Final DIIP presentation FESCO, final 21.11.22.pptx

investment program

1. DISTRIBUTION INTEGRATED INVESTMENT PLAN (DIIP) 2023–24 to 2027-28 1 FAISALABAD ELECTRIC SUPPLY COMPANY (FESCO)

2. INTRODUCTION Faisalabad Electric Supply Company was incorporated as a Public Limited Company under Companies Ordinance 1984 on March 21, 1998. FESCO service territory is comprised of 8 Districts Faisalabad, Jhang, Chiniot , Bhakkar , Mianwali, Khushab , Toba Tek Singh and Sargodha. FESCO jurisdiction covers approximately 45,387 sq. KM area of these districts. FESCO distributes and supplies electricity to 4.87 Million customers within a territory having a population of 32.5 Million. 2

3. 3 FESCO GENERAL STATISTICS AS ON 30 TH JUNE 2022 Description Unit Quantity. Grid Stations 132kv Grid Stations No. 85 66kv Grid Stations No. 16 132kv Consumer Grid Stations No. 23 Power Transformers Installed (Different Capacity) No. 283 Total Installed Capacity of Power Transformers MVA 7243.6 B. Transmission Lines 132kv& 66kv Total Length of Transmission Line kms 5431.7 C. Distribution System 11 KV Feeders No. 1,202 Total Length of 11 KV ( H.T ) Line kms 43819 Total Length of LT Line kms 27622 Distribution Transformers Installed (Different Capacity) No. 124,801 Total Installed Capacity of Distribution Transformers MVA 7934 D. NTDCL Feeding Source (Grid Stations) to FESCO 500KV No. 02 220KV No. 08

4. Gen. (0.62 %) T/Well (1.07%) Inds . (1.1 %) CUSTOMERS MIX. (Ending June 2022) 4

5. CONSUMPTION MIX. (Ending June 2022)

6. T/Well (5.4%) Indu . (42.13%) TARIFF WISE REVENUE COLLECTION (Ending June 2022) ( Rs . in Million) Other (0.11 % ) Govt. (4.67%) (with out subsidy ) 6

7. C-Level hiring as approved by BoD FESCO Manpower Shortage. Technical & Administrative Loss. Reliability and Continuity of Supply. Customer Services. Network Expansion. Network Constraints. Recovery. Safety. Human Intervention. Readiness for CTBCM . Net-Metering and associated Tariff. KEY CHALLENGES 7

8. PMS FORECAST 8

9. ENERGY / DEMAND FORECAST - RESULTS NOTE: Results are based on Power Market Survey (PMS) FY 2020-21 to 2030-31 Year Energy Forecast Demand Forecast ( GWh ) (MW) 2021-22 15,604 3505 2022-23 16,771 3813 2023-24 17,727 4045 2024-25 18,582 4249 2025-26 19,581 4491 2026-27 20,626 4743 2027-28 21,675 4995 2028-29 22,939 5303 2029-30 24,271 5628 2030-31 25,687 5972 Ave. Growth Rate (2021-2031) 5.63% 6.06% 9

10. DEMAND & SUPPLY 202 1 -2 2 (AVG.) MW Month 10

11. DEMAND & SUPPLY 202 1 -2 2 (MAX.) MW Month 11

12. PURPOSE AND GOALS OF INVESTMENT PLAN As per NEPRA guidelines for determination of customer end Tariff, submission of Distribution Integrated Investment Plan (DIIP) by distribution companies is required before submission of Multiyear tariff petition. The FESCO Multiyear tariff determination for control period from FY 2018-19 to FY 2022-23 will be lapsed in June, 2023. In compliance of above regulatory requirement before submission of MYT for next five years i.e. FY 2023-24 to FY 2027-28, FESCO has prepared its Integrated Investment Plan for above years for submission to NEPRA. 12

