Document of The World Bank Report No: ICR00003216 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IBRD-48900 and IBRD-75930) ON LOANS IN THE AMOUNTS OF US$600 MILLION AND US$400 MILLION TO THE POWER GRID CORPORATION OF INDIA LIMITED (WITH THE GUARANTEE OF INDIA) FOR THE FOURTH POWER SYSTEM DEVELOPMENT PROJECT AND ITS ADDITIONAL FINANCING January 30, 2015 Energy and Extractive Industries India Country Management Unit South Asia Region i CURRENCY EQUIVALENTS Fiscal Year Annual Average Exchange Rate to US$ 2006–07 41.35 2007–08 43.50 2008–09 48.40 2009–10 45.73 2010–11 46.67 2011–12 53.44 2012–13 58.60 2013–14 69.50 Currency Unit = INR FISCAL YEAR April 1–March 30 ABBREVIATIONS AND ACRONYMS ADB Asian Development Bank AIS Air Insulated Switchyard BHEL Bharat Heavy Electricals Limited BU Billion Units CAMPA Compensatory Afforestation Management and Planning Authority CAS Country Assistance Strategy CD Community Development CEA Central Electricity Authority CERC Central Electricity Regulatory Commission CF Conservator of Forest ckm Circuit Kilometer CPS Country Partnership Strategy CSR Corporate Social Responsibility CTU Central Transmission Utility D/C Double Circuit DFO District Forest Officer DIR Detailed Investigation Review DPE Department of Public Enterprises EHV Extra High Voltage EHVAC Extra High Voltage Alternate Current EMP Environment Management Plan EMS Environment Management System ERM Enterprise Risk Management ERP Enterprise Resource Planning ERR Economic Rate of Return ERSS I Eastern Region System Strengthening I ESMD Environment and Social Management Department ESPP Environment and Social Policy and Procedures EWTC East West Transmission Corridor FEAR Final Environment Assessment Report ii FM Financial Management FMR Financial Monitoring Report FMS Financial Management System FPO Follow-on Public Offering FRA Forest Rights Act FSC Fixed Series Compensator GDP Gross Domestic Product GIS Gas Insulated Substation GoI Government of India GRI Global Reporting Initiative/Index GW Giga Watts = 1,000 Mega Watts HTLS High Temperature Low Sag HVDC High Voltage Direct Current IEAR Initial Environment Assessment Report IEGC Indian Electricity Grid Code IMF International Monetary Fund IPMCS Integrated Project Management and Control System IPO Initial Public Offering IPP Independent Power Producer JV Joint Venture KPI Key Performance Indicator KIADB Karnataka Industrial Areas Development Board kV Kilovolt M&E Monitoring and Evaluation MDG Millennium Development Goal MIS Management Information System MoEF Ministry of Environment and Forest MoF Ministry of Finance MoP Ministry of Power MPPTCL Madhya Pradesh Power Transmission Company Limited MSETCL Maharashtra State Electricity Transmission Company Limited MTR Midterm Review MU Million Units MVA Megavolt Ampere MW Megawatt NLDC National Load Despatch Center NOC No Objection Certificate NRTP Northern Region Transmission Project NWTC North West Transmission Corridor OC Operations Committee OPRC Operational Procurement Review Committee PAD Project Appraisal Document PAP Project Affected People PAF Project Affected Family PCCF Principal Chief Conservator of Forests PDO Project Development Objective PIP Project Implementation Plan PMU Phasor Measurement Units POSOCO Power System Operation Corporation Limited POWERGRID Power Grid Corporation of India Limited PSDP I First Power Sector Development Project iii PSDP II Second Power Sector Development Project PSDP III Third Power Sector Development Project PSDP IV Fourth Power Sector Development Project PSDP IV AF Fourth Power Sector Development Project - Additional Financing PSDP V Fifth Power Sector Development Project PSE Public Sector Enterprise QER Quality Enhancement Review QPR Quarterly Progress Reports R&D Research and Development RA Rehabilitation Assistance RAP Rehabilitation Action Plan RCCF Regional Chief Conservator of Forest RGO Renewable Generation Obligation RHQ Regional Head Quarters RLDC Regional Load Despatch Center R&M Repairs and Maintenance RMoEF Regional Ministry of Environment and Forest ROC Regional Operations Committee ROE Return on Equity RoW Right of Way RPC Regional Power Committee RPO Renewable Purchase Obligation S/C Single Circuit SAARC South Asian Association for Regional Cooperation SAG State Advisory Group SBD Standard Bidding Document SHG Self-help Group SIA Social Impact Assessment SLDC State Load Despatch Center SPS Special Protection System SRSS 13 Southern Region System Strengthening XIII STU State Transmission Utility TBCB Tariff-based Competitive Bidding TCSC Thyristor Controlled Series Capacitor TOR Terms of Reference TTC Total Transfer Capability UBS Use of Borrower System UI Unscheduled Interchange ULDC Unified Load Dispatch and Communication UMPP Ultra Mega Power Project UHVAC Ultra High Voltage AC WAMS Wide Area Measurement Technology WRSS II Western Region System Strengthening II iv Regional Vice President: Annette Dixon Country Director: Onno Ruhl Practice Manager: Julia Bucknall Project Team Leader: Kwawu Mensan Gaba ICR Team Leader: Surbhi Goyal v INDIA FOURTH POWER SYSTEM DEVELOPMENT PROJECT AND ITS ADDITIONAL FINANCING CONTENTS Data Sheet .................................................................................................................... viii 1. Project Context, Development Objectives and Design ............................................... 1 1.1 Context at Appraisal ............................................................................................. 1 1.3 Revised PDO (as approved by original approving authority) and KPI, and reasons/ justification ................................................................................................... 4 1.4 Main Beneficiaries ................................................................................................ 5 1.5 Original Components (as approved) ..................................................................... 5 1.6 Revised Components ............................................................................................ 6 1.7 Other significant changes ...................................................................................... 8 2. Key Factors Affecting Implementation and Outcomes .............................................. 8 2.1 Project Preparation, Design and Quality at Entry ................................................. 8 2.2 Implementation ................................................................................................... 11 2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization .... 12 2.4 Safeguards and Fiduciary Compliance ............................................................... 13 2.5 Post-completion Operation/Next Phase .............................................................. 17 3. Assessment of Outcomes .......................................................................................... 18 3.1 Relevance of Objectives, Design and Implementation ....................................... 18 3.2 Achievement of Project Development Objectives (PDO) .................................. 19 3.3 Efficiency ............................................................................................................ 21 3.4 Justification of Overall Outcome Rating ............................................................ 21 3.5 Overarching Themes, Other Outcomes and Impacts .......................................... 22 3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops ... 25 4. Assessment of Risk to Development Outcome......................................................... 25 5. Assessment of Bank and Borrower Performance ..................................................... 25 5.1 Bank Performance ............................................................................................... 25 5.2 Borrower Performance ........................................................................................ 27 6. Lessons Learned ....................................................................................................... 28 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners .......... 31 Annex 1. Project Costs and Financing .......................................................................... 32 Annex 2. Outputs by Component ................................................................................. 34 Annex 3. Economic and Financial Analysis ................................................................. 63 Annex 4. Bank Lending and Implementation Support/Supervision Processes ............ 81 (a) Task Team members ..................................................................................... 81 (b) Staff Time and Cost ...................................................................................... 82 Annex 5. Beneficiary Survey Results ........................................................................... 83 vi Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR ..................... 85 Annex 8. Comments of Co-financiers and Other Partners/Stakeholders .................... 118 Annex 9. List of Supporting Documents .................................................................... 119 Annex 10: Eligibility Criteria for Selection of Candidate Schemes to be financed under PSDP Loans ................................................................................................................ 120 Annex 11. Templates .................................................................................................. 121 Annex 12. Incorporation of Lessons from DIR .......................................................... 123 vii Data Sheet A. Basic Information POWER SYSTEM Country: India Project Name: DEVELOPMENT PROJECT IV Project ID: P101653 L/C/TF Number(s): IBRD-48900,IBRD-75930 ICR Date: 01/02/2015 ICR Type: Core ICR POWER GRID CORPORATION Lending Instrument: SIL Borrower: OF INDIA LIMITED Original Total US$600.00 Disbursed Amount: US$976.86 million Commitment: million US$1,000.00 Revised Amount: million Environmental Category: A Implementing Agencies: Power Grid Corporation of India Ltd. Co-financiers and Other External Partners: n.a. B. Key Dates Revised / Actual Process Date Process Original Date Date(s) Concept Review: 12/19/2007 Effectiveness: 05/16/2008 05/16/2008 Appraisal: 01/21/2008 Restructuring(s): 05/23/2014 Approval: 03/18/2008 Midterm Review: 02/28/2010 04/12/2010 Closing: 07/31/2013 07/31/2014 C. Ratings Summary C.1 Performance Rating by ICR Outcomes: Satisfactory Risk to Development Outcome: Low or Negligible Bank Performance: Satisfactory Borrower Performance: Satisfactory C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Rating Borrower Rating Quality at Entry: Satisfactory Government: Satisfactory Implementing Quality of Supervision: Satisfactory Satisfactory Agency/Agencies: Overall Bank Overall Borrower Satisfactory Satisfactory Performance: Performance: viii C.3 Quality at Entry and Implementation Performance Indicators Implementation Indicators QAG Assessments (if any) Rating Performance Potential problem project at No Quality at Entry (QEA): None any time (Yes/No): Problem project at any time No Quality of Supervision (QSA): None (Yes/No): DO rating before Satisfactory Closing/Inactive status: D. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) Transmission and Distribution of Electricity 100 100 Theme Code (as % of total Bank financing) Infrastructure services for private sector development 100 100 E. Bank Staff Positions At ICR At Approval Vice President: Annette Dixon Praful C. Patel Country Director: Onno Ruhl Isabel M. Guerrero Practice Manager: Julia Bucknall Salman Zaheer Project Team Leader: Kwawu Mensan Gaba Pedro E. Sanchez ICR Team Leader: Surbhi Goyal n.a. ICR Primary Author: Ahmed El-Hamri n.a. F. Results Framework Analysis Project Development Objectives (from Project Appraisal Document) The objective of the project is to strengthen India's electricity transmission system in order to increase reliable power exchanges between regions and states. Revised Project Development Objectives (as approved by original approving authority) n.a. ix (a) PDO Indicator(s) Original Target Formally Actual Value Values (from Revised Achieved at Indicator Baseline Value approval Target Completion or documents) Values Target Years Indicator 1 : Growth in power exchange between the regions (million units [MU]) Value (quantitative or 37,750 54,000 56,000 78,384 qualitative) Date achieved 03/31/2007 03/31/2012 03/31/2013 03/31/2014 At appraisal, the anticipated increase was 48% from 37,752 MU (2007) to 56,000 Comments MU (2013) and 54% to 58,000 MU (2014) but the actual achievement was (incl. % 65,860 MU (75% increase from baseline) (2013) and 78,384 MU (108% increase achievement) from baseline) (2014). (b) Intermediate Outcome Indicator(s) Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised approval Completion or Target Values documents) Target Years Indicator 1 : Growth in transformation capacity (megavolt ampere [MVA]) Value (quantitative 59,400 88,000 90,000 205,923 or qualitative) Date achieved 03/31/2007 03/31/2012 03/31/2013 03/31/2014 At appraisal, the anticipated increase was 51% from 59,417 MVA (2007) to Comments 90,000 MVA (2013) and 55% to 92,000 MVA (2014) but actual addition was (incl. % 164,763 MVA (177% increase from baseline) (2013) and 205,923 MVA (247% achievement) increase from baseline) (2014). Indicator 2 : Growth in transmission capacity (circuit kilometer [ckm]) Value (quantitative 59,400 88,000 91,000 106,804 or qualitative) Date achieved 03/31/2007 03/31/2012 03/31/2013 03/31/2014 At appraisal, the anticipated increase was 53% from 59,400 ckm (2007) to Comments 91,000 ckm (2013) and 60% to 88,000 ckm (2014) but actual addition was (incl. % 100,200 ckm (69% increase from baseline) (2013) and 106,804 ckm (80% achievement) increase from baseline) (2014) G. Ratings of Project Performance in ISRs Actual Date ISR No. DO IP Disbursements Archived (USD millions) 1 07/30/2008 Satisfactory Satisfactory 0.00 2 03/26/2009 Satisfactory Satisfactory 220.71 x 3 10/05/2009 Satisfactory Satisfactory 475.52 4 05/15/2010 Satisfactory Satisfactory 625.32 5 12/12/2010 Satisfactory Satisfactory 734.73 6 06/28/2011 Satisfactory Satisfactory 764.46 7 10/18/2011 Highly Satisfactory Satisfactory 778.82 8 04/25/2012 Highly Satisfactory Satisfactory 836.39 9 11/20/2012 Highly Satisfactory Satisfactory 857.53 10 05/21/2013 Highly Satisfactory Satisfactory 879.84 11 12/28/2013 Highly Satisfactory Satisfactory 905.07 12 03/12/2014 Highly Satisfactory Satisfactory 911.04 13 06/28/2014 Satisfactory Satisfactory 914.96 H. Restructuring (if any) ISR Ratings at Amount Board Restructuring Disbursed at Restructuring Approved Reason for Restructuring & Key Restructuring Date(s) PDO Changes Made DO IP (USD, Change millions) The restructuring was triggered by the significant savings surplus of about US$145 million under the loan—of which about US$60 million was under the Fourth Power Sector Development Project (PSDP IV) and about US$85 million was under