. Where applicable an integrated user-friendly system shall be provided.

To protect previous investments, where compatible, existing LAN / WAN assets shall be used and incorporated within the corporate scheme. Upgrading existing and providing new LANs shall be required. All communications and data network equipment will conform to national and international standards and installations in compliance with current best practices.

An appropriate testing facility must be established at the Computer Centre to enable pre-commissioning testing and system problem resolution to be carried out with no impact on the operating system. This “standalone” facility should be so configured as to enable all aspects of the IT training (described in Section 12), to be carried out with no impact on the operating system. Although seen as a “standalone” facility it shall be included as part of the entire system Final Operational Acceptance (described in Section 16.3).

6.7 Performance Requirements

The new computerised system will introduce the need for business process re-engineering (BPRE) to establish consistent and effective procedures throughout DPDC. The number and type of daily transactions resulting from the procedures automated by the computerised system and the online requirements are difficult to accurately predict. A more detailed analysis of all the business processes shall be undertaken during the initial stage of the project implementation in order to assess the number and type of transactions expected to be generated during the first full year of operation. Sufficient allowance shall be made to accommodate a minimum growth of 10% year on year for the first three years following operational acceptance.

It can be expected that the initial IS terminal population will be approximately 390 and an estimation of 30 to 300tps generated from 48 office locations. A typical industry standard response time of 3 seconds or less for 95% of such transactions shall be provided.

The quality and format of information, records and databases are currently not consistent within DPDC and range from spreadsheets created using standard desktop applications through to paper-based systems. In addition, there is a likelihood that information (data) required to produce specific measurements, necessary to assess DPDC’s business performance have yet to be identified and collected. Any proposed solution shall take into account the initial database



requirements and shall provide sufficient spare storage capacity to accommodate a minimum growth of 10% year on year for the first three years following operational acceptance. The solution shall offer a flexible and non-intrusive method of expansion to meet future requirements.

7 Complexity

Introducing new business transaction process systems will require a significant amount of training to introduce best working practices and to establish consistency throughout DPDC by ensuring standardisation of functionality, processes and activities.

It can be assumed that activities within each department shall require access to elements of each business application. It is also very likely that, as the systems evolve, some units within departments will require access to specific applications or modules that they may not currently recognise. Any solution offered shall have the flexibility to enable such access without any major re-configuration or interruptions to the system.

A methodology for managing the appropriate training shall be required and shall be demonstrated by piloting the new processes. A phased implementation approach shall be adopted to ensure the effective introduction of the systems throughout DPDC without any major impact on the business operations.

There are a number of existing “standalone” databases that shall require migration, conversion or re-inputting to enable wider access by appropriately authorised staff. The opportunity to review and restructure all existing databases to produce data models and a common data directory to enable relational databases shall be considered in view of the solutions and process offered.

8 Construction Period

8.1 Expected Construction Period

It has been assumed that the ADB will approve the project to computerise DPDC’s business processes and that the procurement process will commence at the start of the next financial year (June 2008).

A high-level outline implementation plan covering a maximum 12-month period, showing the key stages of the project is shown in Figure 2. An additional 6-month support service period is added to ensure that the system is fully bedded down and the skills and knowledge transfer to DPDC staff is completed. An appropriate training programme for all DPDC users shall be established and implemented.

ID Task Name

1 Project Design,Supply, Installation & Implementation2 Start of Contract / Effective Date3 Supplier Mobilization period4 Business Process Analysis5 Surveys & Installations 6 Implementation/Training 7 Final Acceptance8 Ongoing Support9 Ongoing Support & additional training

22/04

Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 32009 2010 2011

Figure 2: High-level Outline Implementation Plan



A phased approach shall be devised and agreed in line with DPDC business priorities. This shall include pilot trials to ensure the introduction of the new computerised systems and services are aligned with the business processes being undertaken. The project shall be undertaken using an approved and agreed project management methodology (i.e. PRINCE2)

9 Technical Requirements

9.1 General Technical Requirements

Language Support: All information technologies must provide support for English and Bangla. Specifically, all display technologies and software should support as a minimum, the ISO 8859, ISO 10646, HTML and JAVA character sets.

Dates: All information technologies shall properly display, calculate and transmit date data, including, but not restricted to 21st Century date data.

Electrical Power: All active (ac powered) equipment must operate on 220V +/- 20V, 50Hz +/- 2Hz. All active equipment should include power plugs standard in Bangladesh.

Environmental: Unless otherwise specified, all equipment must operate in environments of a temperature of 10 – 45 degrees centigrade, 30 – 90 percent relative humidity, and 0 – 40 grams per cubic metre of dust.

Safety: Unless otherwise specified, all equipment must operate at noise levels no greater than 50 dB(A).All electronic equipment that emits electromagnetic energy must be certified as meeting EN 55022 and EN 50082-1, or equivalent emission standards.

Management and Administration: Complete management and administration of the WAN, LAN networks and all devices shall be centralised with real-time access to provide consistent and accurate information for control and security, and to minimise risk. Where applicable an integrated user-friendly system shall be provided through Simple Network Management Protocol (SNMP).

Operating Systems: At a minimum, must be compatible with industry standard operating systems as listed in 6.6.1 and suitable for industry standard thick / thin client / server configurations.

9.2 Computing Hardware Specification

General: All devices such as servers,29 network switches and communications equipment shall be rack-mountable and contained within industry standard secure equipment enclosures. At business critical sites where a number of such devices are housed together in the same enclosure, then the full-load of the combined power requirements shall be support by, at minimum, of two industry standard UPS units with automatic voltage regulation (AVR) and surge-suppression features, each providing a runtime of 15 minutes full-load and 30 minutes half-load to enable controlled shutdown of all the major attached devices. A remote monitoring feature for the UPS is desirable.

Where required a fireproof data safe for backup storage etc. shall be provided.

29 Refer to note in section 6.6.2



9.2.1 Desktop Terminal (PC / Workstation) with minimum specification:

Processing unit performance: As configured for the bid, the processing unit shall at a minimum: be equipped with Intel® Pentium® processor, or at least substantially equivalent and operate at a minimum clock speed of 2.6 GHz and must be compatible with industry standard operating systems;

Expandability: shall have as a minimum: one PCI Express and two standard PCI expansion slots;

Memory and other storage: shall have as a minimum: at least 2MB L2 Cache memory; an installed SDRAM memory of no less than 512 MB; internal hard drive capacity of no less than 40GB, and an industry standard graphics card;

Input and output devices: shall have as a minimum: a single 10/100/1000 auto sensing UTP Ethernet network interface card (NIC), serial and parallel ports for legacy devices, one FireWire and two USB ports, DVD-RW drive, industry standard keyboard and mouse, and at least a 17″ flat screen colour monitor; and

Unit management features: shall have as a minimum: a secure, browser based full management and monitoring tool to enable remote application installation, updating and re-booting.

9.2.2 (Application / RDBMS / WEB / Storage) Server30 with minimum specification:

Processing unit performance: As configured for the bid, the processing unit shall as a minimum: be equipped with no less than two Intel® Xeon® quad core processors, or at least substantially equivalent; operate at a minimum clock speed of 2.6 GHz, and with 4MB L2 cache. It must be compatible with industry standard operating systems;

Expandability: shall have as a minimum: an integrated dual channel SCSI adapter and six hot-plug PCI Express slots and one PCI slot;

Memory and other storage: shall have as a minimum: an installed memory of no less than 4GB (expandable up to a minimum of 12GB) SDRAM ECC 400MHz, dual processing, fault tolerance controller and storage; RAID protected SCSI / SATA hard discs drives; equipped with not less than two 36GB internal storage installed for mirrored internal OS; additional storage, as required at specific sites, to be increased in pairs of universal hard-drives in hot-swap carriers up to a maximum capacity of 2.4TB; facilities for access to external storage devices.

Input and output devices: shall have as a minimum: two port Gigabit Ethernet network interface card (NIC) and one 8x24 DVD-RW device, and an appropriate maintenance system consoles to be located at the Computer Centre and Business Continuity Centre, Head Office;

Unit management features: shall have as a minimum: a secure, browser based full management and monitoring tool to enable remote application installation, updating and re-booting; and

30 Refer to note in section 6.6.2



Other unit features: shall be rack mountable, high-performance and availability fault-tolerant platform for multi-tasking with single / multi-server and NAS / SAN configuration options, internal memory battery backup, hot-plug fully redundant power supply and cooling systems;

9.2.3 External Storage Devices with minimum specification:

9.2.3.1 Back-up Storage:

Processing unit performance: As configured for the bid, the processing unit shall have as a minimum be equipped with no less than two Intel® Xeon® processors, or at least substantially equivalent; It must be compatible with industry standard operating systems.

