(On-site evaluation: July - August 2006)
Ex-Post Monitoring of Completed ODA Loan Projects
Evaluator: Ryujiro Sasao (IC Net, Ltd.)
Project:Pakistan: “Project to Upgrade Generator No. 6 at the Bin Qasim Thermal Power Plant (1) (2)” (PK-P30, PK-P39)

Loan Outline
Loan Amount/Disbursement Amount:
Loan Agreement:
Loan Completion:
Ex-Post Evaluation:
Executing Agency:

27,525 million yen / 25,089 million yen
March 1992 / November 1994
March 1999 / February 2001
Fiscal Year 2001
Karachi Electric Supply Corporation Limited (KESC) of Pakistan

Project Objective:
By expanding the 210-MW power generator and transformation-transmission facilities at the Bin Qasim Thermal Power Plant in the suburbs of Karachi city, the project aims to supply
power to the areas surrounding Karachi, and thereby improve quality of life for local people and contribute to economic development in the target region.
Consultant: Tokyo Electric Power Services Co., Ltd. (TEPSCO)
Contractors: Marubeni, Interhom (PVT) Ltd. (Pakistan), Siemens Pakistan Engineering Co., Ltd./China Northwest Electric Power Group (Pakistan/China)
Overview of Results
Item

At time of ex-post evaluation

At time of monitoring

Effectiveness &Impact

Power output has largely maintained at the target levels after the ex-post
evaluation. As it has remained a vital power supply source in the target region, its
effectiveness is high.

Effectiveness(1) Power generator No. 6・This generator’s performance has exceeded initial targets and expectations.
However, premature deterioration is a concern. because its equipment hasbeen used heavily,Year
Maximum
output(MW)

Table 1: Operating Conditions of Generator No. 697-98
98-99
99-00
target210
210
210
actual219
213
210(104%)(101%)(100%)(1) Power generator No. 6The operating conditions of the power generator were carried out largely as planned at
the time of the ex-post evaluation, and overall have been quite good. An increase inoperation shutdowns since 2000 has been due to the work being done on equipment
which required repairs.

・Year
Maximum
output(MW)

Table 1: Operating Conditions of Generator No. 600-01
01-02
02-03
03-04
target
210
210
210
210
actual
210
200
205
205
(100%)
(95%)
(98%)
(98%)

04-05
210
207
(99%)

1

Total power target
outputactual(GWh)
Capacitytargetutilization
actualrate(%)
actualThermalefficiency(%)
actualPowerconsumption
forplant
operation(%)
actualShutdowntime(hours)

・

981

1,174

1,174

931
(95%)

1,443(123%)

1,468(125%)

63.83
60.57
(95%)

63.83
73.63
(115%)

63.83
75.13(118%)

--

38.17

-

-

5.85

-

-

72.28

Looking at the entire target region, demand has been increasing at a rate of
5.14% annually over the past five years, but supply from the KESC power
plants has leveled off; supply has in fact fallen short of the plant’s capacity.
The generator that was refurbished has been supplying 13.6% of the power
supply volume to the target region, and will contributes to meeting thestringent power demands of the area.

Total power target
outputactual(GWh)
Capacitytargetutilization
actualrate(%)
actualThermalefficiency(%)
actualPower
consumption
for
plant
operation(%)
actualShutdowntime(hours)
Source: KESC

1 ,542

1,542

1,542

1,542

1,542

1,461(95%)
90.0
79.4(88%)

1,510(98%)
90.0
82.1(91%)

1,492(97%)
90.0
81.1(90%)

1,551(101%)
90.084.1
(93%)

1,472
(95%)
90.0
80.0(89%)

36.74

36.06

35.95

36.49

36.32

6.05

6.10

6.32

6.06

6.23

541

413

398

367

622

・ This generator provides 15.8% of the total power supply to the target region over 2004
- 2005, and has remained an important power supply source. However, whereas
demand over the entire region has continued to increase, rising 3.4% per year over thepast five years, KESC has not built any new power plants, meaning that supply hasleveled off. KESC has gradually increased its power supply purchases from thePakistan Water Power and Development Authority (WAPDA) and other independent
power providers so as to cope with the increasing power demand.
・ Overall, the area has continued to suffer from a chronic shortage of power. Planned
shutdowns have also continued as in the past (see 2).