the Fourth Power Sector Development Project – Additional Financing (PSDP IV AF—resulting from the combined effects of a highly competitive market, the continuing devaluation 05/23/2014 N HS S 913.38 of the Indian rupee (INR) against the U.S. dollar since loan approval, and the regulatory requirements to maintain a debt-equity ratio of 70:30 for all the schemes financed by Power Grid Corporation of India Limited (POWERGRID). Further, in addition to inclusion of a new scheme, another scheme was shifted (originally approved at appraisal) from the Fifth Power Sector Development Project (PSDP V) to PSDP IV AF to leverage the flexibility in the POWERGRID xi portfolio that had the same PDO and KPIs to optimally utilize available funds across its various engagements I. Disbursement Profile xii 1. Project Context, Development Objectives and Design 1.1 Context at Appraisal (2007-08) 1. Country background. At appraisal, India’s gross domestic product (GDP) grew at a remarkable rate of 9.4 percent during FY2007 and this was expected to be sustained and reach 10 percent by the end of the 11th Five Year Plan (2007–12). However, due to the global crisis, growth slowed down and the GDP touched only 6.69 percent at the end of FY2012; in FY2013, the GDP growth was only 4.47 percent. India’s growth is expected to rise to its medium-term growth potential of about 6.75 percent once recently approved investment projects are implemented and as global growth improves.1 Although India has made significant progress in reducing absolute poverty, it remains home to one-third of the global poor. India has already achieved the first Millennium Development Goal (MDG 1) by halving the proportion of people living on less than US$1.25 a day as early as in FY2012.2 Rural poverty has decreased by 16 percent, and the less well-off are increasingly reaping the benefits of shared prosperity, with consumption growth of the bottom 40 percent rising to catch up with average consumption growth. However, Indian society still remains highly segmented and income inequalities are rising. With a gross national income (GNI) per capita at US$1,570 in 2013, India remains at the bottom of the group of middle-income countries and more than 400 million people still live in poverty.3 2. Sector background. Post-independence, the Indian power sector was concentrated in few towns and urban areas. To provide power to the population along with an effort to provide irrigation benefits, massive river-valley projects were developed. With rapid industrial development, there was a necessity to integrate various state grids, which resulted in the formation of the five regional transmission grids in the country. With thermal generating plants setting up near pit heads and producing large amounts of power, transmission voltage levels increased from an initial 220 kV to 400 kV in the 1980s and to high voltage direct current (HVDC) in the 1990s, enabling bulk transfer of power across the states and regions. This was even more important as large consumption centers were scattered across the country while power generation centers were predominantly located in select states. In parallel, the sector was unbundled and regulatory commissions were set up at the central as well as state levels. This led to private sector participation beginning with power generation and followed by the distribution and transmission sectors. 3. At project appraisal (2007–2008), the sector was affected by chronic shortages of electricity and a growing demand. Given the priorities of India’s 10th Five Year Plan (2002– 2007), investments in the sector needed to deal with (a) the limitations of grid integration; (b) the 1 IMF country report February 2014 and India Labor Market Update - December 2013. Following a sustained period of growth, India’s economy slowed down rapidly over the last eighteen months. The GDP growth rate touched a low of 5.0 per cent in FY2012/13, before bottoming out at 4.4 per cent in the first quarter of FY2013/14. In general, economic growth in India is largely driven by services (from a supply-side perspective) and private consumption (taking a demand-side view). However, the slowdown during 2012 and 2013 was associated with a dramatic decrease in the growth of industry and investment. These two dimensions are critical if India is to return to higher and sustained rates of growth. 2 Millennium Development Goals, India Country Report 2014, Ministry of Statistics and Programme Implementation, Government of India. 3 India Country Partnership Strategy (CPS) 2013–2017. 1 deficit in power sector capacity; and (c) severe shortages as peak load shortages reached 12.1 percent and energy shortages 7.2 percent (in 2005) resulting in substantial losses to the economy.4 In 2010, the country’s peak power deficit was at 12.7 percent and the average deficit at 10.1 percent. Therefore, the country constantly needed additional power as it suffered from shortfalls in both generation and transmission capacity.5 The country's installed generation capacity was expected to be more than 200 GW by 2012 from the level of 140 GW in 2008. This meant that demand was to be fully met by 2012 (‘Power for All by 2012’) while shortages were to be recouped. To deliver this power across the country, an expansion of the regional transmission network and interregional capacity to transmit power was essential. The country's transmission plan focused on the consolidation of the National Grid by adding over 31,500 ckm of transmission network by 2014, over the project period starting from 2007. However, POWERGRID actually added over 47,000 ckm to reach 106,804 ckm of transmission lines, which carries about 50 percent of the power generated in the country. For creation of such a grid, an investment of about US$18 billion was estimated under the 12th Five Year Plan (2012–17). Out of this, about US$14 billion was planned to be mobilized by POWERGRID and the remaining US$4 billion through private sector participation. 4. Operational aspects of the sector. The sector’s operations and management by POWERGRID continue to be regulated by the Electricity Act of 2003 which brought together structural and regulatory reforms designed to foster competitive markets, encourage private participation, and transform the state's role from service provider to regulator. In transmission, the enforcement of grid discipline, facilitation of interstate and interregional power transfers, and trading have improved overall power system efficiency. The Electricity Act of 2003 is now being amended6—the amendments are yet to be finalized—to implement further power sector reforms through promoting competition, improving efficiencies, and encouraging the clean energy sector. 5. POWERGRID has been reinforcing its operational capability of grid management and operations through Power System Operation Corporation Limited (POSOCO), a fully owned subsidiary of POWERGRID. POSOCO, with its state-of-the-art Unified Load Dispatch and Communication (ULDC) facilities is mandated to carry out proficient, consistent, and 4 Implementation Completion and Results Report for Third Power System Development Project (PSDP III), The World Bank. 5 South Asia Project Brief by the Asian Development Bank (ADB) 2011–2012 - National Grid Improvement Project in September 2011. The project impact was to accelerate the development of the interregional grid system to deliver increased power supply to sustain the country’s economic growth. The project outcome, strengthening of the transmission capacity and more efficient operations, aimed at increasing reliable power supply from private independent power producers (IPPs) and public utilities through the interconnected grid. 6 The amendments aim at strengthening the penalty provisions, increasing the penalty manifold, and making them more enforceable. Changes to the tariff policy are also expected, to encourage more competition in power distribution, and to give consumers a choice of companies for power supply. While there will be a government distributor of power to ensure that power is provided to the weaker sections of society, competition will be introduced through a private sector role in the sector. Furthermore, to boost the wind energy sector, the government proposes to bring in amendments to the act introducing stricter penalties for failing to meet renewable purchase obligation (RPO) targets. Under the RPO system, the state power distribution companies have to mandatorily purchase electricity generated through renewable energy sources during the year. The proposed changes will also introduce the renewable generation obligation (RGO), which will make it compulsory for thermal power producers to generate electricity through renewables. Overall, the government is aiming at 2 trillion units of electricity generation by 2020, in which renewable sources are to account for 15 percent. The share of renewable energy is currently around 6 percent of a total base of 1 trillion units of electricity. Source: ibnlive.in.com, December 11, 2014. 2 transparent grid operation and management in the country. Further, the National Load Despatch Center (NLDC) and Regional Load Despatch Centers (RLDCs) have been continuously upgraded and modernized to establish an effective grid management infrastructure in the country. During FY2014, to meet the demands in the country, an interregional energy transfer of about 78.38 billion units (BU), which is more than double of 37.75 BU in FY2007, was facilitated across the nation using pan-India interregional transmission links and modernized RLDCs. 6. Rationale for World Bank assistance. The Bank’s strategy for the power sector in India remains centered on promoting economically and financially sustainable access to electricity by addressing bottlenecks in generation, transmission, and distribution at both the state as well as national level through the financing of relevant public investments, while at the same time promoting policies and regulatory measures for efficient sector operations and private sector participation. This project, which was part of a larger program, was designed to contribute to addressing the constraints existing in the transmission subsector and to optimize the development of its infrastructure. The Bank has in the past supported investments in POWERGRID to strengthen the national transmission network and increase the interregional power transfer capacity. These investments aimed at improving the outcome-orientation and service delivery of POWERGRID, by (a) facilitating higher economic use of generation resources and helping to harness low carbon primary energy sources such as hydropower and wind; (b) providing optimal integration and greater grid stability; (c) establishing the open access regime mandated in the Electricity Act of 2003; and (d) facilitating the development of a power trading market within the country and, wherever feasible, with India's neighbors. The Bank has helped POWERGRID emerge as one of the world's largest transmission utilities through a series of investments amounting to about US$3.7 billion since 1993 and intensive capacity-building support during POWERGRID’s formative years. The Power System Development Project (PSDP) series has been very effective in delivering financial assistance by the Bank to the projects launched by POWERGRID in the transmission subsector—the Northern Region Transmission Project (NRTP) for US$475 million that closed in September 2000; the First PSDP (PSDP I) with a loan of US$350 million that closed in December 2000; the Second PSDP (PSDP II) with a loan of US$450 million that closed in June 2006; and PSDP III with a loan of US$400 million that closed in July 2011. 7. POWERGRID projects have contributed to the development of high-capacity transmission corridors which increased the interregional capacity of the National Grid from 1,500 MW in FY1999 to 14,100 MW in FY2007 (baseline year for PSDP IV) and to 37,950 MW in FY2014 (end year for PSDP IV). Correspondingly, it significantly expanded the network of transmission lines from 35,119 ckm in FY1999 to 59,400 ckm in FY2007 and to 106,804 ckm in FY2014. In FY2007, the interregional transmission capacity facilitated energy exchange of almost 37,750 million units (MU) across India to about 78,384 MU in FY2014. During the period, the total transformation capacity increased from 59,400 MVA (FY 2007) to 205,923 MVA (FY2014). 8. Infrastructure development and supply-demand balance management. The PSDP loans are at the core of the sector’s capacity to deal with expanding demand as repetitive energy and peak shortages need to be resolved. POWERGRID has established a strong and reliable national grid in a phased manner to facilitate the optimum utilization of generating resources, the conservation of eco-sensitive ‘right of way’, and the enhancement of its flexibility to accommodate uncertainty of generation plans. On December 31, 2013, POWERGRID achieved a milestone when the Southern Grid was synchronously interconnected with the rest of the national grid through the commissioning of the 765 kV Raichur (Karnataka)-Solapur (Maharashtra) single 3 circuit (S/C) line (funded under PSDP V). This has resulted not only in increasing the transmission transfer capacity by 2,100 MW but also in dealing effectively with the congestion being experienced in the transmission corridor. These infrastructure improvements were a boost for further economic growth of the country. 1.2 Original Project Development Objectives (PDO) and Key Performance Indicators (KPI) (as approved) 9. The objective of the project was to strengthen India's electricity transmission system in order to increase reliable power exchanges between regions and states. ‘Growth in Power Exchange between Regions’ was used as the key indicator to measure the performance in achieving the PDO. PDO Key Outcome Indicators To strengthen India's electricity transmission Growth in power exchange between regions system in order to increase reliable power (MU) exchange between regions and states Intermediate Results Results Indicators for Each Component Component 1: Transmission System Growth in transmission capacity (ckm) Strengthening Schemes Growth in transformation capacity (MVA) 1.3 Revised PDO (as approved by original approving authority) and KPI, and Reasons/Justification 10. Although the project was restructured 7 in May 2014, its PDO was not revised as it QQ transmission system in order to increase remained focused on strengthening India’s electricity reliable power exchange between regions and states. 