Expandability: shall have as a minimum: a storage capacity of 6TB and accommodation for a maximum of 12 industry standard SATA II disk drives;

Memory and other storage: shall have as a minimum: an installed memory of no less than 1GB mirrored cache for the dual storage processor system; fault tolerance controller and storage, RAID protected;

Connectivity: shall have as a minimum: two port 1GB Ethernet network per processor;

Unit management features: shall have as a minimum: a secure, browser based full management and monitoring tool; and

Other unit features: shall have as a minimum: rack mountable, high-performance and availability fault-tolerant platform for multi-server (up to 10) and NAS / SAN configuration options, internal memory battery backup, hot-plug fully redundant power supply and cooling systems;

9.2.3.2 Tape Library: As a minimum an industry standard, rack-mountable, external high-speed auto-loader tape library, must be compatible with industry standard operating systems.

Tape drive: Recording format LTO-3, single SCSI drive, capacity of 400GB (native) 800GB (compressed), buffer size 128MB, transfer rate 160Mbps,

Tape Autoloader: Industry standard LTO-3 drive, number of drives 1, minimum of 8 cartridges; capacity 3200GB (native) 6400GB (compressed)and

Tape Media: minimum durability (archival life) 30 years, Six media LTO-3 tape cartridges; Tape media must be readily available in Bangladesh; and

Unit management features: remote WEB monitoring and management is desirable.

9.2.4 Shared Output and Input Devices:

General Requirements: Unless otherwise specified, all shared output and input devices shall be capable of handling A4 standard sized paper and shall have as a minimum: one port 10/100/1000 shall have installed an Ethernet network interface card (NIC) and must be compatible with industry standard operating systems. As configured for the bid, the option exists for the bidder to offer a multi-functional device which combines both the printer and scanner functions.



9.2.4.1 Laser Printers: Industry standard networked laser printer. The printer will be a reliable, network ready printer which will be capable of printing at a resolution of 1200x1200 dpi, up to 28ppm, duty cycle of at least 75,000 pages per month. The paper size for the printer shall include A4 and A3. Consumables consisting of at least two (2) packets each of A4 and A3 paper and two (2) pairs of toner cartridges (black) will be required to be supplied along with the printer. Paper and toner cartridges shall be readily available in Bangladesh.

9.2.4.2 Heavy Duty Line Printers (Type 1 and Type 2): The printer shall be a reliable, network ready industry standard networked heavy duty line matrix printer and must be compatible with industry standard operating systems. The printer shall be a moveable pedestal type to enable easy access for paper loading and unloading.

Print speed: will be capable of printing at minimum speeds for Type 1 1,000 lpm, NQL 400 lpm and data processing 750 lpm, and for Type 2 of 500 lpm, NQL 200 lpm and data processing 350 lpm;

Daily workload: will be a minimum for Type 1 of 8,000 pages per day and that of Type 2 will be 4,000 pages per day.;

Form Handling: Type: continuous, fan fold, edge-perforation, Paper path: straight through with easy-load dual adjustable tractors, Feed: Bottom, Form width: 6” to 17”, Form Length: 3” to 12”

Fonts: will be industry standard including but not limited to Draft / NQL Serif and Sans Serif, Data processing, High Speed, OCR A and B;

Emulation standards: will be industry standard including but not limited to Printronix P Series, P Series XQ, Serial Matrix, IBM ProPrinter, XL and Epson FX-1050;

Bar Code support: will be industry standard including but not limited to Royal Mail, Postnet, EAN 8/13 OCR, Graphics, Text Printing Application;

Interface Options: Ethernet (PrintNet 10/100 Base T), Parallel (IEEE-1284 / Centronics), Serial (RS-232 / RS-422)

Ribbons: Low cost spool type readily available in Bangladesh;

Other requirements: Integrated print management automatic ribbon life monitor, paper out detector and alarm, paper motion detector and alarm, front and rear paper trays, acoustic reduction assembly, Remote WEB monitoring and management is desirable.

9.2.4.3 Scanners: Industry standard networked scanner and must be compatible with industry standard operating systems and interface options. The scanner shall accommodate up to A3 documents, a scanning resolution of 600dpi, and have grey scale and colour output capabilities, it may have advanced image enhancement functions (sharpening, softening, etc).

9.2.4.4 Uninterrupted Power Supply (UPS): The topology (Off-line or On-line) selection and capacity of the UPS will be dependent on whether the loss of a device or data is an inconvenience or unacceptable. It can be assumed that all desk-top terminals will require an off-line UPS whilst all servers will require an On-line UPS.

AC Input: 160-270 V



AC Output Voltage: 220 +/- 2%

Input frequency: 50/60Hz

Battery: Maintenance-free leak proof sealed Lead-Acid battery with suspended electrolyte, typical recharge time 8 hours to 90% after full-discharge;

Back-up time: minimum of 15 minutes full-load and 30 minutes half-load;

Transfer time: On-Line no break, Off-Line minimum 2ms, maximum 5ms including detection time;

AVR: In-built, with typical voltage detection tolerance +/-6Vac, response time <220ms

Protection and filtering: spike and surge protection, input overload and short circuit protection;

Output power distribution: minimum of 6-way BS output socket strip; and

Other requirements: Depending on location rack-mount or tower format options. Visual load and battery status, On-Line On, replace battery and overload Indicators, distinctive audible alarms for “on battery” and low battery. A remote WEB monitoring and management for the critical UPS is desirable.

9.3 Network and Communications Specifications

Key DPDC sites will be interconnected via a Wide Area Network (WAN), which will carry all inter-site traffic. At each key site a Local Area Network (LAN) will provide the local connectivity. The options shall be considered to extend the current star-topology or to develop alternative topologies to introduce a greater degree of network resilience as described in section 6.6.3 and illustrated in Attachment 7.9.11.

9.3.1 Local Area Network:

Equipment and software: IEEE 802.3 Ethernet supported industry standard auto-sensing 10/100/1000 Ethernet (8, 12, 24 or 48 port), dual Gigabit ports offering copper or fibre interface to unmanaged switched LAN devices where required, supporting standard LAN protocols including TCP/IP. Although IEEE 802.11 series wireless technology (with appropriate encryption) is an option consideration shall be given to the electrical environment the LAN shall be assured to function;

Device network interface card (NIC): Industry standard with at least a single 10/100/1000 auto sensing UTP Ethernet NIC; and

Cabling: Industry standard structured cabling system(s), minimum UTP CAT 5e cabling within offices, industry standard fibre cabling suitable for indoor and outdoor use for internal backbone and inter-building connections where required, secure equipment accommodation, patch panels, standard and tamperproof outlets, hazard cable protectors, surface fitting horizontal and vertical cable trunking / tray, where required and industry standard cable testing (up to a minimum of 100Mbps) and labelling schemes.

9.3.2 Wide-Area Network:

Equipment and software: Industry standard WAN, Router and Firewall devices with NIC offering optional interface modules and supporting all standard LAN and WAN



protocols including TCP/IP. Where practicable the WAN functions above should be integrated into one device. Options available to support industry standard communication services and emerging services (e.g. ATM, VPN) and to access dial-up Internet connections to establish secure back-up routes. Industry standard integrated administration, management, monitoring and security tools, enabling remote device software installation and updating and device re-booting where applicable. Industry standard gateway / zoning between intranet and remote users providing high levels of security, incorporating Web filtering, anti-virus and anti-spam features. Secure equipment accommodation; and

Telecommunications Services: The telecommunications elements of the WAN shall be initially supplied by national carriers offering industry standard communication point-to-point digital services at speeds of 2Mbps (E1), 128kbps or 64kbps. Where practical, consideration may be given to some of the links being provided via DPDC’s microwave / UHF network. Options shall be considered to access emerging services (e.g. ATM).

