Electricity Distribution Efficiency Improvement Project

active

The Project will help improve operational efficiencies and modernize operations and management of the selected DISCOs. There are ten state-owned DISCOs in Pakistan and one privately owned K-Electric (KE) responsible for distribution and supply of electricity in their respective areas. In FY20, the ten DISCOs purchased 113 tera-watt-hours (TWh) of electricity and sold 92.8 TWh to their 30 million connected consumers. About one-fourth is lost in the technical and commercial losses. These high losses add to sector’s financial deficit, affect investments needed to ensure reliable supply of electricity and increase the cost of electricity for the consumers. Some of these losses are due to technical reasons which is normal, though high for electricity distribution system and can be reduced through improvements and investments in the distribution system while also improving the reliability of supply i.e. Component 1 of EDEIP. Other non-technical and commercial losses can be reduced through effective use of technology and information systems i.e. Component 2 of EDEIP. Component 3 of EDEIP will provide implementation support as well as undertake capacity building measures to improve various day-to-day functions of the DISCOs. Component 4 is to support the implementation of power sector reforms. The proposed project is aligned with the World Bank's Country Partnership Framework as it will help support growth by improving supply of electricity and will contribute to achieve the goals for Green and Clean Pakistan through reduction in electricity transmission and distribution (T&D) losses. The three selected DISCOs are: (i) Hyderabad Electric Supply Company (HESCO); (ii) Multan Electric Power Company (MEPCO); and (iii) Peshawar Electric Supply Company (PESCO). The last five-year trend for these three DISCOs show a decline in key operational efficiency parameters i.e. T&D losses and collection rate and in FY20 they contributed one-third of the total increase in sector's financial deficit. As a result of these losses DISCOs also suffer because they are unable to meet their investment requirements and consequently, a significant number of power transformers are overloaded and tripping of feeders is quite common. MEPCO serves 13 districts of southern Punjab and as of June 30, 2020 had 6.86 million connected consumers, highest among DISCOs. MEPCO is the second largest DISCO in terms of sales (16.4 Tera-watt-hours (TWh) per annum) and area covered (105,505 square kilometers). PESCO covers entire Khyber Pakhtunkhwa (KP) (except Federally Administered Tribal Areas and Frontier Regions). PESCO has 3.65 million consumers and annual sales of 9.0 TWh. HESCO is one of the two public sector distribution companies operating in Sindh. It has a consumer base of 1.14 million and annual sales of 3.9 TWh. Brief Description of each component is given below. Component 1: Improving Grid Reliability. This component will finance investments in Secondary Transmission and Grid (STG) and Energy Loss Reduction (ELR) programs of the DISCOs to improve reliability of electricity supply and reduce technical losses. The subprojects financed under this Component can be divided into following categories:a. New Grid Stations. Construction of new 132 kV grid stations and the associated transmission lines; b. Existing Grid Stations. Augmentation, extension, conversion, upgradation and rehabilitation of the existing grid stations; c. Transmission Lines. Construction, rehabilitation and reconductoring of 132kV (and below) transmission lines with high-capacity conductors e.g. High-Temperature Low Sag (HTLS) conductors; and d. Energy Loss Reduction. Expansion and rehabilitation of 33kV and 11kV feeders, deployment of shunt capacitor banks, and other interventions to reduce technical losses and improve grid reliability. Component 2: Modernizing Operations and Management. 24. This component will support modernization of the DISCOs’ operations and management functions using best practice equipment, technology and information systems. Major activities include: a. Automation and Information Systems. This entails upgrading, deployment and integration of information systems and network planning and management solutions. This will help improve planning, grid operations and customer services by providing access to and integrating modern information systems e.g. Incident Management System (IMS), feeder automation, transformer monitoring and protection systems, Geographic Information System (GIS), Customer Management System (CMS) and Enterprise Resource Planning (ERP). This will also lead to the deployment of SCADA and Distribution Management Systems (DMS) during project implementation (subject to finalization of feasibility, availability of funds and required approvals) to integrate these information systems and to start the implementation of smart grids. b. Revenue and Equipment Protection Program. It will comprise of installation of Aerial Bundled Cables (ABC), Advanced Metering Infrastructure (AMI), transformer monitoring system, and other measures to pre-empt theft, reduce losses, improve recoveries, and offer better service delivery based on access to reliable and timely data. Combination of ABC and transformer monitoring system will be used in areas with high losses or theft. AMI/AMRs will be deployed for high load and high revenue consumers largely present in urban circles.Component 3: Capacity Building and Technical Assistance. This component will help build the capacity of the DISCOs with particular focus on: a. Improving operations and maintenanceb. Training, capacity building, studies and improving gender diversity c. Project implementation support. Component 4: Reform Support. This component will support the Ministry of Energy - Power Division (PD) in the implementation of power sector reforms and improve sector governance. It consists of two main subcomponents (i) Supporting Governance and Institutional Reforms; and (ii)Supporting the Implementation of Competitive Trading Bilateral Contract Market (CTBCM).