13. ISSUES FRAMED BY NEPRA 13

14. ISSUE -I Whether the claimed cost of Rs. 38,778 Million under the head of STG is Justified? 14

15. STG PROJECT – OBJECTIVE In view of the growing demand of electricity, FESCO’s Secondary Transmission & Distribution (132 kV & below) infrastructure requires investments in Secondary Transmission & Grid Stations ( STG ) Secondary Transmission & Grids Program FESCO is launched to; Provide relief to the overloaded grid stations and transmission lines Accommodate future load growth Evacuate power from future 220kV and 500kV NTDC grid stations The STG project covers all eight districts under the jurisdiction of FESCO, i.e. Faisalabad, Jhang , Chiniot , Toba Tek Singh, Bhakkar , Mianwali, Khushab and Sargodha. 15

16. STG PROJECT – PROCESS STG Projects were identified by performing system studies in collaboration with NTDC under TSEP project as follows: Verification & Finalization of PMS Report. Validation of FESCO Existing Network. Load flow studies of the system to confirm existing and expected future system constraints. Identification of sub-projects to eliminate constraints. Further load flow studies to assess sub project technical viability, and overall compatibility with NTDC system upgrades. Sub project costs were compiled and then analyzed for financial and economic viability. 16

17. SECONDARY TRANSMISSION & GRIDS (STG) SCOPE : Sr. No. Description 2023-24 2024-25 2025-26 2026-27 2027-28 Total A - GRID STATIONS (Nos) i Construction of New Grid Stations 7 9 4 7 3 30 ii Augmentation of Power Transformers 9 6 8 11 2 35 iii Extension of Existing Grid Stations with T/Former bays 1 5 4 5 15 iv Extension of Existing Grid Stations with Line Bays 2 4 2 4 3 15 v Installation of Capacitor Banks (MVAR) 100 100 100 100 100 500 Additional (MVA) i Construction of New Grid Stations 476 431 210 364 156 1637 ii Augmentation of Power Transformers 124 68 111 143 27 473 iii Extension of Existing Grid Stations 52 118 52 119 78 419 Total 652 617 373 626 261 2530 Transmission Lines Scope under STG Project are as follows: Sr. No. Description 2023-24 2024-25 2025-26 2026-27 2027-28 Total B - Erection of 132 kV Transmission Lines i 132kV Transmission Line Projects (Nos.) 8 11 7 10 6 42 ii Erection of 132kV Transmission Lines (km) 98.8 117 54 86.5 66 422 Grid Stations Scope under STG Project are as follows: 17

18. CAPEX : SECONDARY TRANSMISSION & GRIDS (STG) Project costing was undertaken on the basis of the most recent procurement costs, and site specific needs. All major equipment, associated equipment, and civil works are included in the estimates. Provision is made for physical and price contingencies. Sr. No. Description 2023-24 2024-25 2025-26 2026- 27 2027- 28 Total A - GRID STATIONS (Rs. Million) i Construction of New Grid Stations 3,618 2,673 3,569 4,114 2730 16,704 ii Augmentation of Power Transformers 1224 390 1472 1708 322 5116 iii Extension of Existing Grid Stations with T/Former bays 344 348 503 650 1323 3168 iv Extension of Existing Grid Stations with LineBays 28 100 145 156 280 709 v Installation of Capacitor Banks 420 200 463 486 - 1569 Total Total 5,634 3,711 6,152 7,114 4,655 27,266 B - Erection of 132kV Transmission Lines (Rs. Million) i Cost 1141 3617 1850 3204 1701 11513 Grand Total (Escalated) Grand Total (Escalated) 6,775 7,328 8,001 10,318 6,356 38,778 18

19. ENERGY SAVINGS ( GWh ) Description 2024-25 2025-26 2026-27 2027-28 2028-29 Total STG Energy Savings (GWh) 28.618 20.357 21.438 11.285 6.782 88.48 19

20. STG FINANCIAL ANALYSIS 20 Description NPV ( Rs . Million) IRR (%) Benefit to Cost Ratio Payback period (Years) Secondary Transmission & Grids (STG) 5,325 19.31 1.18 8-Years, 01-Month, 20

21. FINANCIAL ANALYSIS- STG                   Project Discount Rate 16.21%   Financial Analysis Results: PKR. Millions       Project Life 29 Years   Net present Value (NPV) 5,325       Project Cost Details PKR.millions   Benefit to Cost Ratio (B.C.R) 1.18       2024 6,775   Internal Rate of Return 19.31%       2025 7,328   Payback Period ( Years) 8 Years 01 Month       2026 8,001             2027 10,318             2028 6,356             Total 38,778                             Energy Saved & Units (GWh)             Losses Reduction               2025 29             2026 20             2027 21             2028 11             2029 7             Total 88           21