Connections via direct dial-up or Internet access shall be considered at sites generating low levels of data traffic and for specific links to establish back-up routes. The majority of bulk data transfers must be programmed to occur during periods of low network usage (e.g. over-night)

9.4 Software Specifications

9.4.1 System Software and System-Management Utilities:

Processing unit: shall be compatible with industry standard operating systems;

Networking and Communications Software: shall support industry standard WAN, LAN protocols including TCP/IP, integrated administration, management, monitoring and security tools enabling remote software installation, updating and re-booting where applicable;

General-Purpose Multi-user, Multi-tasking Software: shall be compatible with industry standard operating systems, support electronic mail, user-friendly Web browser (default DPDC Portal home page) allowing secure access to information and seamless on-line transaction processing of applications and shared network components, User-friendly (including graphical tools) industry standard structured query language (SQL) and report writer, client antivirus;

Database Software and Development Tools:

Open Database Connectivity (ODBC): shall as a minimum support access to industry standard databases including as a minimum – MS Access, MySQL, Oracle, from any TCP/IP supporting device;

Database Migration: where the proposed solution offers a database platform which is different from that currently in operation (e.g. Oracle Version 7.3) a clear migration plan must be provided and an appropriate migration tool, specifically designed, to allow porting of the data from the existing database to that proposed.



Relational Database Management System (RDMS): shall as a minimum provide a user-friendly (including graphical tools) industry standard relational database management system and development tools;

Data Exchange: shall as a minimum provide user-friendly industry standard tools for the import and export data between formats including as a minimum – MS Access, MS Excel, MS Word (RTF), HTML, PDF, TXT, CSV, SQL; and

WEB Tools: shall as a minimum provide user-friendly industry standard tools (including graphical tools) for building WEB applications and WEB services.

Business Application Software: shall provide as a minimum end-to-end Web enabled business applications as applicable to the business and operational needs of a modern electricity distribution company. The integration of the modules into an enterprise solution is desirable.

Business Application (modular) Software must include but not be limited to the following:

i) 3rd Party Database Access

ii) 3rd Party Software Integration

iii) Asset Management

iv) Business Performance Management (MIS)

v) Contract Management

vi) Documentation Management

vii) Energy Accounting (Including billing for energy and transmission service)

viii) Enterprise Resource Planning (including workflow and job costing)

ix) Facilities & Building Management

x) Finance, Accounting & Treasury

xi) Human Resources and Personnel Management

xii) Maintenance Management

xiii) Office Software (New PC/Workstations and where existing desktop and Laptop software is not acceptable)

xiv) Payroll

xv) Procurement

xvi) Project Management

xvii) Regulatory and Compliance

xviii) Stores & Stock Management

xix) Vehicle Fleet Management



The System Software must include but not be limited to the following:

i) Antivirus Software

ii) Database Software

iii) Email and Intranet software

iv) Network Operating System Software

v) PC / Server Operating System Software

vi) Report Generator Software and Development Tool for Custom & MIS Reports

vii) Security Software

viii) WEB Application and Development Tool Software

10 System Management, Administration, and Security Specifications

General Requirements: In addition to the management, administration, and security requirements specified in each section covering the various hardware and software components, the proposed system shall have the facilities, through a device independent, simple network management protocol (SNMP): to manage all system hardware elements and operating systems, have logical views / diagrams of software and database architecture including data flows, manage data protection to ensure backup and near-continuous protection of all data and storage systems, allocation of server storage, deploying and updating software, able to monitor / analyse all activities throughout the network, carry out service and system health checks, proactive system warnings to enable minimised downtime due to congestion or hardware failures and provide security features at all levels.

Technical Management and Troubleshooting: The solution shall enable a secure remote operational support facility to DPDC which covers all aspects of the hardware and software offered in the solution. Remote access must not be available without the prior knowledge, approval and authorisation from the appropriate DPDC ICT management;

The solution shall provide and support the establishment of an ICT Department Helpdesk / Network Management Centre (NMC) and support service at the DPDC Computer Centre;

The solution shall provide an industry standard integrated system management tool to combine the problem / trouble-ticket management and resolution procedures for all hardware and software elements; and

The solution must provide a licence management tool to ensure the most cost-effective use of all applications by managing the number of simultaneous users to the number of licences available and with the facility to audit software usage and licensing compliance. The Solution must provide as a minimum: application monitoring, reporting and analysis, licence compliance, and application denial to prevent unapproved applications running on the system.



User and Usage Administration: shall have the facilities, through a device independent, SNMP, to takeover user devices / system elements remotely, real-time event monitoring and management, control and manage all servers, storage and security devices, identify accurately and positively network users, hosts, applications, services and resources, establish and enforce centralised security policy.

Security: shall have the facilities to establish layered network security (perimeter, network, application and data) ensure data privacy, provide security gateway / Firewall between intranet and remote users with incorporated Web filtering, antivirus on internet traffic, anti-spam, content filtering and intrusion detection, ability to test and monitor both internal and external access to the network to probe and test integrity and security, facility to trace sessions and audit facilities necessary for regulatory compliance, facility for password and authorisation management and facility to remotely identify and fix network security problem. An audit facility should be available for security and regulatory compliance.

Data Backup and Disaster Recovery: The main data storage facility shall be established at DPDC’s Computer Centre and if appropriate, local data storage and distributed applications to ensure continuity of Divisional functions in the event of major disruption at the Computer Centre or a prolonged communications link failure. Data storage should be accomplished using the most appropriate technique(s) to provide the necessary access, a very high degree of data security and automatic backup in line with industry standard and modern disaster recovery practices. With the major data storage at the Computer Centre consideration shall be given to providing business critical elements and backup / disaster recovery facilities to be accommodated at the DPDC Head Office (Business Continuity Centre).

The solution shall include the provision for establishing a “computer room” within the Head Office (location to be agreed) with the minimum of: site preparation, installation of suitable raised flooring, cable management system, UPS and power distribution and earthing system, air-conditioning, dehumidifier and fire-extinguishing equipment.

Software Licensing

The licence regime to be adopted shall allow DPDC Intranet and Email “unlimited access”, provide sufficient numbers of staff to use the business application(s) for operational purposes and a much smaller number of technical specialists to modify relevant aspects of the system – screen formats, report generation and database(s) etc. under strictly controlled conditions.

The solution shall state clearly on what the licence charging method / model is based i.e. related to the “level” of the end-user function (i.e. by capability) , number of named or concurrent users, storage capacity, individual servers or processors etc. The solution shall show where the charging method / model is “banded” (e.g. 1 – 25 users, 26 – 50 users or for storage blocks of say 1Tbyte) and those bands which are applicable to the various system elements as shown in the proposed solution together with the next incremental band.

Once agreed, system / application software version updates shall not change the way that the licensing charges are calculated or the nature of any hardware licensing. Licensing shall be on a “perpetual” and not a “subscription” basis.



11 Service Specifications

11.1 System Integration:

General Requirements: A data model, together with a common data directory shall be developed and existing ‘standalone’ databases must be reviewed and migrated, converted or repopulated into the appropriate solution. The migration of any existing financial and accounting, stores and asset databases shall be required. Current payroll and financial and accounting packages shall remain operational, running in parallel until the new systems have fully meet the final acceptance criteria.

DPDC SCADA operates a real-time ABB “Spider” system to manage, monitor and control the transmission and distribution networks. The solution shall have the facility to exchange data through the Open Database Connectivity (ODBC) standard. The solution shall offer an industry standard method of secure connectivity to enable exchange of information / data between the SCADA and the appropriate DPDC applications and databases.

The solution may require the capability to interface to a geographical information system (GIS) implementing the Open Geo-spatial Consortium (OGC) Schema with the facility to interact with other databases, supporting binary representation, through the ODBC standard. The solution shall offer an industry standard method of secure connectivity to enable exchange of information / data between the GIS and the appropriate DPDC applications and databases.

12 Training and Training Materials:

General Requirements: Introducing the new business transaction process and management information system will; include a significant amount of training in order to introduce ‘best’ working practices and to establish consistency throughout DPDC by ensuring standardisation of functionality, processes and activities. Assistance shall be given to DPDC HR staff to be involved in the business process re-engineering and to be competent to identify and undertake future process improvements.

A methodology for managing the appropriate training will be required and shall be demonstrated by piloting the new processes. A phased implementation approach shall be adopted to ensure the effective introduction of the systems throughout DPDC.