2

Figure 1: Change in Power Demand and Supply in the Target Region

Figure 1: Change in Power Demand and Supply in the Target Region
2,400
(MW)

KESC plant
capacity

2,200
2,000

KESC plant
capacity
Maximum power
demand in KESC
jurisdiction

1,800

Maximum power
demand in KESC
jurisdiction
KESC available
output

1,600
1,400

KESC available
output1,200
1,000
2000-01

01-02

02-03

03-04

04-05

Source: KESC
(2) Power transmission and transformation facilities
・Power supply cutbacks were greatly reduced from about 102 GWh for 1998
- 1999 to 7.3 GWh for 1999 - 2000.

(2) Power transmission and transformation facilities
・ While maximum power supply cutbacks have tended to decrease slightly, they arelargely the same. Because some of the data was unavailable, the situation with supply
cutback volume is unclear. However, discussions with related institutions indicate thatex-post evaluation levels have clearly improved over those at the time of project
start-up in the 1990s.

Table 2: Changes in the Planned Shutdowns for the Target Region
Maximum Power Supply
Power Supply Cutback
YearCutback
(MWh)
(MW)
94-95
286
30,853
95-96
268
53,18896-97
341
85,93497-98
300
50,201
98-99
338
101,963
99-00
238
7,307

Table 2: Changes in the Planned Shutdowns for the Target Region
Maximum Power Supply
Power Supply Cutback
YearCutback
(MWh)
(MW)
00-01
262
Unclear (data unavailable)
01-02
201Unclear (data unavailable)
02-03
141
Unclear (data unavailable)
03-04
80
Unclear (data unavailable)
04-05
220
Unclear (data unavailable)
Source: KESC

3

(3) Financial Internal Rate of Return (FIRR)
・Negative (at time of appraisal: 9.3%)
・
Inspite of an increase in system loss rates due to the electricity theft andsteep rise in fuel prices, the electricity prices were kept intentionally low forgovernment policy.
(Cost) Capital costs, fuel costs, operation and management costs(Benefit) Increment in sales proceeds from generator No. 6

Power output(GWh)

Sales price(Rp/kWh)

Fuel cost(Rp/kWh)

System lossrate(%)

1,174.2

1.89

0.373

21.0

1,443.0〜
1,468.0

2.33〜
2.56

1.16〜
1.85

31.5〜
38.6

Note: Prices all show the price fixed in 1997.

Impact・It is difficult to recalculate the FIRR because the executing agency would not provide
detailed information pertaining to cash flow. However, because the system loss rates
and power generation volume are essentially at the same level as at the time of theex-post evaluation, and both electricity prices and fuel prices have increased, it isestimated that the FIRR is on par with ex-post evaluation levels.
Table 3: FIRR Calculation Basis

Table 3: FIRR Calculation Basis

Attimeofappraisal
Actual figures(at time of ex-postevaluation)(3) Financial Internal Rate of Return (FIRR)(1) Social Impact
・ Planned shutdowns, which are thought to adversely affect the people andindustry of Karachi city from general households to the industrial sector,
have been reduced. (See Effectiveness [2])Power output(GWh)

Sales price(Rp/kWh)

Fuel cost(Rp/kWh)

System lossrate(%)
21.0

At time of appraisal
1,174.2
1.89
0.373
Actual figures ①
1,443.0〜
2.33〜
1.16〜
31.5〜
(at time of ex-post
1,468.0
2.56
1.8538.6evaluation)
Actual figures ②3.09(at time of follow-up
34.2
1,471.6
4.56(2005)
monitoring:
2004-2005)
Source: Created by evaluators.
Note: Figures at the time of the appraisal and actual figures ① indicate prices fixed in
1997. Actual figures ② have not been revised.
(1) Social Impact
Survey on Ex-post Monitoring analyzes the following four indicators, ①〜④.
① GRDP of the Karachi Region
Although GDP data for the Karachi region alone (encompassing all of Sindh state) has
not been maintained, World Bank estimates show that over the 2004-2005 year period it
was a little over US$28 billion, of which proceeds from electricity and gas supply wereover US$1 billion, according to the executing agency.. Moreover, the electricity and gas
sector is thought to have reached growth in excess of 10% from 1991 to 2005
(unconfirmed). Since Karachi is Pakistan’s largest industrial and commercial region, it isassumed to have improved in correlation with Pakistan’s overall GNP trends.