22. STG PROJECTS BENEFITS Improvements in the Capacity of Substations Reduction in loading of existing 132/11kV transformers Sufficient spare capacity to allow connection of additional load resulting from load growth Improvement in the voltage profile of the substations Reduction in transmission and transformation losses System constraints related to overloading, voltage violation and reactive power compensation will be resolved 22

23. JUSTIFICATION Keeping in view NPV , IRR and pay back period, the project is feasible and claimed cost of Rs. 38,778 Million under head STG is Justified. 23

24. ISSUE-II Whether the claimed cost of Rs.18,266 Million in the head of ELR is Justified? 24

25. ENERGY LOSS REDUCTION (ELR) Energy Loss Reduction (ELR) is the part of System Augmentation Program (SAP). ELR cover improvements in Distribution System by installing new feeders, modifying existing feeders, replacing overloaded Transformers, re- conductoring etc. The Expenditure under ELR are met through Own Resources of FESCO. 25

26. ENERGY LOSS REDUCTION (ELR)- OBJECTIVE ELR comprises of HT and LT proposals. These proposals are prepared / selected where all or any one of the following improvement is required: Improving Voltage drop (where more than 5%) Reducing Power Loss (where loss is more than 3%) Reducing Annual Energy Loss (where loss is more than 3%) iv. Decreasing Percentage Loading (where loading is above or equal to 80%) Improving Power Factor Independent/Industrial (>0.95) Mix Load urban (>0.95) Mix Load Rural (>0.90) 26

27. ENERGY LOSS REDUCTION (ELR) SCOPE: Description 2023-24 2024-25 2025-26 2026-27 2027-28 Total No. of HT Proposals 32 34 36 38 40 180 No. of LT Proposals 800 850 900 950 980 4480 Replacement of Old Type T/ Formers (Above 20 Yrs) 646 645 645 645 645 3244 27

28. CAPEX : ENERGY LOSS REDUCTION (ELR) Rs. in Million No. Description 2023 - 24 2024-25 2025-26 2026-27 2027 - 28 Total 1 HT Proposals 806 1026 1259 1719 1942 6752 2 LT Proposals 944 1154 1444 1855 2096 7493 3 Replacement of Old Type T/Formers (age above 20 Years) 805 804 804 804 804 402 1 Total Project Cost (Escalated) 2555 2984 3507 4378 4842 18266 28

29. ELR FINANCIAL ANALYSIS 29 Description NPV (Rs. Million) IRR (%) Benefit to Cost Ratio Payback period (Years) Energy Loss Reduction (ELR) 18,347 47.39 2.36 05 Years, 05-Month

30. FINANCIAL ANALYSIS-ELR                   Project Discount Rate 16.21%   Financial Analysis Results: PKR. Millions       Project Life 29 Years   Net present Value (NPV) 18,347       Project Cost Details PKR.Millions   Benefit to Cost Ratio (B.C.R) 2.36       2024 2,555   Internal Rate of Return 47.39%       2025 2,984   Payback Period ( Years) 5 Years 05 Months       2026 3,507             2027 4,378             2028 4,842             Total 18,267                             Energy Saved & Units ( GWh )             Losses Reduction               2025 106             2026 148             2027 184             2028 212             2029 237             Total 887           30

31. JUSTIFICATION Keeping in view NPV , IRR and pay back period, the project is feasible and claimed cost of Rs . 18 , 266 Million under head ELR is Justified. 31

32. ISSUE -III Whether the claimed cost of Rs.6,859 Million in the head of DOP is Justified. 32

33. DISTRIBUTION OF POWER ( DOP ) DOP head deals with projects where the distribution of power or continuity of services is the main objective MAJOR ACTIVITIES Construction of feeders due to addition/augmentation of power transformers and new grid stations. Rehabilitation (re- conductoring , replacement of poles and mid-spanning) of feeder. Expansion of distribution network and augmentation of distribution transformer due to the addition of new general connections 33