Prerequisite Requirements: The solution shall provide DPDC with a base competence and IT literacy requirement for effective operation of the ‘end user’ application activities to enable DPDC ICT and HR to carry out a staff skills-gap analysis and assessment. If required, assistance shall be given to DPDC ICT and HR staff to create a training programme to ensure that staff has attained the prerequisite IT literacy level before further system training commences.

End User / Operators: shall be given a System overview and appropriate training on the general purpose software and specific applications, including hands-on training, relevant to their work activities.

Managers and Supervisors: shall be given a system overview and appropriate training on the general purpose software and effective use of the management



information system, including hands-on training, relevant to the applications and information / data specific to their functional responsibility.

MD, Directors and Function Heads: shall be given a system overview and appropriate training on the general purpose software and effective use of the management information system, including hands-on training, relevant to their functional responsibility.

Internal Audit staff: shall be given a system overview and appropriate training on the general purpose software and the specific applications applicable to Audit, including hands-on training. Audit staff must be trained in the effective use of the software offered in the solution to develop industry standard information system (IS) audit techniques for compliance as required by DPDC company governance, National and International financial and accounting standards, and legal and regulatory requirements.

Technical and Operational Support Staff: must be given comprehensive system details and appropriate training on the general purpose software where applicable. Technical and operational support staff must be given specific training to ensure the effective use of all system management tools offered, including hands-on training, to ensure that all aspects of the solution, both hardware and software incorporated in the system. All network / device management tools must be covered to a level of competence to enable such staff to provide DPDC with ongoing effective management, technical and operational support on completion of the implementation.

The offer shall provide assistance to DPDC to establish a centralised Helpdesk / Network Management Centre (NMC) and support service together with IT training facilities the DPDC Computer Centre.

All training shall be prepared in advance and provide clear documentation on all aspects of the training and associated systems / applications. All documentation shall be provided in hard copy for each trainee together with a soft copy which shall be held in a specific training repository at HR, Head Office. Where appropriate, the training material, including a self-assessment feature, shall be provided as an on-line service both for staff reference / refresher and for new recruits.

The training material shall contain process scenarios relevant to the particular business function / activity identified during the analysis stage, detailed navigation steps for performing each step and notes and guidance for avoiding typical errors while performing the various steps. In addition the training material shall contain technical guidance for managing and cloning databases, taking backups and tutorials for constructing queries and report creation.

In addition to the formal training requirements the solution shall ensure the effective transfer of technology and knowledge to DPDC’s staff during the project implementation and six month support period, the solution shall provide a methodology for monitoring and assessing all of the business processes.



13 Technical Support:

Warranty Service: All warranties for supplied hardware and software products offered must be transferred to DPDC without any additional costs.

Hardware: all hardware must have a minimum of three year full warranty.

Antivirus Software: should have a three year warranty with appropriate regular updates to retain the appropriate level of security and protection against, as a minimum viruses, worms, trojans, unsolicited Email, spyware and spam.

Device and Network Operating System Software and Application Software: must have at least one year warranty.

Support, Technical Assistance and Post-Warranty Maintenance Services: The solution must establish quality local (in-country) support for all software and hardware offered to DPDC with appropriate agreed Service Level Agreements (SLAs) with at a minimum support service 24x7, with a 4 hour on-site response and with continuous problem resolution.

System Software Maintenance and Support: A local (in-country) maintenance and support service shall be available in addition to the standard operating system upgrade and product support provided directly from the operating system solutions supplier, the solution shall state the support escalation procedures and response times.

Application Software Maintenance and Support: A local (in-country) maintenance and support service shall be available in addition to the standard software upgrade and product support provided directly from the application software solutions supplier, the solution shall state the support escalation procedures and response times.

Hardware Maintenance and Support: A local (in-country) maintenance and support service shall be available in addition to the product support provided directly from the solutions supplier, the solution shall state the support escalation procedures and response times.

14 Documentation Requirements

General: All documentation should be in English and Bangla. All training, user-manual and technical documentation shall use version control and, in addition to the availability of hard copies, a software copy shall be available in the appropriate document repository / library. DPDC must have formal permission giving them the authority, with no restrictions, to making any number of hard and / or soft copies of any documentation, diagram or drawing associated with the solution without infringing any copyright.

End-User Documents: must contain at least a clear description of the processes relevant to the function / activity, flow-chart(s) or diagram illustrating the process, data flow inputs and outputs and any links to other activities.

Technical Documents: In addition to the technical documentation provided to ICT staff during training, six hard copies and two soft copies of all technical documentation, diagrams and drawings, including manufacturers’ and suppliers’ manuals etc. must be provided.



Process and Database Documents: All business processes / activities and associated data models / databases must be documented.

15 Consumables and Other Recurrent Cost Items

A full list of all consumables and other recurrent cost items should be provided, including all operating system, application and support software licences, and post-warranty maintenance services.

15.1 Consumables comprising as a minimum the following:

Printer Toners;

A4 Papers;

Line Printer Cartridge;

CD Rewritable;

Tape Cartridges;

Network Interface Card;

Hard disk;

Random Access Memory (RAM); and

Flash Drives.

15.2 Recurrent cost items

Hardware Maintenance for 12 months;

System Software maintenance for 12months;

Application Software maintenance for 12months; and

System Licences and Updates (Refer Section 10.6);

16 Testing and Quality Assurance Requirements

16.1 Inspections

16.1.1 Factory Inspections: The solution shall only offer industry standard complete hardware and software items, conforming to proven technologies and configurations. The requirement, if necessary, for factory inspections shall be included in the proposal.

16.1.2 Inspections following delivery: It must be the sole responsibility of the Supplier to receive and accept delivery of all hardware and software items, unpack and inspect that such items are fully fit for purpose. It must be the sole responsibility of the Supplier to re-pack and transport any such items from its original point of delivery to the designated location, unpack and inspect that such items are fully fit for purpose and prepared for installation. Any items found not to be fit for purpose must be replaced within 24 hours at no additional cost to DPDC.



16.2 Pre-commissioning Tests

In addition to the Supplier’s standard check-out and set-up tests, pursuant to appropriate contractual clauses the Supplier (with the assistance of DPDC) must perform tests on the system and its subsystems before installation and, in any event, this will be deemed to have occurred and DPDC will issue the Installation Certificate(s) An appropriate testing facility shall be established at DPDC’s Computer Centre as described in Section 12.

The Supplier must provide a test plan, with descriptions of the testing methodology, techniques and tools necessary to meet at least industry standards of quality assurance. All aspects of the testing and quality assurance must be documented including problem / deflects recording, monitoring and resolution.

All tests must follow the industry standards to ensure the function and performance of the DPDC system. The Supplier must demonstrate to DPDC representatives the functionality and performance of all systems and its subsystems to agreed function and performance criteria before such systems are made available for DPDC’s operations as per an agreed implementation schedule.

All aspects of the testing and quality assurance must be formally presented to DPDC representatives for consideration and approval prior to commencement of any tests. If during the tests, modifications or changes are identified, the Supplier must be responsible for evaluating and recommending such modifications or changes to be considered by DPDC through a formal change management process.

The implementation of the system must be undertaken under a staged / phased approach as illustrated in the high level outline implementation plan and as such, the pre-commissioning tests of the entire system cannot be effectively performed. However, the Supplier must demonstrate that the impact on the overall operational and technical performance, as each stage / phase is completed, remains within the agreed design criteria of the entire system.

16.3 Operational Acceptance Tests

Pursuant to appropriate contractual clauses, DPDC (with the assistance of the Supplier) will perform tests on the system or subsystems following installation to determine whether the system or subsystems meet all the requirements mandated for Operational Acceptance. To ensure business critical functions are not put in jeopardy, all processes, with the exception of new processes introduced by the Supplier, will run side-by-side with those existing processes for a “trouble free” period of time, the duration of which to be agreed between the DPDC and the Supplier and after which the new process will be considered fit-for-purpose and introduced as the production / operational process.

The number, type and volume of equipment supplied and installed must correspond to that agreed to be supplied and installed at each location as per the implementation schedule, including any agreed spares holding.

The functionality of each software and hardware element must meet at least the agreed level of functionality and performance.

The Supplier shall provide DPDC with details of the Mean-Time-Between-Failures (MTBF) for each item of hardware equipment. The reliability of each software and



hardware element shall be demonstrated by the Supplier to fully function within the allowed failure rate as agreed in the acceptance test criteria. The Supplier must demonstrate the ability of and speed taken by each software and hardware element to recover full functionality and performance following particular types of failure (the types of failure to be defined within the test plan). The demonstration must include all back-up and recovery facilities.