11. The restructuring was triggered by the significant savings/surplus of about US$145 million under the loan (of which about US$60 million was under PSDP IV and about US$85 million was under PSDP IV AF) resulting from the combined effects of a highly competitive market, the continuing devaluation of the India rupee (INR) against the U.S. dollar since loan approval, and the regulatory requirements to maintain a debt-equity ratio of 70:30 for all the schemes financed by POWERGRID. Further, in addition to the inclusion of a new scheme, another scheme was shifted (originally approved at appraisal) from PSDP V to PSDP IV AF to leverage flexibility in the POWERGRID portfolio among projects that had the same PDO and KPIs to optimally utilize available funds across its various engagements. Specifically, the restructuring included: a. Inclusion of a new scheme in PSDP IV—Southern Region System Strengthening Scheme XIII (SRSS 13) b. Shifting a scheme from PSDP V to PSDP IV AF—System Strengthening in Western Region for Sasan Ultra Mega Power Project (UMPP) 7 It was a level-2 restructuring that required Country Director clearance. 4 12. Change in KPI. The project had only one outcome indicator (interregional power exchange) that outperformed its existing (as per the PAD) end-year (FY2014) target. The project also had two result indicators: (a) transmission capacity and (b) transformation capacity. For transmission capacity, targets for FY2010 till FY2013, as agreed during the appraisal, were revised downward during the April 2010 implementation support mission of the project due to factors beyond the control of POWERGRID as explained below. 13. In August 2009, the government of India (GoI) issued a notification under the Forest Rights Act (FRA) that required the project implementing agency (POWERGRID) to obtain a no- objection from every gram sabha (at village level) for all the proposals involving diversion of forest land under the Forest (Conservation) Act. This requirement was later waived for linear projects8 (including the transmission business) in February 2013. However, it is noted that all the indicators had already outperformed their original (as per the PAD) targets in FY2013 after which the end-project targets (FY2014) were revised upward during the implementation support mission of September 2013, which was also the midterm review mission for PSDP V. The upward revision in targets was also formally recorded through restructuring of the Project. POWERGRID outperformed all the revised targets except for a marginal gap of 0.18 percent in transmission capacity.9 1.4 Main Beneficiaries 14. POWERGRID, the central transmission utility (CTU) of India, was the borrower and the direct beneficiary of PSDP IV loans. The loans provided resources and funds for investments needed by POWERGRID to undertake the physical expansion of the transmission system while at the same time improving its technical, financial, and institutional capacity to enhance the transfer of energy across regions and reduce transmission costs, system losses, and unserved energy. 15. The benefits of the project also extended to the various transmission and distribution utilities at the state level, as well as to the IPPs, which could rely on a stronger network to allow them to fully benefit from the open access regime that was mandated by the Electricity Act of 2003. Furthermore, the beneficiaries are also the urban and rural populations as a result of increased efficiency and reduction in power shortages. 1.5 Original Components (as approved) 16. PSDP IV (US$ 600 million) was designed to contribute to the financing of POWERGRID’s investment program totaling US$2.125 billion for the 2006–2014 period (as per the PAD). The project consisted of only one component, namely, Transmission System Strengthening Schemes, which included the following: I. Partial construction of the East-West Transmission Corridor (EWTC) 8 Transmission lines usually need narrow, long strips of land and hence, these are considered linear projects. Roads, canals, and optical fiber lines are other examples of linear projects. 9 Growth in power exchange - Target as per the PAD (PSDP V for FY2014): 58,000 MU; Restructured target: 68,000 MU; Actual: 78,384 MU. Transmission capacity - Target as per the PAD (PSDP V for FY2014): 95,000 ckm; Restructured target: 107,000 ckm; Actual: 106,804 ckm. Transformation capacity - Target as per the PAD (PSDP V for FY2014): 92,000 MVA; Restructured target: 185,000 MVA; Actual: 205,923 MVA. 5 The work consisted of: Transmission Lines (a) From Ranchi to Rourkela 400 kV double circuit (D/C) line on a distance of 145 km (290 ckm) (b) From Rourkela to Raigarh 400 kV D/C line on a distance of 210 km (420 ckm) (c) From Raigarh to Raipur 400 kV D/C line on a distance of 220 km (440 ckm) Substations (d) Extension of 400/220 kV substations at Ranchi, Rourkela, Raipur, and Raigarh. II. Partial construction of the Western Region System Strengthening II (WRSS II) The work consisted of: Transmission Lines (a) From Korba to Birsinghpur 400 kV D/C line on a distance of 227 km (454 ckm) (b) From Birsinghpur to Damoh 400 kV D/C line on a distance of 254 km (508 ckm) (c) From Damoh to Bhopal (MP Transco) 400 kV D/C line on a distance of 216 km (432 ckm) Substations (d) New 400/220 kV substations at Pune and Solapur. (e) Extension of 400/220 kV substations at Aurangabad, Parli, Kolhapur, Damoh, Gwalior, Bina, Korba, and Bhopal III. Partial construction of the Eastern Region System Strengthening I (ERSS I) The works consisted of: Transmission Lines (a) From Durgapur to Jamshedpur 400 kV D/C line on a distance of 157 km (314 ckm) (b) From Jamshedpur to Baripada 400 kV D/C line on a distance of 141 km (282 ckm) (c) From Baripada to Mendhasal 400 kV D/C line on a distance of 272 km (544 ckm) Substations (d) Extension of 400/220 kV substations at Jamshedpur, Durgapur, Baripada, and Mendhasal (e) Renovation of 400/220 kV substations at Siliguri and Purnea IV. Completion of construction of ±500 kV, 2,500 MW Balia-Bhiwadi HVDC Bipole System The works consisted of Substations: (a) HVDC terminal for 2,500 MW at Balia along with associated works (b) HVDC terminal for 2,500 MW at Bhiwadi along with associated works HVDC bipole line between Balia and Bhiwadi (1,580 ckm) was completed under PSDP III financing. V. Completion of construction of the transmission lines in the North-West Transmission Corridor (NWTC) The works consisted of: (a) Substations. Extension of 400/220 kV substations at Agra, Gwalior, Kankroli, and Zerda (Gujarat Energy Transmission Co. Ltd). (b) Transmission lines. Agra-Gwalior 765 kV second circuit (initially to be operated at 400 kV) (128 ckm) and Kankroli-Zerda 400 kV D/C (470 ckm) were completed under PSDP III financing. 1.6 Additional Components 17. At the time of appraisal of PSDP IV, the GoI had indicated its intention to request a follow-on loan (additional financing) of US$400 million to finance the completion of the schemes 6 initiated under PSDP III and PSDP IV. The timing of the additional financing was dependent on POWERGRID initiating advance procurement of these schemes. These schemes also contributed to the financing of POWERGRID’s investment program totaling US$2.125 billion for the 2006– 2014 period. In line with PSDP IV, the additional financing also constituted of only one component, namely Transmission System Strengthening Schemes. Revised components under additional financing (US$400 million) supported the implementation of the following schemes: I. Completion of the East-West Transmission Corridor (EWTC) The works consisted of: Substations (a) Fixed Series Compensator (FSC) at Raipur substation for 400 kV D/C Rajgarh-Raipur transmission line II. Completion of the Western Region System Strengthening II (WRSS II) The works consisted of: Transmission Lines (a) From Wardha to Parli 400 kV D/C (quad) line on a distance of 337 km (674 ckm) (b) From Bhadrawati to Parli 400 kV D/C line on a distance of 388 km (776 ckm) (c) From Raipur to Wardha 400 kV D/C line on a distance of 371 km (741 ckm) (d) From Parli (Maharashtra State Electricity Transmission Company Limited [MSETCL]) to Parli (POWERGRID) 400 kV D/C line on a distance of 5 km (10 ckm) Substations (e) A new 400/220 kV substation at Parli (f) Extension of 400/220 kV substations at Bhadrawati, Parli (MSETCL), Wardha, Seoni, and Raipur (g) Extension of 400/220 kV substations at Rajgarh, Karamsad, Limbdi, Zerda, Ranchhodpura, and Birsinghpur (h) FSC at Rajgarh substation for 400 kV D/C Rajgarh-Karamsad line (i) FSC at Wardha substation for 400 kV D/C Wardha-Raipur line III. Completion of the Eastern Region System Strengthening I (ERSS I), specifically: The works consisted of: Transmission Lines (a) Supply of conductors for 400 kV D/C Durgapur-Jamshedpur, Jamshedpur-Baripada, and Baripada-Mendhasal transmission lines (b) Re-conductoring of 400 kV D/C Siliguri-Purnea transmission line 18. Further, after completion of project restructuring in May 2014, two schemes (one new and one shifted from PSDP V to optimally use the funds available across various POWERGRID projects with the Bank) were added to the project. Specifically, the restructuring included the following schemes: IV. Completion of Southern Region System Strengthening Scheme XIII (SRSS 13) The works consisted of: Transmission Lines (a) From Gooty to Madhugiri 400 kV D/C line on a distance of 209 km (417 ckm) (b) From Madhugiri to Yelahanka 400 kV D/C (quad) line on a distance of 66 km (132 ckm) (c) Supply of conductors and insulators for 400 kV D/C Gooty-Madhugiri and Madhugiri- Yelahanka transmission lines Substations (d) New 400/220 kV substation at Madhugiri 7 (e) Extension of 400 kV bay at substation at Gooty V. Completion of System Strengthening in Western Region for Sasan UMPP The works consisted of: Substations (a) New 765/400 kV substation at Indore (b) Upgrade of substations to 765 kV from 400 kV at Gwalior and Bina (c) Extension of 400/220 kV substations at Indore (Madhya Pradesh Power Transmission Company Limited [MPPTCL]) (d) Shunt reactors at 765/400 kV substations at Bina, Gwalior, and Indore 1.7 Other Significant Changes 19. The loan for PSDP IV was appraised in January 2008, approved on March 18, 2008, signed on March 28, 2008, and became effective on May 16, 2008. The midterm review (MTR) was carried out during April 12 –23, 2010. It was necessary to provide PSDP IV with an additional financing of US$400 million and expand the scope of the project by adding new schemes as it was agreed with the GoI during the appraisal of PSDP IV. During the appraisal of PSDP IV AF, it was agreed that the loan closing date of PSDP IV will be extended by one year from July 31, 2013, to July 31, 2014, to match the loan closing date of PSDP IV AF as it was funding the components of the same schemes with no spillover of contracts across the loans for ease of monitoring the funds flow. 20. The Bank and the borrower agreed during the appraisal of PSDP IV to hold a common MTR for PSDP III and PSDP IV around October –December 2009, which was a year later than agreed for the MTR of PSDP III during its appraisal (December 2008). During the MTR, an implementation support mission was also undertaken for PSDP V that became effective on January 8, 2010. 21. It is important to note that these three projects (PSDP III, PSDP IV including its additional financing, and PSDP V) had the same PDO, supported the same entity/sector and were structurally linked. There were no changes in implementation arrangements. With availability of the additional financing, the original loan amount underwent a change leading to an adjustment of the disbursement schedule, which was also impacted by the dynamism in the environment in which the schemes were being implemented (for instance, introduction of the notification under the FRA in 2009). 2. Key Factors Affecting Implementation and Outcomes 2.1 Project Preparation, Design, and Quality at Entry 22. Robustness of the background analysis. POWERGRID’s satisfactory achievements and learning experience resulting from the implementation of PSDP I, PSDP II, and PSDP III had a positive impact on the preparatory process of the project. Continuous and sound sector review by the Bank ensured that key aspects of the project had been included in the design and appraisal. 23. A Regional Operations Committee (ROC) meeting was held on December 19, 2007, to determine if PSDP IV should be considered as a repeater project (to PSDP III). The ROC opined that since another US$400 million request (additional financing) was to be received soon, the PSDP IV loan (of US$600 million) should be considered as a repeater only reflecting that POWERGRID was well-prepared for PSDP IV. Even though the guidelines called for any 8 operation of US$600 million to go to Operations Committee (OC) review, since the project had no major issues and was low/moderate on risk operation, it was agreed during the ROC meeting that an OC review will not be required, indicating the robustness of the project design.10 24. Further, since PSDP IV was structurally interconnected with PSDP III activities that had been well underway and supported by the Bank, the arguments and analytical perspective from the Quality Enhancement Review (QER) for PSDP III, which took place in October 2004, were still valid and applicable for PSDP IV and its additional financing, given that the PDO, KPIs, and the structure of these projects did not change in qualitative terms. 25. The implementation of several schemes under PSDP IV was already underway as part of PSDP III at the appraisal. Advance procurement of all packages to be financed under PSDP IV was initiated by POWERGRID in accordance with the Procurement Guidelines prevailing at that time after obtaining no objection on the bidding documents from the Bank. 26. Assessment of the project design. POWERGRID has been instrumental in providing efficient, reliable, and smooth grid operations in the country. In line with the urgency of physical investment actions to be undertaken by POWERGRID, lessons from PSDP II and III were taken into account for the design of PSDP IV. POWERGRID’s strong technical design capability, including its Research and Development (R&D) capability and its solid collaboration with the Central Electricity Authority (CEA), which is a technical regulatory institution under the Ministry of Power (MoP), was and still is the cornerstone for the power system planning studies and the targeting of investments. The investments are prioritized in consultations with the various stakeholders, such as beneficiary states and generators. This process has been helpful and efficient in determining the types and voltage levels of transmission network development that were and are required. The key to this aspect of project design was underscored by planning relevant sections of the new transmission network at higher voltage and capacity to efficiently meet the growing demand that was scattered across the country while proactively addressing Right of Way (RoW) problems demonstrating POWERGRID’s planning capability. 11 The technical experience of POWERGRID combined with the use of eligibility criteria of PSDP III were critical for identifying investments as well as financing mechanisms for transmission systems under PSDP IV and PSDP IV AF. The use of eligibility criteria to identify investments was an appropriate analytical tool adapted to carry out project design12 (refer to annex 10). 