34. DISTRIBUTION OF POWER ( DOP ) PROCESS HT proposals for construction of new feeders/shifting of existing feeders are estimated as per no. of new grids to be added by 2027-28 annually in line with STG. 30% load utilization of new grid stations is proposed by shifting of 5 feeders to new grid station (per feeder 3MW load). HT proposals for re- conductoring of 11KV feeders having technical parameters out of permissible limits are proposed based on previous years progress. LT Proposals due to addition/augmentation of distribution transformers are proposed based on previous years progress. Installation of 11KV capacitors for improvement of power factor/voltage profile are proposed on selected feeders having power factor below 90% 34

35. Description 2023-24 2024-25 2025-26 2026-27 2027-28 Total HT PROPOSALS:   LOAD SHIFTING ON NEW GRIDs (Nos.) 8 16 18 22 25 89 RECONDUCTORING OF 11KV FEEDERS (Nos.) 12 15 18 22 24 91 LT PROPOSALS:   ADDITION/AUGMENTATION OF T/F (Nos.) 541 618 695 773 845 3472 11KV CAPACITORS (Nos.) 25 30 45 55 70 225 DISTRIBUTION OF POWER ( DOP ) SCOPE: 35

36. CAPEX : DISTRIBUTION OF POWER ( DOP ) Description 2023-24 2024-25 2025-26 2025-26 2026-27 2027-28 Total HT PROPOSALS:   LOAD SHIFTING / RECONDUCTORING 850 947 1042 1086 1227 5152 LT PROPOSALS: ADDITION/AUGMENTATION OF T/F 366 332 300 319 360 1677 11kV CAPACITORS 3 4 6 8 9 30 TOTAL 1219. 128 3 1348 1413 1596 6859 36 (Rs. in million)

37. Description 2024-25 2025-26 2026-27 2027-28 2028-29 RECONDUCTORNG OF 11KV FEEDERS(GWH) 6 9 11 13 15 ADDITION/AUGMENTATION OF T/F (GWH) 3 4 6 7 9 11kv CAPACITORS (GWH) 2 2.5 3 4.5 5 TOTAL ENERGY SAVED (GWH) 11 15.5 20 24.5 30 DOP ENERGY SAVINGS 37

38. DOP FINANCIAL ANALYSIS 38 Description NPV ( Rs . Million) IRR (%) Benefit to Cost Ratio Payback period (Years) Distribution of Power ( DoP ) 5,010 30.82 1.96 06 Years, 05 Months

39. FINANCIAL ANALYSIS- DOP                   Project Discount Rate 16.21%   Financial Analysis Results: PKR. Millions       Project Life 29 Years   Net present Value (NPV) 5,010       Project Cost Details PKR.Millions   Benefit to Cost Ratio (B.C.R) 1.96       2024 1,219   Internal Rate of Return 30.82%       2025 1,282   Payback Period ( Years) 6 Years 05 Months       2026 1,348             2027 1,413             2028 1,596             Total 6,858                             Energy Saved & Units (GWh)             Losses Reduction               2025 11             2026 16             2027 20             2028 25             2029 30             Total 101           39

40. JUSTIFICATION Keeping in view NPV , IRR and pay back period, the project is feasible and claimed cost of Rs. 6,859 Million under head DoP is Justified. 40

41. ISSUE-IV Whether the claimed cost of Rs. 3,650 Million in the head of Technical improvement Plan and 2,026 Million for AMI/AMR is justified? Provide the basis against requested investment in terms of voltage wise areas where AMI/AMR system will be implemented and benefits of proposed investment, Whether any Plan of AMR/AMI installation on PMT level is included in the investment Plan or otherwise? 41

42. Sr# Description Rs . in Million 2023-24 2024-25 2025-26 2026-27 2027-28 Total 1. GIS Mapping of HT/LT upto customer & Development of Web Based Application for future updating along with Hardware and Software. HT Mapping (updation) 100% LT Mapping up to consumer & Development of Web Based Application for future updation along with Hardware and Software   175 140 35 - - 350 2. Installation of SCADA system to connect FESCO 132kv & 66kv Grid Station with DCC & RCC. Installation of SCADA system to connect FESCO 132 kv & 66 kv Grid Station with DCC & RCC. 200 800 1200 300 - 2500 3. Capacity Building of Technical Services (TS) Department and purchase of required IT tools/ software. Capacity Building of Technical Services (TS) Department and purchase of required I.T tools/ software 150 250 200 100 100 800 Total 525 1190 1435 400 100 3650 42 TECHNICAL IMPROVEMENT PLAN