Acceptance Tests for the entire System are: The Supplier must provide industry standard test programmes to simulate full transaction processing as each stage / phase is completed, building up to the entire system. The simulation must fully stress the system at each stage and demonstrate that the entire systems functionality and performance are not impaired under such conditions. The transaction processing capacity and duration of this aspect of the acceptance must be agreed with DPDC.

16.4 Final Operational Acceptance:

The entire system will be finally accepted by DPDC representatives during the last three weeks of the six-month support period. The acceptance criteria must be a period of two consecutive weeks (14 days) of trouble-free operations of the entire system under normal operating condition.



Attachment 7.9.1: Map of Dhaka showing the DESA/ DPDC Distribution Area



Attachment 7.9.2: List of all DPDC Office Locations

Department / Office Function Address Site Ref.

Managing Director (11thflr)

Technical Director (11thflr)

Finance Director (11thflr)

Company Secretary (11thflr )

Deputy General Manager (Tech) (11thflr)


Manager (Tech) (11thflr)

Manager (Finance) (11thflr)

Deputy Manager (Tech) (11thflr)




Deputy Manager (Finance) (11thflr)

Support (Accountant) (11thflr)

Support (Computer Operator) (11thflr)

ACE (Planning & Design) (2ndflr)

Planning Circle (2ndflr)

Project Planning (2ndflr)

System Planning (2ndflr)

Distribution Planning (North) (2ndflr)

Distribution Planning (South) (2ndflr)

Corporate Planning & Design (2ndflr)

Administration (3rdflr)

Procurement & Stores Management (3rdflr)

Head Office

Finance (ground floor)

Operations / Network Operations / North Zone / Segunbagicha Circle

Segunbagicha Divisional Control Room (grd flr)

Bidyut Bhaban1, Abdul Gani Road, Dhaka-1000

SR01

Engineering / Procurement / Central Stores

C.S.D (Revenue) DESA Store, Millgate, Tongi, Gazipur

SR02

Engineering / Procurement / Central Stores

C.S.D (Development)

Cherag Ali Bus Stand, Tongi, Gazipur & Adjacent PDB Central Store, Tongi, Gazipur

SR03

Finance / Computer Centre MIS & Computer Department (3rdflr)

Development Division-1 (1stflr)

Development Division-2 (grd flr)

Development Division-3 (2ndflr)



9th & 10th Power Project (1stflr)

Other Project (grdflr)

Engineering / System Development

GIETC Project (2ndflr)

House-47, Road-135, Gulshan-1, Dhaka-1212

SR04

Engineering / System Operations

SCADA Operation & Maintenance Circle Kataban, Ramna,, Dhaka-1000

SR05

Grid Maintenance Circle

Protection & Metering Unit (North) Engineering / System Operations

Protection & Metering Unit (South)

Dhanmondi Power House, Mazar Building, Dhaka

SR06

Engineering / System Grid Maintenance Division (Central) 80, Mohakhali C/A, SR07




Operations Development Division-4

Magistrate Court 1 Operations / North Zone / Consumer Services Magistrate Court 2

Magistrate Court 3 Operations / South Zone / Consumer Services Magistrate Court 4

Dhaka

Zone Management

Administration

Engineering

Operations / North Zone / Consumer Services

Commercial

Operations / North Zone / Consumer Services / Azimpur Circle

Azimpur Consumer Services

House-73/1, Road-5/A, Dhanmondi, Jigatola, Dhaka

SR08

Satmasjid Consumer Services

Satmasjid S&D Division Operations / North Zone / Satmasjid Circle

Satmasjid Divisional Cntrl Rm

Line-K, Kazi Nazrul Islam Avenue Mohammadpur, Dhaka-1207

SR09

Shamoli S&D Division Operations / North Zone / Satmasjid Circle Shamoli Divisional Cntrl Rm

19/B, 4D Ring Road, Shamoli, Dhaka-1207

SR10

Jigatola S&D Division Operations / North Zone / Satmasjid Circle Jigatola Divisional Cntrl Rm

House-57, Road-5/A (6/A) Dhanmondi R/A, Dhaka

SR11

Dhanmondi S&D Division Operations / North Zone / Satmasjid Circle Dhanmondi Divisional Cntrl Rm

Operations / North Zone / Tejgaon Circle

Tejgaon Consumer Services

8/2, Lalmatia, Dhaka-1207

SR12

Tejgaon S&D Division Operations / North Zone / Tejgaon Circle Tejgaon Divisional Cntrl Rm

80, (90) Sahid Tajuddin Ahmed Sarni, Tejgaon I/A, Dhaka-1208

SR13


Moghbazar S&D Division 163/1 Green Road, Dhanmondi, Dhaka

SR14


Moghbazar Divisional Cntrl Rm

Moghbazar 132/33kV Substation, Tongi Diversion Road, (West side of FDC) Dhaka

SR15


Sher-E-Bangla Nagar S&D Division (1stflr) Shech Bhaban (1st flr) 22, Manik Mia Avenue, Dhaka

SR16


Sher-E-Bangla Nagar Divisional Cntrl Rm

Kawranbazar 33/11kV Substation, 3/KA, West Tejturi Bazar, Garden Road, Dhaka-1215

SR17

Kakrail S&D Division Operations / North Zone / Tejgaon Circle Kakrail Divisional Cntrl Rm

20/B, New Eskaton Rd, Gausnagor, Dhaka-1000

SR18

Operations / North Zone / Azimpur Circle

Azimpur S&D Division 278/3, Elephant Road, Kataban, Dhaka

SR19

Azimpur Divisional Cntrl Rm Operations / North Zone / Azimpur Circle Paribag Divisional Cntrl Rm

DPH Hatirpul Power House, Paribag, Dhaka-1000

SR20

Operations / North Zone / Azimpur Circle

Paribag S&D Division 1/E/2, Paribag, Dhaka SR21

Lalbag S&D Division Operations / North Zone / Azimpur Circle Lalbag Divisional Cntrl Rm

20/C Noor Fattah Lane, Lalbag, Dhaka

SR22

Operations / North Zone / Kamrangirchar S&D Division Middle Rasulpur, SR23




Azimpur Circle Divisional Cntrl Rm

Pathan Bari, (Westside Roni market), Kamrangirchar, Dhaka

Operations / North Zone / Ramna Circle

Ramna Consumer Services New Ramna 33/11 KV Substation, Fulbaria, Dhaka

SR24

Operations / North Zone / Ramna Circle

Segunbagicha S&D Division 201 Shahid Nazrul Islam Sharani, Segunbagicha, Dhaka-1000.

SR25

Rajarbag (Razarbagh) S&D Division Operations / North Zone / Ramna Circle Rajarbag Divisional Cntrl Rm

959, Outer Circular Rd, Rajarbag Dhaka

SR26

Bashabo S&D Division

Bashabo Divisional Cntrl Rm

Khilgaon S&D Division Operations / North Zone / Ramna Circle

Khilgaon Divisional Cntrl Rm

Taltola 33/11 S/S, Khilgaon Jhil Par, Bashabo, Dhaka [Block-A, (behind Taltola market, Chowrasta Jilpar) Khilgaon]

SR27

Finance – Regional Accounts Office (RAO)

Accounts: Central, North & South (7thflr) Rahman Chamber (7thflr), 12-13 Motijheel, Dhaka-1000

SR28

Audit Internal Audit

Engineering / System Operations

Grid Maintenance Division (South)

Zone Management

Administration

Engineering

Operations / South Zone / Consumer Services

Operations (Commercial)

Operations / South Zone / Shampur Circle

Shampur Consumer Services

Operations / South Zone / Banglabazar Circle

Banglabazar Consumer Services

Motijheel Consumer Service Operations / South Zone / Motijheel Circle Kamalapur S&D Division

12/1/B, Motijheel C/A, Dhaka-1000

SR29

Operations / South Zone / Motijheel Circle

Kamalapur Divisional Cntrl Rm Pir Jangi Mazar, Circular Road, Motijheel, Dhaka.