27. The schemes funded under PSDP IV were an integral part of the schemes supported under PSDP III and were required to increase the interregional power exchange capacity (refer paragraph 36 of the PSDP IV PAD). As a result, Project Implementation Plans (PIPs) for all the schemes covered under the project had been reviewed and approved by the Bank early in the 10 The project’s preparation and review of all required conditions (rationale, procurement, social and environmental safeguards, financial management, and risk assessment) were considered to be fully satisfactory. POWERGRID had been a reliable partner of the Bank in financing the transmission infrastructure in India (through past projects)). 11 Experienced with the construction of 765 kV Extra-High Voltage Alternate Current (EHVAC) and ±500 kV HVDC transmission system, POWERGRID has been working on higher transmission voltages of 1,200 kV Ultra High Voltage Alternate Current (UHVAC) and ±800 kV HVDC systems to achieve efficient utilization of RoW and increased power transfer capability for bulk power transmission over long distances. 12 By applying these criteria, POWERGRID ensured that the investment scheme was technically and operationally justified and had been formulated after taking into account other alternative investments. Furthermore, the scheme had to be based on the least cost options and was part of the overall least cost investment program of POWERGRID. Moreover, the project’s schemes were economically and financially justified. The eligibility criteria were discussed at length with the Bank team during the appraisal of PSDP IV and PSDP IV AF. 9 appraisal stage, as they met the eligibility criteria. These PIPs provided extensive analysis and review of all financial, economic, technical, safeguards, and fiduciary aspects of the schemes. 28. Further, as PSDP IV supported the additional transmission investments initiated under PSDP III to scale up the project’s impact and development effectiveness, the bidding process for packages worth US$434 million (to be financed under PSDP IV) was initiated as part of the procurement process underway for PSDP III in late 2005, which was before the 2006 revisions to the Procurement Guidelines were adopted by the Bank. The procurement process for some of the packages covered under PSDP IV had already been completed and some were in an advanced stage at the appraisal. It was agreed that for the packages to be covered under PSDP IV, POWERGRID would have the relevant additional clauses included where contracts had not yet been awarded, and would request the contractors for suitable inclusion of clauses where the contracts had been signed. In fact, PSDP IV was already under way at the appraisal since some of its expenditures had already been claimed under PSDP III. 13 The Bank and POWERGRID proceeded to make the needed adjustments to ensure that there was no spillover of contracts across the two loans. 29. Adequacy of government’s commitment. The strong ownership by the borrower and the GoI continued to be a key factor that resulted in the effective implementation of POWERGRID projects. POWERGRID’s commitment to the project as well as its extensive experience and close working relationship with the Bank facilitated the preparatory work done during the project’s preparation and appraisal phases. Early preparation that started during PSDP III provided valuable insights into issues to be resolved by both the parties in PSDP IV and its additional financing. Furthermore, the continued use of the eligibility criteria (see annex 10) ensured the borrower’s commitment to the project. 30. The GoI’s commitment to the project is demonstrated through strategic and managerial directives for the power sector, specifically for the CTU, put forth in the 11th and 12th five year plans, translated into institutional measures (through the MoP, Central Electricity Regulatory Commission [CERC], and the CEA). Further, the nationwide grid failure that happened in July 2012 prompted CERC to take several measures to stabilize the system and thereby ensure grid discipline. In its report on grid disturbance in August 2012, the enquiry committee constituted by the MoP had concluded that grid failure was linked to a series of events such as multiple forced outages leading to weak interregional corridors, transmission line overloading due to overdrawing by some of the northern region constituents, inadequate response by the State Load Despatch Centers (SLDCs) to the instructions of the RLDCs, and loss of the 400 kV Bina-Gwalior link. Some of the key actions that were proposed were (a) third-party protection audits, (b) formulation of islanding schemes in different states, (c) review of the unscheduled interchange (UI) mechanism, and (iv) further tightening of the frequency band. After NLDC’s (POSOCO) petition to CERC, congestion charges were approved in April 2013, thereby amending the congestion charge regulation of 2009. The amendments were in line with the CEA’s planning criteria. 13 POWERGRID claimed an amount of around US$48.9 million under PSDP III for contracts that were meant to be financed under PSDP IV. These expenditures were incurred for various periods starting from March 2007 onward. Retroactive financing was applied to refinance these already claimed expenditures from PSDP IV proceeds and reduce these from PSDP III disbursements. This approach ensured that there is complete disconnect between the packages of the PSDP III and PSDP IV loans for ease of monitoring and tracking of funds flow. 10 31. Assessment of risks. The overall risk rating for project implementation was ‘low’. Specific risks for implementation of key investments were rated ‘low’. To mitigate these risks, mostly foreseen delays in implementing the project’s schemes, advance procurement action was taken for the investments before the first year of the project. Further, risk linked to delays in implementation due to environment and social safeguards was rated ‘moderate’ before mitigation and was rated ‘low’ after mitigation as POWERGRID has already institutionalized safeguard policies. The safeguard policies of POWERGRID were being considered for Use of Borrower System (UBS) at appraisal. These were later accepted under the Bank’s UBS during the PSDP V project period. The financial management risk was rated as ‘moderate’ because at the time of appraisal POWERGRID had launched its initial public offer (IPO) in the Indian stock market for which it had to adhere to higher and stricter corporate governance requirements. POWERGRID, through its implementation of PSDP projects, has demonstrated its ability to plan and implement even complex investments on time and to cost. Appropriate mitigation measures were put in place and consisted of actions and measures that were directly relevant for POWERGRID’s operations such as compliance with financial covenants, arrears payments, and safeguards compliance. 2.2 Implementation 32. The implementation of the project component and the utilization of the loan proceeds were satisfactory. POWERGRID and the GoI were instrumental in ensuring that project implementation was successful and that all components planned at the time of appraisal were completed satisfactorily and became operational within the project period. The transmission schemes in this project had been designed, engineered, and implemented by POWERGRID, and local and foreign contractors carried out supply and installation works. All the originally approved schemes under PSDP IV and its additional financing have been commissioned successfully. With regard to the two new schemes that were added later through level-2 restructuring of the project (while keeping the PDO, KPI, and structure of the project the same), one scheme (System Strengthening for Western Region for Sasan UMPP) has been commissioned whereas the second scheme (Southern Region System Strengthening XIII, SRSS 13) is subject to delays caused due to severe RoW issues being faced at the state level, which is beyond the control of POWERGRID. This scheme is now expected to be completed not before March 2015 14 as necessary approvals from the involved state government of Karnataka are being processed. The monitoring of implementation of this scheme will now be done under PSDP V (for which the loan closing date is May 31, 2017). Both parties ensured that supervision focused on resolving key project implementation issues, including physical implementation of transmission schemes and compliance with environmental and social safeguards (issues of forestry clearance and resettlement), financial performance, and arrears collection objectives. Details about implementation of each of the schemes are provided in annex 2 and annex 9. 33. POWERGRID’s continued use of Integrated Project Management and Control System (IPMCS) has contributed to closer and effective monitoring of project implementation leading to the adoption of necessary steps for corrective actions. Moreover, close supervision by the Bank team with day-to-day responsibilities fully delegated to Delhi-based staff, facilitated by the availability of effective support from POWERGRID’s staff at field offices, also contributed to efficient monitoring of project components and timely completion of the project. In addition to adherence to the Bank’s Procurement Guidelines, POWERGRID's managerial and operational culture, and project management allowed for effective monitoring of implementation. 14 Initially, this scheme was planned to be completed by July 2013 according to the PIP (submitted in December 2010). 11 2.3 Monitoring and Evaluation (M&E) Design, Implementation, and Utilization 34. Monitoring and evaluation (M&E) design. Arrangements for M&E of the project consisted of targets that were linked to the completion of the transmission schemes and their impacts over a given timeframe. The M&E framework focused on annual monitoring and regular reporting of the progress in achievement of the PDO and project outputs. The targets for completion of investment projects consisted of physical achievements as well as their impacts on the performance of the transmission system. In addition, the design of the M&E framework was intended to provide a comprehensive view on POWERGRID’s performance in every aspect. To this effect, indicators additional to KPIs and covenanted targets were also agreed upon with the Bank to objectively measure improvements in power sector performance as well as POWERGRID's corporate performance. Given the satisfactory performance of POWERGRID in achieving and reporting such indicators, these were discontinued during the MTR of PSDP IV and its additional financing. Later, during the MTR of PSDP V in September 2013, the monitoring of these additional indicators was reinstated to allay concerns linked to the slower disbursement of PSDP V, reversing the decision taken at the MTR of PSDP IV and PSDP IV AF. The result of consistent efforts and round-the-clock monitoring is demonstrated through POWERGRID’s high operational performance from 2007 to 2014 in terms of transmission system availability that improved from 99.2 percent to 99.9 percent and the number of trippings per line reduced from 3.64 to 0.56 during this period. The corporate level indicators depict a strong performance of POWERGRID across several metrics (Refer annex 2 for details). 35. The sectoral indicators reflect that private sector participation has increased by more than 4.5 times in terms of circuit kilometers of line constructed from 2007 to 2014. Further, power traded as a percentage of total power generated in the country has shown an upward trend from 3.6 percent in 2007 to 11 percent in 2014. This implies an improved utilization of existing capacities as the power trade ensures that surplus regions/states can easily transfer generated power to deficit regions/states when needed. After the July 2012 grid failure, CERC has tightened the grid frequency band15 to put a check on overdrawing by various constituents, hence, ensuring grid security and encouraging distribution utilities to procure power through contracts in organized markets. In December 2013, the Southern Region was also connected synchronously with the rest of the National Grid. Given these factors, the grid frequency has shown a downward trend but all measures have been adopted to bring back the frequency within the prescribed band. POWERGRID along with POSOCO is now handling one of the largest transmission networks at a single frequency in the world. 36. Further, the quarterly financial monitoring report (FMR) included the detailed contracts monitoring report and physical monitoring report, which were essential for both the Bank as well as POWERGRID to take corrective actions when required (refer annex 11 for templates). 37. M&E implementation. Data collection was in line with the PAD guidelines and the borrower’s information system. The data collected for progress achieved on outcome (growth in power exchange) and outputs indicators (transmission and transformation capacities) were monitored through an agreed reporting format. The IPMCS provided POWERGRID with real time monitoring of the physical installation of transmission lines and the NLDC provided continuous monitoring and data for power exchanges and transfers. POWERGRID established 15 Indian Electricity Grid Code (IEGC) Range: Till September 16, 2012: 49.5 Hz to 50.2 Hz and from September 17, 2012 onwards: 49.7 Hz to 50.2 Hz 12 and provided the Bank with a monthly report on billing and collection, quarterly progress reports (QPRs), quarterly financial management reports, annual information about progress on key entity and sectoral performance indicators, audited annual financial statements (within six months of the end of each financial year), and other information as the Bank required. These arrangements were working in a satisfactory manner in earlier loans and were continued under the project and are replicated for PSDP V as well. In addition, the Bank team periodically conducted site visits as part of the implementation support missions, to monitor compliance with the project design with a special emphasis on environmental and social safeguards, and to engage in discussions regarding benefits achieved from the investments. The Bank team also interacted regularly with various project stakeholders including the MoP and the Ministry of Finance (MoF), which have a keen interest in seeing sustained, high performance from POWERGRID. 38. M&E utilization. In addition to POWERGRID’s own scoreboard that provided decision makers with a retrospective analysis on performance and inputs for planning purposes, it produced and submitted QPRs containing M&E data to the Bank for review every quarter (refer annex 11 for table of content of QPR). The quarterly reports resulted in discussions on all aspects of the project ranging from procurement, engineering, safeguards, financial management, and finance to the corporate monitoring group. These reports also provided close monitoring of covenanted targets such as the debt-equity ratio, the self-financing ratio, and payment of arrears. 