43. AMI System/ Smart Energy Meters Objectives of AMI System/ Smart Energy meters : Reading with Advanced Metering Infrastructure without human intervention and accurate billing for customers satisfaction. Loss reduction and recovery improvement in high loss area. Assessment of load profile of each customer on real time Availability of real time data for planning purpose etc. Monitoring of critical alarms and load side management. Remote Connection and Disconnection which will be linked through online payment / banking system. Load Limitation through disconnection of unapproved extension of load cases. Better asset management. 43

44. SCOPE OF AMI SYSTEM / SMART ENERGY METERS Description 2023-24 2024-25 2025-26 2026-27 2027-28 Total Above 15kW tubewell and industrial connections Other connections above 15kW Above 5kW connections No. of connections 16,066 16,145 16,008 20,000 20,000 88,219 Note: - Although all feeders of FESCO are under Category-I, even then FESCO is planning for installation of AMI meters at selective approximately 200 Nos. PMTs of high loss feeders / areas. 44

45. CAPEX: AMI SYSTEM/ SMART ENERGY METERS Description   2023-24 2024-25 2025-26 2026-27 2027-28 Total AMI Metering 387.97 348.16 430.00 430.00 430.00 2026.13 45 (Rs. in million)

46. AMI / Smart Energy Meters Savings ( Gwh ) Description 2024-25 2025-26 2026-27 2027-28 2028-29 Total AMI / Smart Energy Meters 2.52 5.03 7.59 9.85 12.11 37.08 46

47. AMI/ SMART ENERGY METERS, FINANCIAL ANALYSIS 47 Description NPV ( Rs . Million) IRR (%) Benefit to Cost Ratio Payback period (Years) AMI / Smart Energy Meters 85 17.18 1.05 08Years, 08 Months

48. FINANCIAL ANALYSIS-AMI/SMART ENERGY                   Project Discount Rate 16.21%   Financial Analysis Results: PKR. Millions       Project Life 29 Years   Net present Value (NPV) 85       Project Cost Details PKR . millions   Benefit to Cost Ratio (B.C.R) 1.05       2024 388   Internal Rate of Return 17.18%       2025 348   Payback Period ( Years) 8 Years 08 Months       2026 430             2027 430             2028 430             Total 2,026                             Energy Saved & Units (GWh)             Losses Reduction               2025 3             2026 5             2027 8             2028 10             2029 12             Total 37                           48

49. JUSTIFICATION Keeping in view NPV , IRR and pay back period, the project is feasible and claimed cost of Rs. 2,026 Million is Justified. 49

50. ISSUE -V Whether the claimed cost of Rs.155,245 Million in the head of Annual Recurring Cost which include O&M and R&M expenses is justified? 50

51. SUMMARY OF ANNUAL RECURRING COST (EXISTING & NEW SCHEMES) 51 (in Rs. Millions) Sr.# Description Unit Quantities 2023-24 2024-25 2025-26 2026-27 2027-28 Total O&M Cost for FESCO Expansion & Rehabilitation 1. Existing O&M Cost Rs. Million 27391 28761 30199 31,709 33294 151,354 O&M Cost for New Schemes Rs. Million 679 717 785 891 749 3822   Total   28,070 29,478 30,984 32,600 34,043 155,176 Note:- Approval is required for only capital cost of the projects, above annual recurring cost is just an estimate. T he actual recurring cost will be submitted by Finance Department during MYT petition. Existing O&M Cost is as per decision of the Authority in the matter of request filed by FESCO for Adjustment / Indexation for the tariff for the FY 2021-22 under the MYT and 5% increase year on year. Annual recurring cost has been taken 4.50% of capital cost of the project .