SR30

Manik Nagar S&D Division Operations / South Zone / Motijheel Circle Manik Nagar Divisional Cntrl Rm

22/6/2, Golapbag, Dhaka

SR31


Mugdapara S&D Division 100, East Bashabo, Sabujbag, Dhaka

SR32


Mugdapara Divisional Cntrl Rm

Mothertak 33/11 kV Substation, opposite to Mothertak Abdul Aziz school & college.

SR33

Kazla S&D Division Operations / South Zone / Motijheel Circle Kazla Divisional Cntrl Rm

Kazla 33/11 kV Substation, Kazla, Dhaka-1236

SR34


Shampur (Shyampur) S&D Division Maloncha Community Centre, 43/3, North Jatrabari, Dhaka

SR35


Shampur Divisional Cntrl Rm Shyampur 132/33/11 kV Substation,Dhaleshar, Shyampur, Dhaka-1204

SR36





Postogola Divisional Cntrl Rm Postogola 33/11 kV Substation, Postogola. Dhaka.

SR37

Postogola S&D Division Operations / South Zone / Motijheel Circle Jurain S&D Division

169/1, West Dholaipar, Jurain, Dhaka

SR38


Jurain Divisional Cntrl Rm 169/Cha-Dhlolaipar, Dhaka-1204.

SR39


Fatulla S&D Division Panchabati, Fatulla, Narayangonj

SR40


Fatulla Divisional Cntrl Rm Fatulla 33/11 kV Substation, Panchabati, Fatulla, Narayangonj

SR41

Banglabazar S&D Division

Banglabazar Divisional Cntrl Rm

Bangshal S&D Division


Bangsha Divisional Cntrl Rm

1, English Road, Dhaka-1100

SR42

Swamibagh S&D Division Operations / South Zone / Banglabazar Circle Swamibagh Divisional Cntrl Rm

249/2, South Jatrabari, Dhaka

SR43


Narinda S&D Division Mamun Plaza, 31, Hatkhola Road, Dhaka

SR44


Narinda Divisional Cntrl Rm 62 No. Bhagabati Shankanidhi Lane, Narinda.

SR45

Narayangonj Consumer Services

Narayangonj (East) S&D Division

Narayangonj (East) Divisional Cntrl Rm

Narayangonj (West) S&D Division

Operations / South Zone / Narayangonj Circle

Narayangonj (West) Divisional Cntrl Rm

Killer Pool, Hajeegonj, Narayangonj

SR46

Demra S&D Division

Demra Divisional Cntrl Rm Operations / South Zone / Narayangonj Circle

Siddhirgonj S&D Division

WAPDA Road, Ati, Siddirgonj, Narayangonj.

SR47

Operations / South Zone / Narayangonj Circle

Siddhirgonj Divisional Cntrl Rm WAPDA Coloni Gate, Siddirgonj, Narayangonj.

SR48

Notes:

Alternative spellings shown in Italic



Attachment 7.9.3: DPDC Head Office Proposed Organogram



Chairman

ManagingDirector



shareholder


HR Committee

Audit Committee

EngineeringDirector

OperationsDirector

FinanceDirector

HR Director

CompanySecretary

GM, Audit

DGM,Public

Relations

GM,Systems

Development

GM,Systems

Operations

GM,Procurement& Contracts

GM,Network

Operations

GM,CustomerServices

GM,Finance

& Accounts

GM,Human

Resources

DGM, Tariffs and

Pricing

DGM,System

Plan & Design

DGM,Major

Projects

DGM,Policy &

Standards

DGM,SystemControl

DGM,System

Protection

DGMGrid Operation& Maintenance

DGM,Procurement & Contracts

DGM,Network

Operations

DGM,CustomerServices

DGM,Health, Safety& Environment

DGM, Security

DGM,ManagementAccounting

DGM,Corporate

Financial Plng

DGM,MIS

DGM,Training

& Development

DGM,EmployeeRelations

DGM, Administration

ChiefMedicalOfficer

DGM, Regulation

See Circle levelorganogram



Chairman

ManagingDirector



shareholder


HR Committee

Audit Committee

EngineeringDirector

OperationsDirector

FinanceDirector

HR Director

CompanySecretary

GM, Audit

DGM,Public

Relations

GM,Systems

Development

GM,Systems

Operations

GM,Procurement& Contracts

GM,Network

Operations

GM,CustomerServices

GM,Finance

& Accounts

GM,Human

Resources

DGM, Tariffs and

Pricing

DGM,System

Plan & Design

DGM,Major

Projects

DGM,Policy &

Standards

DGM,SystemControl

DGM,System

Protection

DGMGrid Operation& Maintenance

DGM,Procurement & Contracts

DGM,Network

Operations

DGM,CustomerServices

DGM,Health, Safety& Environment

DGM, Security

DGM,ManagementAccounting

DGM,Corporate

Financial Plng

DGM,MIS

DGM,Training

& Development

DGM,EmployeeRelations

DGM, Administration

ChiefMedicalOfficer

DGM, Regulation

See Circle levelorganogram



Attachment 7.9.4: DPDC Circle Proposed Organogram

Organogram Circle level



Security

Overhead lines and cables

Substation plant


supplies

Metering


Meter readingCustomer records

Billing Collection

See Board, Executive Teamand Head Office organogram

Organogram Circle level



Security

Overhead lines and cables

Substation plant


supplies

Metering



Billing Collection



Billing Collection

See Board, Executive Teamand Head Office organogram



Attachment 7.9.5: DPDC HQ Engineering, Business and Support Function Accountabilities

Directorate Department Core Function Finance Finance & Accounting Customer Accounting Finance Accounting Financial Planning Management Accounting Management Information Systems & Reports Tariffs & Pricing Human Resources Human Resources Administration Compensation Management Employee Relations Performance Management Recruitment Training and Development Operations Customer Service Billing Collection Customer Records Customer Service Meter Reading Revenue Management Network Operations Field Resource Management Health, Safety & Environment Metering Management New Connections Overhead Lines & Cables Operation & Maintenance Security Substation Plant Operation & Maintenance Supplies? Technical Procurement & Contracts Contract Management Materials Planning & Inventory Control Procurement Stores Management System Operations System Control System Protection Grid Operation & Maintenance Systems Development System Planning & Design Major Projects Engineering Policy & Standards Audit Management Audit Internal Audit Company Secretary Company Secretary Regulation Public Relations Public Relations



Attachment 7.9.6: Integrated Financial Management Block Diagram



Attachment 7.9.7: Schematic of the current DESA IT facilities providing the billing and customer account service



Attachment 7.9.8: List#1 of Hardware currently used within DESA

Item No. Name & Description of item(s) Total Qty.Billing Section: MIS & Computer Department 01 IBM Netfinity Server 01 02 IBM PC (Model 300 GL) IBM PC

(Model: NetVista) DELL PC (Model: 170L/160L & Others)

60

HP Network Laser Printer Model: 4050N 02 HP Laser Jet Printer Model: 1200, Qty.-02 1100,Qty.-06 1160, Qty-01 05, Qty-01

10 03

Epson Dot Matrix Printer: Model 2170, 2180 02 04 SOCOMEC SICON/MICRO/SENDON/RIELLO/Apollo UPS

(500VA/I KVA) with Battery 35

05 Switch /Hub IBM (16 port) Qty. -04 Planet (16 port /8 port) Qty. -02 3 Com (16 port) Qty. -05 D-link Ethernet Qty.-01(16 port)

12

MIS & Computer Dept Online Access for 26? S&D Offices 01 IBM PC (Model: 300GL) Qty.-01 (at MIS & Computer)

HP PC Qty.-02 (at each S&D Office) 01 x n? + 02 x 32?

02 Online/SICON I KVA UPS, Qty.-02 (at each S&D Office) 02 x 32? 03 Router: 24E Qty.-1 (at MIS & Computer) 01 x ? 04 Router: IS4E Qty – 1 (at each S&D Office) 01 x 32? 05 Switch: 3 Com (16 port) Qty – 1 (at each S&D Office) 01 x 32?

Web Section: At MIS & Computer Department a) Web Server, Model: Dell Power Edge 1600SE 04 b) Firewall CISCO Model: PIX501 01

c) Switch. Dell 5224 02 Store Management System: At Directorate of Procurement, Head Office & Tongi Store Management - CSD (Revenue) & CSD (Development) 01 IBM PC Server (X Series -235) 03 02 IBM PC (Net Vista-A30) 03 03 US Robotics Modem 03 04 Dot Matrix Printer (LQ 2180) 03 05 Laser Jet Printer (HP 1200) 03 06 Sendon UPS 1000 VA 03 07 Sendon UPS 500 VA 03 08 D-Link HUB (ROSH-16) 03

Note #1: This list may not be complete as a number of returns from an IT equipment survey are still outstanding



Attachment 7.9.9: Financial Management Upgrade Project List of Modules and Status

Module Name Status

Billing and Consumer Accounting System

Implemented and operational

since last 6 years.