4

Table 4: Pakistan’s GNP
Year
2000-01
01-02
ActualGDP
1.8
3.1
growth rate (%)
Source: Pakistan Economic Survey

02-03

03-04

04-05

4.7

7.5

8.6

② Accidental power outage time per year and per consumer household (min / year •household)③ The number of accidental power outages per year and per consumer household (times /year • household)・ We were not able to obtain accurate information on either of these factors, but weestimate that they are very likely to have increased compared to pre-project execution
years. Among the reasons for this is the fact that total power output is insufficient
relative to regional demand; this despite the performance of power generationequipment including generator No. 6. Moreover, electricity theft is a problem, as is theinsufficient operation and maintenance of the overall transmission grid on the part ofKESC.
④ The number of power users and usage volume
・ Both the number of users and usage volume have tended to increase since the start of
the facilities’ operation. Considering the fact that KESC has no particular plans toconstruct power plants within its jurisdiction, it is expected that the project has made acertain contribution to satisfying the increasing power usage in the target region.
Table 5: No. of Power Users and Usage Volume

No. of Power Users
Residential Users (people)
Commercial Users (people)
Industrial Users (people)
Power Usage Volume (GWh)
Source: KESC

1997 - 1998
(At time facilities
started operation)
1,060,000
337,004
28,0486,138

2003 - 2004
1,350,000
407,90232,574
7,832

5

(2) Environmental Impact
・There have been no notable problems in terms of the impact for noise andvibrations on private homes, the effect of thermal discharge on the ocean, orconditions in the surrounding atmosphere.
・The executing agency’s smoke emissions monitoring system is out ofcommission and needs to be repaired.

Sustainability
・Projectsustainability
・Operation andmanagement
conditions(2) Environmental Impact・
According to an internal audit conducted by the executing agency in March 2006,
SOX (sulfur oxide), NOX (nitrogen oxide), noise, and drainage are all within the limitsprescribed by the National Environment Quality System (NEQS), which operates
under the Environmental Protection Agency that which administers the environment.
・Since the smoke emissions monitoring system was installed ten years ago and is nolonger functioning adequately, it is in the process of repair. In addition, a vehicle forambulatory monitoring of the surrounding atmosphere (provided through a loan fromKfW) is in operation, but because the program has some problems, it is scheduled tobe improved.
The executing agency, and operation and maintenance organization have continued
to freeze the employment of new personnel since the ex-post evaluation. The
executing agency’s financial deficit has not improved from the time of ex-post
evaluation. Following privatization of the executing agency in December 2005,
countermeasures to remedy both these problems are expected.

(1) Technology•
The power plant has 862 employees, of whom 122 are managers and 740 areworkers (it is unclear whether or not they are technicians). Throughrationalizations conducted under the guidance of the Asian Development
Bank (ADB), new hires and the replacement of retirees has been suspended.

(1) Technology・ The power plant has a total of 746 employees, of whom 149 are technicians. Since thetime of the ex-post evaluation, the plant has lost 116 employees (13.5% of total). Thisis due to the fact that new hiring has been frozen since 1996 as part of the restructuring
effort. In order to attain a minimum technical level (to maintain the minimum technicallevel as an organization), there is an intention to gradually increase the number ofemployees from now on. All of the engineers have BAs in engineering and the boiler
operators have public qualifications. They also have the opportunity to receive training
at KESC’s training facilities and foreign institutes. There is a manual in the generator’scontrol room, and it is being put to use.