52. SUMMARY OF ANNUAL RECURRING COST OF NEW SCHEMES 52 Item 2023-24 2024-25 2025-26 2026-27 2027-28 Total A STG 305 330 360 464 286 1745 B Distribution of Power (DOP) 55 58 61 64 72 309 C Energy Loss Reduction (ELR) 115 134 158 197 218 822 D Vehicles and T&P 108 68 65 61 77 378 E Civil works 31 38 37 45 43 194 F Technical Improvement Plan 24 54 65 18 5 164 G Commercial Improvement Plan 18 17 22 22 23 102 H Financial Improvement Plan of IT Directorate 14 10 10 11 17 62 I HR Improvement Plan 9 9 9 9 9 45 Total Total 679 717 785 891 749 3822 (in Rs. Millions)

53. JUSTIFICATION This is the estimated existing Operation & Maintenance Cost and Depreciation Expenditure of the proposed new investments. The OPEX is only mentioned here for information. It will separately claimed in the MYT Petition with justification after approval of DIIP. 53

54. ISSUE -VI Payback period of investment claimed under the head of DOP , ELR and STG ? 54

55. FINANCIAL ANALYSIS 55 Energy Saving / Loss Reduction NPV (Rs. Million) IRR (%) Benefit to Cost Ratio Payback Period (Years) Secondary Transmission & Grids (STG) 5,325 19.31 1.18 8-Years, 01-Month, Distribution of Power ( DoP ) 5,010 30.82 1.96 06 Years, 05 Months Energy Loss Reduction (ELR) 18,347 47.39 2.36 05 Years, 05-Month

56. JUSTIFICATION The payback period of the projects (STG, ELR & DOP) is 6 year and 7 months which is rationally justified. 56

57. Distribution Integrated Investment Plan (DIIP) (CAPEX for System Improvement) Rs. in Million 57 Item 2023-24 2024-25 2025-26 2026-27 2027-28 Total A STG 6775 7328 8001 10318 6356 38778 B Distribution of Power (DOP) 1,219 1,283 1,348 1,413 1,596 6,859 C Energy Loss Reduction (ELR) 2555 2984 3507 4378 4842 18266 D Vehicles and T&P 2397 1504 1438 1347 1708 8394 E Civil works 690 843 826 997 950 4306 F Technical Improvement Plan 525 1190 1435 400 100 3650 G Commercial Improvement Plan 408 388 480 490 510 2276 H Financial Improvement Plan of IT Directorate 312 213 229 252 377 1383 I HR Improvement Plan 210 190 190 210 210 1010   Total Total 15091 15923 17454 19805 16649 84,922

58. FINANCIAL ANALYSIS Assumptions: Average Sale Rate FY 2023-2024 has been assumed as Rs.22.88 kWh which is further indexed with reference to projected CPI. Average Purchase Rate (unadjusted) for FY 2023-24 has been assumed as Rs.20.86 kWh which further indexed with reference to projected CPI. It is assumed that the benefit will accrue from the following year of investment. The life of project has been assumed as 29 years. 58

59. Financial Analysis-Investment                   Project Discount Rate 16.21%   Financial Analysis Results: PKR. Millions       Project Life 29 Years   Net present Value (NPV) 17,711       Project Cost Details PKR. Millions   Benefit to Cost Ratio (B.C.R) 1.27       2024 15,091   Internal Rate of Return 21.09%       2025 15,923   Payback Period ( Years) 7 Years 10 Months       2026 17,454             2027 19,805             2028 16,649             Total 84,922                             Energy Saved & Units (GWh)             Losses Reduction               2025 148             2026 189             2027 233             2028 258             2029 286             Total 1114           59

60. Energy Savings of All Projects in GWH 60 Description 2024-25 2025-26 2026-27 2027-28 2028-29 Total STG 28.62 20.36 21.44 11.29 6.78 88.48 DOP 11.00 15.50 20.00 24.50 30.00 101.00 ELR 106.12 148.25 184.03 211.94 237.09 887.43 AMI 2.52 5.03 7.59 9.85 12.11 37.08 %age T&D Loss Decrease 0.10 0.14 0.10 0.10 0.10 0. 5%

61. PRAYER NEPRA Authority is requested for kind approval of Distribution Integrated Investment Plan for control period of 2023-24 to 2027-28. 61

62. 62