39. Implementation of the Enterprise Resource Planning (ERP) system. POWERGRID is in the process of enhancing its operational capabilities through the deployment of an integrated ERP system. The system is being deployed to integrate processes and data pertaining to key business processes of the organization. Among others, the key objective for setting up the ERP system includes integration and standardization of various business processes and hence the flow of information. The full deployment of ERP in the organization is expected by February 2015. 2.4 Safeguards and Fiduciary Compliance 40. Environmental and social safeguards. PSDP IV and PSDP IV AF were rated ‘Category A’ on safeguards management. Aspects linked to environmental and social safeguards associated with the project have been addressed in accordance with the corporate Environment and Social Policy and Procedures (ESPP) developed by POWERGRID in 1998 and revised from time to time. The corporate ESPP is in compliance with the Bank's safeguards policies and its provisions systematically applied to all POWERGRID projects regardless of the source of financing. The ESPP outlines POWERGRID's approach and commitment to deal with the environmental and social issues relating to its transmission schemes and lays out management procedures to address them. The ESPP provides POWERGRID with a framework for identification, assessment, and management of environmental and social concerns at both organizational as well as field levels. Capacity building in the environmental and social management department of POWERGRID contributed significantly to the update of the corporate ESPP in 2005, which resulted from research on legal and institutional frameworks, analysis of priority issues (gap analysis) in the power transmission sector and wide ranging discussions including national and regional consultations. The ESPP was further updated in 2009 to meet the requirements of the new enactment, revised rules, and guidelines including those of multilateral funding agencies and to adopt international best practices to preempt all possible safeguards issues. During this revision, even wider stakeholder consultations including project affected people and local communities were carried out. The revised ESPP was adopted by the Bank as a pilot for Use of Country Systems (OP 4.00) under PSDP V. 13 41. The safeguards process followed during the preparation and appraisal stages of a scheme under the project included preparation of an Initial Environmental Assessment Report16 (IEAR) for these transmission schemes. These IEARs were reviewed by the Bank and the feedback was incorporated in the Final Environmental Assessment Report (FEAR). In addition to measures taken for PSDP III,17 the Bank team had also recommended the use of Environmental and Social Sustainability Reporting on a regular basis with the objective of improving POWERGRID’s communication with internal and external stakeholders regarding its environmental and social management track record. POWERGRID agreed to develop such a sustainability report, with consultant assistance for the first year, to showcase its achievements so far and the way forward as seen by it and other stakeholders. 42. In addition, POWERGRID implemented specific actions to improve implementation monitoring, such as tracking and collating information on actual compensatory afforestation on the ground; updating of statutory clearances from the Ministry of Environment and Forest (MoEF) and state pollution control boards, if needed; extending application of the integrated Environment Management System (EMS) to regional headquarters and project locations; and strengthening environmental training and capacity building. At project closing, POWERGRID has demonstrated a clear appreciation and adherence to the ESPP provisions pertaining to minimum disturbance of forest areas by the field office staff both in the Regional Head Quarters (RHQ) and site (substation and line) offices. Overall, POWERGRID has satisfactorily dealt with safeguards issues associated with the project. These aspects of the project were adequately addressed by implementing the provisions of corporate ESPP effectively. 43. In carrying forward its Corporate Social Responsibility (CSR) activities, POWERGRID has ensured that resources were made available to cover local needs and provide adequate solutions to social safeguard aspects in terms of development impact. POWERGRID’s CSR policy is clearly stated in its biennial Sustainability Report and in line with international best practices in order to preempt possible environmental and social issues. In line with the Bank’s social safeguards, the CSR policy is aimed at promoting community development around its establishments and substations with a focus on education, health care, infrastructure development, ecology and environment conservation, and disaster relief in the country. The CSR initiatives are aimed to improve the quality of life of the local population and bring the marginalized people to the mainstream of development. POWERGRID has articulated a ‘Social Entitlement Framework’ based on the National Resettlement and Rehabilitation Policy of 2007 and other progressive trends in its ESPP applicable for the affected families. In line with its land acquisition policy (for the construction of substations), POWERGRID acquires land with minimal social impact on account of land loss. Site selection is planned on the basis of avoiding irrigated land, homestead land/houses, religious structures, cultural property, or public infrastructure. Overall, 16 IEARs were prepared for schemes proposed under PSDP IV. These were submitted to the Bank for review and disclosed on the POWERGRID website. These environmental assessment reports and the Environmental Management Plan (EMP) have been prepared using baseline information available concurrently with the preliminary surveys, and include analyses of alternative routes/alignment and community consultation. The FEAR shall include additional information collected at the time of detailed surveys, details of compensatory afforestation and other regulatory approvals, and details of EMP implementation. 17 Actions for further strengthening the environmental management practices as was done for PSDP III through (a) designation and assignment of environmental management specialists in the field and regional offices to assist with implementation and reporting of the EMP implementation at POWERGRID; (b) undertaking of yearly independent environmental audits of a sample of transmission lines and substations; and (c) preparation of sustainability reports (prepared annually). 14 implementation of ESPP along with measures adopted under CSR has played a major/vital role in mitigation of social impacts of the project. 44. The safeguards rating was Moderately Satisfactory since the start of the project to maintain consistency across the various repeater projects as PSDP IV partly funded some of the schemes under PSDP III. To improve safeguards performance, POWERGRID was advised to strengthen its Environment and Social Management Department (ESMD). In response, POWERGRID started taking measures to strengthen its ESMD both at its head office and at regional offices to manage safeguards concerns of the projects. On environmental issues, the focus was on two specific aspects related to forests: (a) coordination with MoEF to reduce delays in obtaining clearances under the Forest (Conservation) Act and (b) coordination with the recently formed state-level Compensatory Afforestation Management and Planning Authorities (CAMPAs) to monitor the plantation to be carried out as part of compensation. In parallel, POWERGRID, through the MoP, requested the MoEF to streamline the clearance process under the Forest (Conservation) Act. Further, the RoW issues and delays in obtaining forest clearances started cropping up after the GoI’s notification regarding the FRA in August 2009,18 which was later waived for linear projects19 (including the transmission business) in February 2013. The rating was later upgraded to Satisfactory in June 2011 when (a) POWERGRID strengthened its ESMD at its corporate office as well as RHQs to factor in activities required to comply with the MoEF’s notification to the FRA of August 2009 and (b) upon obtaining long-pending forest clearances (final approval for Wardha-Parli and in-principle approval for Baripada-Mendhasal) for transmission lines in May 2011. Since then, the rating has been kept at Satisfactory. All the schemes are complete except for SRSS 13, which is now expected to be completed not before March 201520 due to severe RoW issues being faced in the state of Karnataka, which were out of the control of POWERGRID. Annex 2 provides the details about the chronological sequence of activities by POWERGRID to resolve this issue. Monitoring of implementation of this scheme will now be done under PSDP V. 45. Financial management (FM). At the beginning of the project, in July 2008, the FM rating was Moderately Satisfactory due to certain outstanding issues21 on PSDP III, PSDP IV, and PSDP IV AF. Given the progress on implementation of agreed actions, the FM rating was again upgraded to Satisfactory in May 2010. The FM ratings were Satisfactory till October 2013 when the rating was downgraded to Moderately Satisfactory due to delay in submission of the project audit report for FY2013 (due to the delay in appointing an auditor) that falls due for submission at the end of September every year. Further, the FY2013 audit report was qualified due to temporary diversion of Bank-funded material for other projects. The audit report for FY2014 was submitted on time (September 30, 2014), meeting the legal covenant, after these loans had been already closed. However, the qualification remained on diversion of material by POWERGRID from the sites where delays occur due to issues (like RoW in SRSS 13) to sites that have become higher priority on the National Grid thereby reducing capital work in progress. A proper arrangement is formulated between the sites where the material has been diverted to return the material of the 18 Under this the project, the implementing authority (POWERGRID) had to get a no-objection certificate from every gram sabha (at the village level) for all proposals involving diversion of forest land under the Forest (Conservation) Act. 19 Transmission lines usually need narrow, long strips of land and hence, these are considered linear projects. Roads, canals, and optical fiber lines are other examples of linear projects. 20 Initially, this scheme was planned to be completed by July 2013. 21 Such as, agreed terms of reference (TOR) of audits, application of the various provisions of TORs in the audit of the underlying financial statements, the audit opinion, and the management letter on audit (as issued by auditors). 15 same specifications and diligently followed. Both the Bank and POWERGRID are working together to resolve the issue at the earliest and this will be closely monitored under PSDP V. 46. Although rated Moderately Satisfactory initially and briefly toward the project end, POWERGRID’s FM system accurately accounted and reported for the project resources and expenditures. The FM systems of POWERGRID (housed as a part of their general accounting and financial systems) were used to generate the financial and other quarterly progress reports under the project. The reporting framework for the project included a quarterly FMR, an equivalent of the interim unaudited financial report, prepared by POWERGRID in a format agreed with the Bank (detailed in the PIP). Initially, the FMRs were being submitted by POWERGRID on a monthly basis, which was later amended to quarterly submission starting from the April–June 2009 quarter. FMRs were prepared using information generated from POWERGRID's FM system (FMS) and management information system (MIS) and were rated Satisfactory. These systems are now being upgraded through implementation of the ERP system. POWERGRID has strengthened its FM capacity during its partnership with the Bank through implementing ERP, strengthening its internal audit function, and undertaking Enterprise Risk Management (ERM)22 and has been able to adhere to its policies and procedures as its FM performance under previous loans has been rated Satisfactory. 47. Procurement. Under PSDP IV and PSDP IV AF, procurement was carried out for all the schemes in accordance with the Bank’s Procurement Guidelines. The Bank team worked together with POWERGRID to review relevant sections, such as qualification requirements, special conditions of contract, and technical specifications, in the Standard Bidding Documents (SBDs) of the Bank, resulting in model bidding documents of POWERGRID under the loan. This facilitated preparation of the package-specific bidding documents expeditiously and thereby, reduced the overall time consumed during the administrative part of the procurement process. Additional provisions were also introduced to provide substantial flexibility to POWERGRID in handling the procurement process and interactions with contractors. Further, the Operational Procurement Review Committee (OPRC) threshold limits were also revised upward, except for high risk packages, from US$50 million to US$200 million for low-risk packages and to US$115 million for moderate-risk packages that are generally the risk profile of POWERGRID packages. 48. Under this loan and in line with the Bank’s procedures, procurement was carried out for transmission system projects which were either uniquely positioned or pertained to emerging transmission technologies in India. For example, the Balia-Bhiwadi Transmission System, a long distance (approximately 800 km) bipole HVDC transmission system for transfer of 2,500 MW power at ±500 kV voltage level was a unique project, considering the complexity of procurement of the HVDC Terminal Package. Similarly, procurement for certain packages in other transmission projects involved procurement of plant and equipment and goods for 765 kV voltage level, which was an emerging voltage level in the transmission system in India at that time. POWERGRID, in association with the Bank, reviewed and suitably incorporated the sections to facilitate selection of capable contractors to successfully execute such emerging technologies in India. 22 As part of its compliance to Clause 49 of the Listing Agreement and Dep artment of Public Enterprises’ Code on Corporate Governance, POWERGRID has implemented an ERM framework. The framework was approved by the POWERGRID Board on February 8, 2011. The ERM framework identifies 24 major risks. A few KPIs are associated with each of the risks. Quarterly ERM reports with these KPIs are being prepared and examined by the Risk Management Committee. The Chief Risk Officer subsequently presents the report to the Audit Committee. 