(2) Organizational Structure
・Operation and management of the project was done under KESC, one of twopower companies in Pakistan which operates the Bin Qasim thermal plant.
KESC has 12,499 employees (as of June 1999).
・
The Pakistani government has expressed its intention to restructure thepower sector through means such as sharing functions, liberalizing theelectricity market, and reforming structures through, for example,privatization.

(2) Organizational Structure
・The operation and management systems are the same as at the time of the ex-post
evaluation.
・KESC was privatized in December 2005. (The capital structure is such that 27% of its
capital is owned by the government and public sector, and 73% is owned privately.
The CEO is German.) KESC consists of 10,188 employees (as of July 2006), which isa decrease of 2,311 employees (18.5%) from the ex-post evaluation. This is due to thefact that, new hires have been frozen for several years—since 1996.
・ADB’s support for rationalizing the executing agency was the driving force behind
KESC’s privatization. The resulting improved administration of operations should
contribute to overall sustainability.
・The various measures taken following privatization, and their effects, are unclear

6because of restrictions on information gathering. Opinions on-site suggest that
concrete results should be looked at from a long-term perspective.

(3) Financial Status
・KESC’s financial status has worsened year by year. Reasons for this include
the fact that electricity prices are set by a government policy that does notreflect steep increases in heavy oil prices, an increase in system loss rates
due to electricity theft, and the burden of high credit costs. KESC is alsoheavily dependent on borrowing as the accounts receivable turnover period
has grown longer.
・As a measure against the steep rise in heavy oil prices, the Pakistani
government places priority on using domestically produced natural gas forthe power sector. Gas accounts for 44% of the Bin Qasim power plant’soutput (February 2001).

(3) Financial Status
・KESC’s earnings performance has not improved. With regard to ordinary profit andloss, the deficit of approximately 7.3 billion Pakistani rupees in 1998 expanded to oneof 11.9 billion rupees in 2004. The reasons are basically the same as at the time of theex-post evaluation. Over three years starting in FY2002 assistance was provided by thegovernment. Even though it resulted in final profits and losses showing a net profit of460 million rupees in FY2004, there are no expectations for further governmentalassistance.
・The switch to gas as a fuel for power generation is proceeding and as of 2005 gas
accounted for 76% of power generated. Compared to the time of the ex-post
evaluation, this comes to a saving of 1.266 billion rupees per year. This corresponds to3.2% of sales proceeds. Although demand for gas is expected to surpass supply from2008 to 2010, its gas fuel supply a long-term contract was signed between KESC andgas supply companies, so there should be no problems.

Operation and Maintenance Conditions
・ Power generator No. 6 has been operating well, and has had no particularproblems. However, there is concern that premature deterioration may resultfrom excessive operation and failure to perform periodic inspections.

Operation and Maintenance Conditions
・ Operation and maintenance work is performed periodically in accordance with themanual from the machinery manufacturer, and sufficient consumables are stored.
Generator No. 6 is operating well for the most part, but problems on specificcomponents and abrasion have been noted, and an overhaul is scheduled for December
2007.

Lessons
The executing agency needs a new plan to cope with the increased demand for
power in the entire target region, as well as a study to improve financial conditions.

Learned,Recommendations,(1) No lessons or recommendations are mentioned.

Information(1) Follow-up on recommendations and lessons from the ex-post evaluation
・ Not applicable.

Resources andMonitoring
Methods(1) Follow up onlessons

learnedand recommendations made in(2) Lessons from ex-post monitoring evaluation and recommendations for securing
sustainability
・ A reduction of planned shutdowns to cope with the increased power demand isurgently needed, and the executing agency as a whole needs to make an all-out effort
to construct new power plants or improve the transmission and distribution grid.
・ Cooperation in the disclosure of information was not sufficiently obtained, making it
difficult to assess relevance through data collection or monitoring of project relevance.
When the management is transferred to new organization (following privatization), it

7

ex-post

evalu-

should be done in a way that ensures continued smooth operations.

ation report or inlater evaluations(2) Proposals forsecuring
sustainability
and instructions
given at time offollow-up
monitoring8