Project Accounting and Job Costing System

Not implemented

Rechargeable Deposit Works (RDW) System

Not implemented




Inventory Management System

Standalone version operational for

Tongi Stores



Attachment 7.9.10: Estimation of IT Equipment (Refer to Attachment 8 for type of some existing IT equipment)

Existing Additional Site Ref.

Function PC Printer Other

Terminal (PC)

Laser#1 Printer

Scanner#1 LAN WAN#2 Link

Server#3 (PC)

UPS Heavy Line

Printer#4 Other

Managing Director (11thflr)

Technical Director (11thflr)

Finance Director (11thflr)

Company Secretary (11thflr )



Manager (Tech) (11thflr)

Manager (Finance) (11thflr)





Deputy Manager (Finance) (11thflr)

Support (Accountant) (11thflr)

Support (Computer Optr) (11thflr)

ACE (Planning & Design) (2ndflr)

Planning Circle (2ndflr)

Project Planning (2ndflr)

System Planning (2ndflr)

Distribution Planning (North) (2ndflr)

Distribution Planning (South) (2ndflr)

Corporate Planning & Design (2ndflr)

Administration (3rdflr)

Procurement & Stores Management (3rdflr)

SR01

Finance (ground floor)





Terminal (PC)

Laser#1 Printer


Server#3 (PC)

UPS Heavy Line

Printer#4 Other

Segunbagicha Divisional Control Room (grd flr)

SR02 C.S.D (Revenue)

SR03 C.S.D (Development)

MIS & Computer Department (3rdflr)


Development Division-2 (grd flr)




9th & 10th Power Project (1stflr)

Other Project (grdflr)

SR04

GIETC Project (2ndflr)

SR05 SCADA Operation & Maintenance Circle

Grid Maintenance Circle

Protection & Metering Unit (North) SR06

Protection & Metering Unit (South)

Grid Maintenance Division (Central)

Development Division-4

Magistrate Court 1

Magistrate Court 2

Magistrate Court 3

SR07

Magistrate Court 4

Zone Management

Administration

Engineering

Commercial SR08

Azimpur Consumer Services





Terminal (PC)

Laser#1 Printer


Server#3 (PC)

UPS Heavy Line

Printer#4 Other

Satmasjid Consumer Services

Satmasjid S&D Division SR09

Satmasjid Divisional Cntrl Rm

Shamoli S&D Division SR10

Shamoli Divisional Cntrl Rm

Jigatola S&D Division SR11

Jigatola Divisional Cntrl Rm

Dhanmondi S&D Division

Dhanmondi Divisional Cntrl Rm SR12

Tejgaon Consumer Services

Tejgaon S&D Division SR13

Tejgaon Divisional Cntrl Rm

SR14 Moghbazar S&D Division

SR15 Moghbazar Divisional Cntrl Rm

SR16 Sher-E-Bangla Nagar S&D Division (1stflr)

SR17 Sher-E-Bangla Nagar Divisional Cntrl Rm

Kakrail S&D Division SR18

Kakrail Divisional Cntrl Rm

SR19 Azimpur S&D Division

Azimpur Divisional Cntrl Rm SR20

Paribag Divisional Cntrl Rm

SR21 Paribag S&D Division

Lalbag S&D Division SR22

Lalbag Divisional Cntrl Rm

Kamrangirchar S&D Division SR23

Divisional Cntrl Rm





Terminal (PC)

Laser#1 Printer


Server#3 (PC)

UPS Heavy Line

Printer#4 Other

SR24 Ramna Consumer Services

SR25 Segunbagicha S&D Division

Rajarbag (Razarbagh) S&D Division SR26

Rajarbag Divisional Cntrl Rm

Bashabo S&D Division

Bashabo Divisional Cntrl Rm

Khilgaon S&D Division SR27

Khilgaon Divisional Cntrl Rm

SR28 Accounts: Central, North & South (7thflr)

Internal Audit

Grid Maintenance Division (South)

Zone Management

Administration

Engineering

Operations (Commercial)

Shampur Consumer Services

Banglabazar Consumer Services

Motijheel Consumer Service

SR29

Kamalapur S&D Division

SR30 Kamalapur Divisional Cntrl Rm

Manik Nagar S&D Division SR31

Manik Nagar Divisional Cntrl Rm

SR32 Mugdapara S&D Division

SR33 Mugdapara Divisional Cntrl Rm

Kazla S&D Division SR34

Kazla Divisional Cntrl Rm





Terminal (PC)

Laser#1 Printer


Server#3 (PC)

UPS Heavy Line

Printer#4 Other

SR35 Shampur (Shyampur) S&D Division

SR36 Shampur Divisional Cntrl Rm

SR37 Postogola Divisional Cntrl Rm

Postogola S&D Division SR38

Jurain S&D Division

SR39 Jurain Divisional Cntrl Rm

SR40 Fatulla S&D Division

SR41 Fatulla Divisional Cntrl Rm

Banglabazar S&D Division

Banglabazar Divisional Cntrl Rm

Bangshal S&D Division SR42

Bangsha Divisional Cntrl Rm

Swamibagh S&D Division SR43

Swamibagh Divisional Cntrl Rm

SR44 Narinda S&D Division

SR45 Narinda Divisional Cntrl Rm

Narayangonj Consumer Services

Narayangonj (East) S&D Division

Narayangonj (East) Divisional Cntrl Rm

Narayangonj (West) S&D Division

SR46

Narayangonj (West) Divisional Cntrl Rm

Demra S&D Division

Demra Divisional Cntrl Rm SR47

Siddhirgonj S&D Division

SR48 Siddhirgonj Divisional Cntrl Rm





Terminal (PC)

Laser#1 Printer


Server#3 (PC)

UPS Heavy Line

Printer#4 Other

Totals

Notes:

Some of the items / facilities may have been supplied / made available under the DESA Computer Centre programme to extend the existing billing and customer account facilities to all S&D Division Offices (e.g. Bill Printing, LAN and WAN links)

1 Where applicable the option for a combined printer / scanner should be considered. 2 Equipment for WAN Link will be dependent on data traffic volume and may range from dial-up (land-line for direct

connection or via internet or GSM), Broadband services or leased lines with 64 kbps, 128 kbps or 2 Mbps capacity. 3 Number and configuration dependent on location. 4 Two types (500 lpm / 1,000 lpm) dependent on bill printing requirements at particular S&D Offices



Attachment 7.9.11: Conceptual Topology of a Future Corporate Data Network

Office

Office

Office

Office

OfficeOffice

Office

Office

Office

OfficeOffice

Office

Office Office

Office

Office

Office

Office

Office

Office

Office

Office

Office

Office

Office

Office

Office

Office

Office

Office

Office

Office

Office

Office

OfficeOffice

ComputerCentre

SCADABuilding

HeadOffice

An OtherOffice

64kbps

128kbps

2Mbps

Line Speeds

Office

Office

Office

Office

OfficeOffice

Office

Office

Office

OfficeOffice

Office

Office Office

Office

Office

Office

Office

Office

Office

Office

Office

Office

Office

Office

Office

Office

Office

Office

Office

Office

Office

Office

Office

OfficeOffice

ComputerCentre

SCADABuilding

HeadOffice

An OtherOffice

64kbps

128kbps

2Mbps

Line Speeds

Office

Office

Office

Office

OfficeOffice

Office

Office

Office

OfficeOffice

Office

Office Office

Office

Office

Office

Office

Office

Office

Office

Office

Office

Office

Office

Office

Office

Office

Office

Office

Office

Office

Office

Office

OfficeOffice

ComputerCentre

SCADABuilding

HeadOffice

An OtherOffice

64kbps

128kbps

2Mbps

Line Speeds

64kbps

128kbps

2Mbps

64kbps

128kbps

2Mbps

Line Speeds



Appendix 7.10: Estimation of Costs (Excluding Tax and VAT)