16 49. Further, to increase participation of the vendors, POWERGRID, in association with the Bank, organized conferences for conductor and insulator vendors in April 2009 and September 2010. Such conferences have resulted in more participation and competitive prices. Further, POWERGRID, in association with the Bank, also organized the vendor conference regarding common mistakes/discrepancies during bidding in September 2010. This conference has resulted in significant improvement in the bids being submitted and helped reduce the delay in bid evaluation on account of common errors or inconsistencies in the bids. 50. Incorporation of lessons from the Detailed Implementation Review (DIR). This consisted of a review of all procurement issues that had been flagged by the DIR of projects in other sectors in India (mainly health) and an agreement between the Bank and POWERGRID on a set of actions to be taken during the implementation of PSDP IV to avoid and deal with such issues (see annex 12). During the first mission (appraisal) in January 2008, based on the executive summary of the DIR, the team prepared a matrix including all the main recommendations of the report. Subsequently, the team discussed the status of the recommendations with POWERGRID and the actions to be taken both by the team and POWERGRID. 2.5 Post-completion Operation/Next Phase 51. Investments financed by the loan were successfully and progressively commissioned between March 2009 and October 2014. These schemes were integrated with the National Grid and their operation is continuously closely monitored and maintained by POWERGRID. POSOCO ensures the integrated operation of the grid in a reliable, efficient, and secure manner. In line with the latest CPS (2013–2017) and through a series of additional loans to POWERGRID (PSDP V) and other sector entities, the Bank shall continue to support the ongoing sector reform agenda and further strengthen POWERGRID's institutional and transmission capacities in line with the standards of global operators. 52. Changes in the regulatory environment/framework of the transmission sector. The regulatory environment in India is changing rapidly given the fast pace at which new complexities are being introduced to the system, such as integration of large-scale renewable energy and smart grids. The tariff regime has changed since appraisal of the loans. On April 1, 2014, CERC introduced new tariff regulations for five years (2014–2019). Further, POWERGRID was earlier recovering all the costs through cost-plus basis but the GoI introduced TBCB23 in India in January 2011. Since then, POWERGRID also has to apply for competitive bidding to get new projects. There are exceptions to this regime wherever POWERGRID is entrusted by the MoP to carry out the works on a nomination basis depending on the criticality of the works. As of October 31, 2014, POWERGRID had secured five transmission projects, which is more than 30 percent of the projects floated under TBCB. 53. Bank’s follow-up on the project’s sustainability. The project KPIs: (a) power exchange across regions (in MU); (b) transformation capacity (in MVA); and (c) transmission capacity development (in ckm) are being monitored and updated through implementation of PSDP V that is in compliance with their respective M&E systems. Given the grid disturbance of July 2012 (for details refer to annex 2), monitoring of additional indicators was reinstated as part of PSDP V. 23 Under the TBCB norms, developers quoting the lowest average electricity tariffs from a proposed project get to set it up, as against the erstwhile ‘cost-plus’ model, where projects were set up through pacts with transmission utilities and were entitled to assured returns. 17 Further, two new additional indicators on safeguards (percentage of project affected people [PAP] rehabilitated and cumulative transmission capacity [MW] per meter width of RoW within forest areas) were also added under PSDP V. Since SRSS 13 is expected to be completed after March 2015, supervision of its implementation will be part of PSDP V. 3. Assessment of Outcomes 3.1 Relevance of Objectives, Design, and Implementation 54. The Bank’s support for this project was highly relevant and the PDO reflects the importance of achieving further expansion and transformation in India’s power sector infrastructure. The project’s design reflected sector priorities and focused on the need for more investments in transmission to successfully transmit the power generated (by large-scale generation capacity infusion planned in the country) from surplus to deficit regions and hence optimally utilizing the available limited resources. In partnership with POWERGRID, a key participant in several sector reform initiatives in India, the Bank has been able to design and implement a project, among many, that ensures the funding of much-needed physical investments in parallel with institutional transformation. This has become even more important with synchronization of the Southern Region grid with rest of the grid to make it truly one National Grid. 55. The framework outlined in the CAS (2004–2007) remains largely pertinent. The strategic principles and program priorities remain appropriate and the overall approach has been effective. The priority areas of engagement (infrastructure, human development, rural development) remain relevant, and the instruments for delivery of the program are functioning well. On an operational level, this project focused on (a) expanding POWERGRID’s transmission capacity (interregional and at the state level); (b) sustaining efficient energy markets and linking demand centers with resource-rich parts of the country (particularly hydro resources in the north and northeast); and (c) improving electricity access and quality of services to end consumers both in urban and rural areas. Since the loan had been put in place, POWERGRID has been able to provide efficient, reliable, and smooth grid operation and management in the country and deliver on the outcomes of PSDP IV and its additional financing. 56. The Bank’s current CPS (2013–2017) for India endorses a larger development vision that will enable the country to launch action programs for ‘faster, sustainable, and more inclusive growth’ focusing on poverty reduction, group equality, regional balance, empowerment, environmental management, and employment. Given that an estimated 400 million people are not connected to the national electrical grid and those who are connected face frequent disruptions, it is critical to invest in the sustainable development of power infrastructure which is a strategic pillar of project financing, in tandem with private participation, and best-practice management in power generation and distribution. Investments in the power sector aim at building upon the achievements of previous power projects, including those dedicated to energy generation and transmission. The support for the sector was made clear during PSDP IV MTR mission as the Bank expressed its support for India’s 12th Five Year Plan (2012–17). The plan called for a substantial increase in POWERGRID’s investment targets for 2012–17 from the ongoing plan and it needed mobilization of about US$11 billion for which POWERGRID expressed interest to continue its collaboration with the Bank. The Bank had informed the borrower that since funds that can be mobilized directly from the Bank are limited, there is a need to explore other innovative financing options which will allow leveraging of additional funds to 18 finance the Bank-supported projects. In this context, POWERGRID has planned a capital investment of more than US$16 billion (or INR 1,000 billion) for the development of an interstate transmission system during this plan period. In financing PDSP IV, the Bank reaffirmed its commitment to a long-term partnership to support critical investments in the transmission segment. In view of the Bank’s assistance to India, POWERGRID has put in place a network of about 106,804 ckm of transmission lines along with 184 Extra High Voltage (EHV) AC and DC substations with transformation capacity of 205,923 MVA, spread over the length and breadth of the country at the end of March 2014. POWERGRID has been consistently maintaining the availability of this huge transmission network at over 99 percent and ensures the transfer of about 50 percent of total power generated in the country on its network. 3.2 Achievement of Project Development Objectives 57. Disbursements. The disbursements under PSDP IV stood at 96.10 percent and at 100 percent under PSDP IV AF. This reflects that almost all the funding for the project was used. The undisbursed balance of US$23.14 million represents savings on the loan amount that are to be returned to the loan account at the Bank. The used/disbursed amount served to finance the following project schemes: (a) Balia-Bhiwadi HVDC terminal; (b) WRSS II; (c) EWTC; (d) NWTC; (e) ERSS I; (f) SRSS 13; and (g) System Strengthening of Western Region for Sasan UMPP.24 For optimal utilization of available resources to POWERGRID, PSDP IV and PSDP IV AF were restructured on May 23, 2014, as a result of which the last two schemes were added to the project. In terms of procurement, all 73 packages (39 packages under PSDP IV and 34 packages under PSDP IV AF) were awarded according to the Bank’s procurement procedures. 58. Implementation and completion of transmission schemes. Under PSDP IV, all transmission project schemes have been completed except for SRSS 13, which has been delayed due to severe RoW matters that needed to be dealt with at the highest level of state authorities and the concerns about the compensation were adequately addressed for the Tumkur and Bangalore rural areas. However, as implementation resumes on the transmission line, issues concerning the small area in the Bangalore city urban area are being taken up for prompt resolution of RoW issues with the state government authorities. The amount disbursed for SRSS 13 was about US$37 million out of the fundable value of US$47 million and no further disbursement is expected. The scheme will now be completed using POWERGRID funds. 59. Under PSDP IV AF, all transmission project schemes were completed before the loan closed on July 31, 2014, except one spare transformer at the Indore substation (under system strengthening for Sasan UMPP), which was commissioned in October 2014. 60. Impact of the completion of project components. It should be noted that all the indicators have already outperformed their original (as per PAD) targets in FY2013 after which the end- project targets (FY2014) were revised upwards during the implementation support mission of September 2013, which was also the mid-term review mission for PSDP V and later recorded through restructuring of the Project. POWERGRID outperformed not only the original targets (as per PAD) but also the revised/restructured targets for all indicators except for a marginal gap of 0.18 percent in transmission capacity. POWERGRID’s infrastructure investments have expanded 24 During the restructuring, Northern Region System Strengthening XXIV (NRSS 24) and Southern Region System Strengthening XVII (SRSS 17) were transferred from PSDP IV to PSDP V while one scheme of PSDP V (System Strengthening Scheme in WR for Sasan UMPP) was transferred to PSDP IV AF. 19 the network to 106,804 ckm of transmission lines along with 184 EHV AC and DC substations with transformation capacity of 205,923 MVA, spread over the length and breadth of the country. As of March 2014, POWERGRID has been consistently maintaining the availability of this huge transmission network at over 99 percent and wheels about 50 percent of total power generated in the country on its network. India’s electricity transmission system has been strengthened further as the following key indicators show: a. Power exchanges between regions have been enhanced. During FY2014, POWERGRID’s strong transmission network and modernized RLDCs facilitated about 78,384 MU of power exchange across regions, reflecting a growth of about 40,634 MU (107.64 percent) in power exchange across regions in comparison to baseline FY2007 of 37,750 MU. Under the PSDP IV loan, an interregional line, namely, the 400kV Rourkela-Raigarh-Raipur D/C line, has been implemented. This line has contributed an addition of about 1,400 MW to the interregional power transmission capacity of the National Grid. b. Transmission capacity has significantly increased. As on March 31, 2014, POWERGRID owns and operates about 106,804 ckm of EHV transmission lines. An addition of about 47,404 ckm (79.80 percent) has been achieved in transmission capacity with respect to baseline FY2007 of 59,400 ckm. Transmission lines covered under PSDP IV and the additional financing have contributed about 6,230 ckm 25 of 400 kV lines toward transmission capacity addition. c. Growth in transformation capacity has been achieved. As on March 31, 2014, the transformation capacity of POWERGRID’s network is about 205,923 MVA. An addition of about 146,523 MVA (or 246.67 percent) has been achieved in transformation capacity with respect to baseline FY2007 of 59,400 MVA. The infrastructure funded under PSDP IV and PSDP IV AF has added about 8,000 MVA of transformation capacity. 61. The implementation of the +500 kV HVDC bipole and other 765 kV and 400 kV transmission lines and components has contributed to the strengthening of the National Grid through the enhancement of interregional and intraregional power transmission capacity. The benefits of these elements are the following: a. apart from extensions of numerous substations, a significant transmission capacity has been added, which is about 6,230 ckm at 400 kV level and about 8,000 MVA transformation capacity along with new 400/220 kV substations at Pune, Solapur, and Parli and a 765/400 kV substation at Indore. b. The interregional transmission line, namely, 400 kV D/C Rourkela-Raigarh-Raipur, under the EWTC Strengthening Scheme, implemented under the PSDP IV loan has resulted in enhancing the interregional power transfer capacity by about 1,400 MW. c. The implementation of grid strengthening schemes under PSDP IV and the additional financing has resulted in improving the grid security, quality, and reliability of the Indian power system. 62. It should be noted that the availability of all the Bank-funded lines have been above 99.5 percent (refer to annex 2 for details). However, this does not imply that the lines have to be loaded to their capacity due to reasons as follows. After commissioning of a transmission system, 25 It excludes about 549 ckm being implemented under the SRSS 13 scheme. 20 sometimes loading on the lines is less during the initial phase due to delays in envisaged generations and/or the capacity of the state’s transmission network to absorb power. However, the loading increases with increase in power transfer requirements and materialization of envisaged generation projects. It is also imperative to mention here that as per technical norms, it is essential to maintain redundancy in the system so that in case of grid indiscipline, grid security is not compromised. 3.3 Efficiency 63. At appraisal, the economic and financial analysis for the originally approved schemes was carried out and they were justified on the ground that their Economic Rates of Return (ERRs) were higher than the opportunity cost of capital of 12 percent. The ERRs were in the range of 14.8 percent to 22.4 percent in the base case and 10.46 percent to 15.52 percent in the most adverse case. 64. Analysis at completion. Using actual cost figures and applicable tariffs, the analysis covers all the schemes. It also takes into account changes in tariffs and return on equity (ROE) objectives. This has a positive impact on the revenue generated from the schemes and is reflected accordingly in the ERR and ROE calculated and presented in detail in annex 3. a. Economic Rate of Return. The same methodology during appraisal was also adopted at completion to calculate the ERR. The ERR varies between 10.86 percent (for ERSS I) and 23.54 percent (for NWTC). In all the cases, except for ERSS I, the ERR is above the opportunity cost of the capital at 12 percent. b. Return on Equity. The ROE has been taken as a proxy for financial rate of return as was taken during the appraisal. The same methodology as during appraisal was adopted to calculate ROE at completion. In all the cases, the ROE for the different schemes varies between 14.02 percent (for ERSS I) and 29.08 percent (for NWTC). 65. The financial analysis was also carried out at the entity level and it is observed that all the financial ratios (presented in annex 3) are robust. POWERGRID also comfortably complied with all the financial and legal covenants. The debt-equity ratio was always less than 80:20, and the self-financing ratio was also greater than 20 percent for all the years from FY2008 till FY2014. Accounts receivable over the project life were also much lower than the 3 months of billing stipulated in the Legal Covenants. POWERGRID’s receivables as of July 31, 2014 , stand at 0.34 months of average billing. 3.4 Justification of Overall Outcome Rating Rating: Satisfactory 66. The overall rating of the project is Satisfactory on the basis of its high relevance (as discussed in Section 3.1); satisfactory achievement of all the PDOs; and efficiency in implementation (as discussed in section 2.2). In addition, owing to the project, POWERGRID’s performance has significantly improved. It stands today as a stronger company on the technical, managerial, and institutional fronts and has undergone a tremendous transformation to reach the coveted status of a corporation with international stature. The Satisfactory rating is also justified by sustainability of the project components. In the coming years, the role of POSOCO will become more important with further development of the electricity trading market as the 21 transmission schemes financed by this loan as well as subsequent loans will enable transfer of large quantities of power across and between the regions of the country. 3.5 Overarching Themes, Other Outcomes, and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development 67. This project will increase the availability of electricity to the Indian people and contribute to an increase in consumers’ connection rate to the system, especially in regions where power availability has been constrained by the lack of adequate transmission systems. Development and strengthening of the National Grid through reliable and stable operation of regional grids facilitates the timely transfer of power from surplus regions to deficit regions leading to optimal utilization of scarce energy resources. Although POWERGRID’s network does not link directly to the end consumer, it facilitates power evacuation from central sector generating stations and interregional power exchange, resulting in increased availability to and access to reliable electricity by the connected consumers. (b) Institutional Change/Strengthening 68. The two-decade partnership between the Bank and POWERGRID has led to adoption of good practices by the latter since its inception. POWERGRID’s institutional and managerial capacity has been strengthened through targeted Bank support and strengthening of internal audit department, development/implementation of an organization-wide ERM framework and ERP aimed at improving corporate governance and financial accountability. Consistent improvement on such aspects has led POWERGRID to successful listing on stock exchanges, both Indian as well as international. 69. In July 2012, POWERGRID also signed loan agreements with International Finance Corporation (IFC) and Infrastructure Crisis Facility Debt Pool Limited Liability Partnership (ICF Debt Pool LLP) for a total amount of US$270 million. 70. In February 2009, POWERGRID established and commissioned the NLDC (funded under PSDP II and PSDP III loans) as the apex structure for national grid management and operation. According to POWERGRID, this four-tier system is a complex and globally unique mode of grid operation. It minimizes grid disturbances and facilitates quick restoration in case of failure. Further, the NLDC and RLDCs, now being managed by POSOCO, are upgraded and modernized continuously to establish an effective grid management infrastructure in the country. 71. Aspects linked to the environmental and social safeguards associated with the project have been addressed in accordance with the corporate ESPP developed by POWERGRID in 1998 along with an active support from the Bank. This ESPP is revised from time to time. The corporate ESSP is in compliance with the Bank's safeguards policies and its provisions systematically applied to all POWERGRID projects regardless of the source of financing. The ESPP outlines POWERGRID's approach and commitment to deal with the environmental and social issues relating to its transmission schemes and lays out management procedures to address them. POWERGRID’s ESPP was adopted by the Bank as a pilot under UCS (OP 4.00). This was formally adopted under PSDP V. POWERGRID developed a CSR policy enabling it to make contribution to the society at large with emphasis on socioeconomic and integral development of areas/communities primarily in and around its areas of operations. POWERGRID is the first among the Bank’s clients in India to have prepared a Sustainability Report in March 2010, covering its environmental and social performance. The second such report has been published in 22 March 2013, providing all stakeholders a clear picture of POWERGRID’s cont ributions to sustainable development through its activities. Further, this ESPP is now being used as a base document for replication in various state level utilities including the Northeastern states where the Bank is also engaged.26 72. As mentioned in the earlier sections, under this loan following the Bank’s procedures, procurement for some of the transmission system schemes were either uniquely positioned or pertained to emerging transmission technologies in India. For instance, the Balia-Bhiwadi Transmission System was a unique project given the complexity of procurement of HVDC Terminal Package. Similarly, procurement for certain packages for 765 kV transmission lines, which was an emerging voltage level in India, was also carried out under these loans. POWERGRID, in association with the Bank, reviewed and suitably revised the bid documents to successfully facilitate execution of this new technology in India. 73. Building on the experience gained from several HVDC transmission links including the ±500 kV Balia-Bhiwadi HVDC line, POWERGRID has now established 500MW HVDC back- to-back terminal along with Bheramara (Bangladesh) - Baharampur (India) 400kV D/C enabling a power flow of 500 MW from India to Bangladesh. This line is an important contribution toward regional integration. 74. Experienced with construction of the 765 kV EHVAC and ±500 kV HVDC transmission system, POWERGRID has been working on the next higher transmission voltages of ±800 kV HVDC27 and 1,200 kV UHVAC system to achieve efficient utilization of RoW and increased power transfer capability for transfer of bulk power over long distances. The 1,200 kV UHVAC technology, the highest voltage level in the world, is being developed indigenously by POWERGRID in collaboration with 35 Indian manufacturers under public-private partnership (PPP). The 1,200 kV UHVAC National Test Station at Bina, Madhya Pradesh, including test- charge of 1,200 kV single and D/C transmission lines, as a pilot project has been established. Construction of a 1,200 kV upgradable transmission line from Wardha to Aurangabad (approximately 350 km in length, to be initially charged at 400 kV level) is also underway and shall be charged after field trials. This 1,200 kV line is also being funded under one of the Bank loans (PSDP V). 75. On December 31, 2013, POWERGRID achieved a milestone by interconnecting Southern Grid synchronously with rest of the National Grid through commissioning of the 765 kV Raichur (Karnataka)-Solapur (Maharashtra) S/C line (funded under PSDP V). With this ‘One Nation-One Grid-One Frequency’ has become a reality. This has facilitated augmentation of transmission capacity by 2,100 MW. After integration of Southern Region with rest of the grid, through the transmission link funded under the Bank loan, POWERGRID along with POSOCO is handling one of the largest transmission networks at a single frequency in the world. Such integration will enable transfer of power to power starved Southern Region. 26 The Bank is preparing a ‘North Eastern Region Power Sector Improvement Project’ to provide assistance of US$1,500 million of IBRD funding, in three tranches of US$500 million each, for strengthening of the intrastate transmission and distribution network and for building institutional capacity of six states in the region (Assam, Manipur, Mizoram, Meghalaya, Tripura, and Nagaland). 27 The HVDC system facilitates bulk power transmission over long distances with power controllability, reduced RoW, and transmission losses. Implementation of ±800 kV, 6,000 MW multiterminal HVDC system of around 2,000 km from North Eastern Region (NER) to Northern Region (NR) is under implementation (non-Bank funding). Upon completion, it shall be one of the largest multi-terminal HVDC systems in the world at this voltage level. 23 (c) Other Unintended Outcomes and Impacts 76. POWERGRID was conferred ‘Navratna’ status by the GoI in May 2008, implying a greater commercial and financial autonomy for the Company. During the project period, POWERGRID entered the capital market with an Initial Public Offering (IPO) during FY2008 with 10 percent of fresh issue of existing paid-up capital along with the divestment of 5 percent of GoI’s shareholding. In FY2011, POWERGRID floated a Follow-on Public Offering (FPO) comprising fresh issue of 10 percent paid-up capital along with divestment of 10 percent of GoI’s shareholding. The FPO received overwhelming response and was oversubscribed by 14.84 times, reflecting sound corporate governance policies of the company. In December 2013, POWERGRID again issued its second FPO constituting 13 percent of existing paid-up capital along with simultaneous disinvestment of 4 percent of GoI’s sharing holding and was oversubscribed 6.7 times. The shares are listed on the National Stock Exchange and Bombay Stock Exchange. In January 2013, the company made its maiden foray into foreign currency markets and raised US$500 million through issuance of 10-year foreign currency notes at an attractive coupon rate of 3.875 percent per year and was oversubscribed nearly 19 times. The bonds are listed on the Singapore stock exchange. Other achievements by POWERGRID are listed:  POWERGRID continues to excel over its competitors under TBCB. As on October 31, 2014, the company has secured 5 transmission projects, which is more than 30 percent of the projects floated under TBCB since January 2011 when the regime was changed from cost-plus basis to TBCB.  POWERGRID has developed a Smart Grid pilot project in the country through open collaboration at Puducherry. The company has been appointed as advisor-cum-consultant for implementation of the Smart Grid project by eight utilities during FY2014.  With the vision of setting up a world class laboratory for carrying out research and development in power transmission, POWERGRID is establishing a POWERGRID Advanced Research and Technology Center (PART) at Manesar, Gurgaon, with state-of- the-art laboratories for power system analysis, advanced equipment diagnostics, smart grid in transmission and distribution, energy efficiency, power system control and automation, material science, and engineering design.  Further, POWERGRID is also establishing a transmission line research lab to carry out validation of transmission line design and subsequent optimization. In the quest to achieve fully digitized substations, POWERGRID is in the process of introducing process bus technology for substations.  POWERGRID is also playing a catalyst role in formation of the South Asian Association for Regional Cooperation (SAARC) grid for effective utilization of resources for mutual benefits. Transmission links with Bhutan, Nepal, and Bangladesh already exist and are being further strengthened.  POWERGRID is also in the process of mapping pollution intensity of various regions of the country on a geographical map. This activity shall enable efficient and effective transmission line designs, particularly in high pollution and fog affected areas. 24  POWERGRID diversified into the telecom business under the brand name ‘POWERTEL’ to expand its revenue stream by installing overhead optic fiber network using Optical Ground Wire (OPGW), leveraging its existing countrywide transmission infrastructure.  Since 2009, POWERGRID has spread its global footprint in more than 18 countries and is emerging as a strong player in the transmission sector in South Asia, the Middle-east, and Africa. The company has also joined hands with other leading power sector companies to offer integrated solutions for generation, transmission, and distribution to international power utilities. 3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops Not Applicable 4. Assessment of Risk to Development Outcome Rating: Low or Negligible 77. The overall level of risk to the development outcome is rated Low. This assessment is based on the sustainability of the physical investments financed by the loan as well as on the financial, operational, and technical strength of POWERGRID. POWERGRID has an adaptive technical, operational, and corporate structure that allows it to operate its infrastructure efficiently. The low risk level is also based on the sustainability of POWERGRID's enhanced institutional capacity and managerial performance which should enable the company to continue to achieve high performance levels. The reliability of the grid has been enhanced. 5. Assessment of Bank and Borrower Performance 5.