Quantity Unit Cost Total Hardware (Note - 1) Computer Centre and Engineering (Note - 2)

Server (farm / blade) functions: Domain / Access / Network 1 $5,000 $5,000

Application 1 $10,000 $10,000 File / SQL 1 $10,000 $10,000

Mail 1 $5,000 $5,000 Proxy Gateway / WEB 1 $5,000 $5,000

Print 1 $5,000 $5,000 Core Database 1 $80,000 $80,000

Standalone Test & Training 1 $10,000 $10,000 Sub Total $130,000

External Storage $130,000 Tape Library 1 $10,000 $10,000

Sub Total $10,000 Desk-top and shared equipment $10,000

Helpdesk, Training & additional Terminals (e.g. Desktop PC) 20 $1,000 $20,000

Laser Printer / scanner (industry standard) 6 $1,000 $6,000 UPS (off-line) 20 $100 $2,000

Sub Total $28,000 LAN (Assumption: over 4 floors) $2,100

24 port 10-Gibabit managed switch 2 $1,600 $3,200 12 port 10/100/100 managed switch 4 $800 $3,200

Backbone cabling 4 $1,000 $4,000 Patch Panels / Pre-made patch cables 5 $1,000 $5,000

UTP Floor cabling, RJ45 outlets & pre-made cables 48 $1,000 $48,000 Installation & Testing 4 $2,000 $8,000

Sub Total $71,400 WAN (additional to existing WAN equipment) $7,400

VPN Router / Firewall 1 $4,500 $4,500 8 port dial-up Modem / Router /Firewall 2 $3,500 $7,000

Installation & Testing 1 $5,000 $5,000 Sub Total $16,500

Environment equipment $13,000 Site preparation 1 $1,000 $1,000

Enclosure 2 $1,300 $2,600 Power distribution 4 $200 $800

UPS (on-line) 4 $7,500 $30,000 Cable management system 2 $5,000 $10,000

Air conditioner 2 $2,000 $4,000 Dehumidifier 2 $2,000 $4,000

Fire Extinguisher 4 $100 $400 Secure, Fire-proof storage 1 $500 $500

Installation & Testing 1 $10,000 $10,000 Sub Total $63,300 Business Continuity (Head Office) (Note - 3) $29,600

Server (farm / blade) functions: One lot 1 $130,000 $130,000 External Storage 1 $10,000 $10,000



Quantity Unit Cost Total Additional Terminals (e.g. Desktop PC) 80 $1,000 $80,000

Laser Printer / scanner (industry standard) 8 $1,000 $8,000 UPS (off-line) 80 $100 $8,000

LAN - (4/5 CC ) one lot 1 $9,250 $9,250

WAN (initially high-speed link to Computer Centre) 1 $13,000 $13,000 Environment equipment (Note - 4) 1 $37,000 $37,000

Sub Total $295,250 Remote Offices (Note - 5) $201,350

Non-S&D location: WAN equipment 12 $1,100 $13,200 Non-S&D location: Local Server 12 $10,000 $120,000

Non-S&D location: UPS (on-line) 12 $7,500 $90,000 LAN equipment 44 $3,700 $162,800

Additional Terminal (e.g. Desk-PC) 165 $1,000 $165,000 UPS (off-line) 165 $100 $16,500

Laser Printer / scanner (industry standard) 144 $1,000 $144,000

Site survey & preparation, installation & testing 48 $2,000 $96,000 Sub Total $807,500 $26,400

Hardware Total $1,421,950 Annual maintenance & support (Note - 6) Sub Total $142,195 Notes: 1 - For estimation only as Low, Middle and High-level devices yet to be defined 2 - Including IT test & training facilities 3 - Mirror of central equipment and LAN installed over 5 floors 4 - Including computer room flooring etc 5 - Assumption: all 32 S&D offices are WAN connected and equipped with heavy duty line printers 6 - Assumed 10% hardware total 7 - Total number of additional terminals 265 Software

System Software Operating system (e.g. Linux Redhat) 46 $5,000 $230,000

Operating system (e.g. Microsoft Visa Business) 46 $3,300 $151,800 Linux Intergration Software 46 $700 $32,200

Security Software 2 $1,000 $2,000 Database Software 2 $40,000 $80,000 Antivirus Software 394 $20 $7,880

SQL Software 2 $200 $400 Report Generator Software 2 $200 $400 WEB Application Software 2 $30,000 $60,000

MIS Report Software 2 $1,000 $2,000

Utility packages (e.g. Microsoft Office Small Business 2007) 390 $500 $195,000

Sub Total $761,680 Application Software

Application Software Package 2 $250,000 $500,000 Software Development Tools for Custom & MIS Reports 2 $1,000 $2,000

Software WEB Development Tools 2 $100 $200 Sub Total $502,200



Quantity Unit Cost Total Software Total $1,263,880 Annual maintenance & support (Excluding Licences) (10% of software total) Total $126,388

Business Process Development & Training

Business Process Identification & Understanding 1 $25,000 $25,000 Application / business process alignment / customerisation 1 $75,000 $75,000

Business Process / Application Training (assume total of 480 users in groups of 8) (Note - 1) 60 $18,000 $1,080,000

IS & System Training 12 $10,000 $120,000 Sub Total $1,300,000 Miscellaneous

Support (per Month) 6 $10,000 $60,000 Extended Warranty & Retainer 1 $130,000 $130,000

Sub Total $190,000 Hardware $1,421,950 Software $1,263,880

Business Process Development & Training $1,300,000 Miscellaneous $190,000

TOTAL $4,175,830 Contingency (Assumed 10% of overall total) Sub Total $417,583 TOTAL ESTIMATED COST $4,593,413 Notes: 1 - Includes all training materials and documentation



Appendix 7.11: Project Management

Introduction

To ensure the successful implementation of the MIS and for future system developments it is important that key members of staff from DPDC are assigned to support the project and take an active role in its management and delivery. This approach, when adopted early in the life cycle of a project, encourages individuals to “buy-in” and to take ownership. Consequently, this improves motivation, enables knowledge transfer and develops the skills of leadership and the management of projects, risks and quality issues.

The requirement for an international method for the effective management of the MIS project will be specified in the Statement of Requirements. DPDC staff should have the opportunity to become skilled in the various disciplines and stages of this project including procurement and implementation.

Methodology

BPI recommends that the project is managed using an internationally accepted project management process such as PRINCE (Projects IN Controlled Environments). A PRINCE project has the following characteristics:

A finite and defined life cycle;

Defined and measurable business products;

A corresponding set of activities to achieve the business products;

A defined amount of resources; and

An organisation structure, with defined responsibilities, to manage the project.

Managing the project in such a manner would in, BPI’s opinion, go a long way to ensuring the successful implementation of the MIS and provide long-term benefits for both individual staff members and DPDC in general. The PRINCE process model is shown in Figure 1.

Figure 1: The PRINCE Process Model

D i r e c t i n g a P r o j e c t

P l a n n i n g

S t a r t i n g u p a P r o j e c t

M a n a g i n g S t a g e

B o u n d a r i e s

C l o s i n g a P r o j e c t

I n i t i a t i n g a P r o j e c t

C o n t r o l l i n g a S t a g e

M a n a g i n g P r o d u c t D e l i v e r y



Key DPDC Roles

There are various roles and responsibilities for which suitable DPDC staff should be given the opportunity to undertake, either directly or as a counterpart. All knowledge and skills attained during this project will serve individuals and DPDC well, both in the development of the MIS and the future management of similar projects.

Project Board

The project manager for the MIS will be accountable to the Project Board, which should consist of a minimum of three people. An executive, who has ultimate responsibility for the project, supported by a senior user, who has responsibility for the specification and needs of the “users” and a senior supplier who represents the interests of those designing and implementing the project and for the quality of its delivery. This Project Board will be responsible to DPDC’s corporate management for the overall direction and management of the project. It has the responsibility and authority for the project within the remit (the Project Mandate) set by DPDC’s corporate management.

Project Management

The DPDC Project Manager will have the authority to run the project on a day-to-day basis on behalf of the Project Board within the constraints laid down by that Board.

Project Assurance

Project Assurance covers all interests in the project, including the business, the users and the supplier. This role must be independent of the DPDC Project Manager.

Project Support (Office)

Project Support is a centralised pool of resources that provides clerical and administration support, configuration management and ensures that the quality review process and Issue and Risk Logs are maintained.