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Satisfactory 78. The Bank’s performance during identification, preparation, and appraisal of the project is rated Satisfactory. The Bank had acquired valuable experience through PSDP I, II, and III and its knowledge of the Indian power sector resulted in the formulation of a targeted PDO in keeping with the strategic transformation of the transmission subsector sustained by POWERGRID's operational and institutional capabilities. The Bank established a strong partnership and good working relationship with all the sector’s stakeholders including the CERC, POSOCO, MoP, MoF, and PTC. This helped the Bank team, POWERGRID, and GoI authorities define feasible component options and set up an implementation framework in line with the Bank's procurement and applicable safeguards. The definition of the PDO focused on outcomes for which POWERGRID was held accountable and risk assessment focused on appropriate risks while the ratings were realistic. 79. The preparation team also ensured that all required steps were taken by the GoI and POWERGRID, including the final project implementation plan incorporating details of investment subprojects. The project ROC review (held in December 2007) ensured that lessons from previous operations and India’s DIR were taken into account by the project team and the 25 borrower. The Bank team also carried out safeguards and compliance measures assessment. Tests were carried out during the preparation phase, including a financial management assessment (refer to annex 7 of the PAD). The Bank also ensured that the borrower had an established and effective ESPP framework needed for project implementation. In addition, the ESPP assessment made sure that POWERGRID provided the initial environmental action plan and Rehabilitation Action Plans (RAPs) for the project. Moreover, a number of required measures were put in place to ensure quality at entry contributed to successful implementation: a. Early approval by the Bank of PIPs for all five schemes covered under PSDP IV b. Advance procurement of all packages to be financed under PSDP IV initiated by POWERGRID in accordance with the Procurement Guidelines prevailing at the time c. Timely compliance by POWERGRID with all required actions for ESSP (IEARs, EMP, FEAR, and RAPs), CSR, recommendations from DIR, and FMR 80. The Bank carried out a total of eleven missions, of which one was the appraisal mission for PSDP IV held in January 2008, including site visits. The first implementation support mission for PSDP IV held in August 2008 coincided with the appraisal mission for PSDP IV AF. The second implementation support mission for PSDP IV held in February 2009 was also the first implementation support mission for PSDP IV AF and preparation mission for PSDP V. The first implementation support mission for PSDP V was also the MTR mission for PSDP III, PSDP IV, and PSDP IV AF. This MTR was held in April 2010, four months after its planned date at appraisal stage of PSDP IV so as to include PSDP IV AF and also to enable the team to get a holistic view of implementation of the schemes being financed across these projects (b) Quality of Supervision Rating: Satisfactory 81. The World Bank’s performance during supervision is rated Satisfactory. Since loan effectiveness, the Bank team carried out nine supervision missions, including field visits over the six-year implementation period. Adequate budget and staff resources were allocated as the project was effectively supervised and closely monitored, including through delegation of day-to-day supervision responsibilities to Delhi-based staff, which proved highly effective. The Implementation Completion and Review (ICR) mission took place in October 2014. Supervision of the project's implementation was strengthened by a systematic collaboration between the Bank and POWERGRID's project teams with a significant skills mix. The Bank team was continuously involved in all aspects of implementation to ensure that physical investments were carried out and that disbursements occurred as planned. Submission of progress reports, FMR, and safeguards compliance reports ensured that supervision provided both parties with indicators to allow them to track progress and take corrective actions when needed. The Bank's supervision tracking system (Implementation Status and Result Reports (ISR) and mission aide memoires) provided much-needed status information about the project and required implementation ratings and compliance with covenants. Continuous involvement by the Bank's team and POWERGRID were instrumental in ensuring that the project components were successfully implemented with a satisfactory disbursement rate. 82. The MTR for PSDP IV and PSDP IV AF was carried out in April 2010, and at that time, the PDO and implementation progress were rated satisfactory and all KPIs had surpassed their planned targets. The project’s closing date was postponed to July 31, 2014, to adjust for implementation and disbursements schedules of the additional financing portion of the loan. The Bank team was continuously involved with POWERGRID to resolve delays due to forest 26 management and RoW issues. Most of these issues were resolved and project implementation activities proceeded toward completion according to the planned schedule. The FM was also closely monitored as the World Bank recommended that POWERGRID strengthen its internal audit department and take actions to hire consultants for reviewing the company's ERP and strengthen its ERM. Overall World Bank Performance Rating: SATISFACTORY (c) Justification of Rating for Overall Bank Performance Rating: Satisfactory 83. The Bank did carry out an objective and well-defined appraisal of the project. In tandem with the borrower, the Bank team has been able to make the necessary adjustments and take corrective actions (in all project aspects) so that the project achieves its development objectives in line with the Bank’s overall objective for the transmission sector. 5.2 Borrower Performance (a) Government Performance Rating: Satisfactory 84. The government’s performance is rated Satisfactory. The GoI has identified the power sector as being vital for sustained and inclusive economic growth and has made investment allowances (in the 12th Plan) in line with the growth of the transmission subsector so that electricity demand is sustained by a reliable network. All sector stakeholders (MoP, MoF POSOCO, and CERC) were always available to the Bank supervision teams and worked together to resolve issues during project supervision. Sector governance by the GoI was crucial to the successful implementation of this project. Institutional support ensured continuous monitoring and support for loan disbursement and related financial measures such as counterpart funding, and compliance with loans covenants, including arrears payments. The GoI ensured an adequate legal and regulatory framework conducive to achieving the objectives of the project and POWERGRID’s operational sustainability. In addition, the GoI's and CERC's regulatory framework were designed to provide tariffs to enable the company achieve adequate and satisfactory ROEs. (b) Implementing Agency or Agencies Performance Rating: Satisfactory 85. POWERGRID was the borrower and the implementing agency and its performance is rated Satisfactory. This rating is based on POWERGRID's efficiency in implementing the project as most investment schemes were implemented on time, disbursements reached 96 percent of the PSDP IV first loan, and closing occurred as planned on July 31, 2014. The undisbursed balance of US$23.14 million represents savings on the loan amount that are to be returned to the loan account at the Bank. The PSDP IV AF loan was disbursed at 100 percent. POWERGRID has satisfactorily achieved the PDO and has not only met but outperformed all KPIs, thus meeting all development outcomes. 27 86. Compliance with financial and legal agreements was also achieved during implementation as POWERGRID's management and project team were strongly committed to the project's successful implementation. The use of IPMCS in tandem with its corporate ESPP ensured adequate mitigation of safeguards risks. POWERGRID continues to improve its corporate governance, environmental, and social responsibility through strengthening of the ESPP and CSR, internal audit department, carrying out of operational audits, implementing of the ERM framework, and the ERP system. Overall Borrower Performance Rating: Satisfactory 6. Lessons Learned 87. The main lessons learned from the design and implementation of the project are listed: a. Long-term programmatic engagement results in a successful partnership. The long-term partnership between the Bank and POWERGRID has not only contributed to the establishment of a strong transmission system but also supported POWERGRID in institutional strengthening, enabling it to become one of the largest and best utilities in the world. Successful implementation has shown the importance of partnership with an efficient and strong implementing agency over the PSDP series. Using operational and project management experience, POWERGRID has effectively contributed to the success of the project. Moreover, this project has shown that continuous reviews and improvements of POWERGRID’s technical implementation, procurement, and safeguards systems have raised the standards to be followed by others. b. Repeater projects contributed toward effective implementation of POWERGRID projects. Early preparation started during PSDP III provided valuable insights (such as success of eligibility criteria and implementation of emerging technologies)28 into issues to be resolved by both the parties in PSDP IV and its additional financing. Furthermore, the continued use of the eligibility criteria ensured the borrower’s commitment to the project. c. Retroactive financing enabled an advance preparation of the project. Under the loans, the provision for retroactive financing for up to 20 percent of the loan amount resulted in immediate disbursement of about US$57 million under PSDP IV and about US$26 million under the PSDP IV AF loans. d. Strong and reliable National Grid is facilitating economic development. With a stronger National Grid spanned out across the country, integration of renewable energy with the grid has become easier. This will provide energy security as well as carbon emission reduction. POWERGRID is engaged with the GoI on this initiative through implementing interstate transmission system and setting up of Renewable Energy Management centers and control infrastructure as part of Green Energy Corridors that envisions grid integration of renewable generation capacity addition of about 33 GW across India during the 12th Five Year Plan. Further, POWERGRID has installed overhead optic fiber network using OPGW, leveraging its existing countrywide transmission infrastructure. It has an all-India broadband telecom network of about 29,640 km, providing connectivity to all metros, major cities, towns, state capitals, including remote areas of the North-Eastern Region. POWERGRID also has the necessary licenses to provide a variety of telecom services. As part of a National Knowledge Network, POWERGRID is connecting selected educational institutions with a unified high- 28 The Balia-Bhiwadi HVDC bipole line was funded under PSDP III and PSDP IV. 28 speed network backbone. POWERGRID is also a member of the Advisory Body and Core Committee of the ambitious National Optical Fiber Network project, which uses the existing optical fiber facilities of Bharat Sanchar Nigam Limited (BSNL), POWERGRID, and RailTel Corporation of India Limited to connect all the 250,000 gram panchayats (GPs). POWERGRID is working for development and maintenance of this network in four states (Andhra Pradesh, Himachal Pradesh, Jharkhand, and Odisha) covering about 36,000 GPs. e. POWERGRID is now a ‘partner of choice’. Over the years, POWERGRID has transformed into an organization successfully foraying into advanced technologies that it has become a ‘partner of choice’ by Indian states as well as neighboring countries. Building on the experience gained from several HVDC transmission links including the ±500 kV Balia- Bhiwadi HVDC line, POWERGRID has now established 400 kV D/C HVDC back-to-back terminals at Bheramara (Bangladesh), enabling a power flow of 500 MW from India to Bangladesh. This line is an important contribution toward regional integration. POWERGRID is also providing technical support through consultancy outside India. Within India, POWERGRID is partnering with most of the states (such as the North Eastern States) to help develop their transmission networks. f. Timely measures required for overcoming RoW issues. It is important to note that given the scarcity of resources within the country, RoW has become very difficult to obtain. Because of the linear nature of the transmission projects and traversing through agricultural lands/farms, and habitation enroute, RoW problems are probable during construction of transmission lines. Even though POWERGRID is following principles set out in its ESPP, it is increasingly becoming difficult to obtain RoW. These issues can hamper project execution and, in some cases, may derail the entire project schedule as in the case of SRSS 13. Since, land is a state subject, POWERGRID takes necessary assistance of the local government authorities in resolving the RoW problems as and when they arise.29 Further, POWERGRID has adopted innovative tower design and deploying transformation technologies30 to reduce width of RoW and has also taken a policy decision to install D/C or multicircuit towers in forest and other ecologically sensitive areas. This has resulted in huge saving of trees. POWERGRID is also adopting higher voltage levels gradually such as 765 kV or 800 kV and increasing the power carrying capacity of transmission lines (up to 6,000 MW on D/C lines) for optimizing RoW without much effect on transmission losses. g. Due focus on safeguards help in obtaining forest clearance with a shorter turnaround time. Even though processing time of a proposal for forest clearance at the state level has been prescribed as 210 days according to guidelines issued by MoEF, the time taken normally is very high, resulting in delay in implementation of projects. This is aggravated if the transmission line passes through a wildlife sanctuary, national park, or notified eco-sensitive zone, when permission of the Supreme Court is essential but is a very cumbersome process. In such cases, the whole process takes 2–3 years and sometimes even more. POWERGRID has very limited role in processing of forest proposal in the state forest hierarchy due to involvement of many officials. However, it was experienced that constant persuasion of the officials expedites the process. Hence, strengthening of the environment and social department proved to be useful as POWERGRID did in June 2011 to factor in activities required to comply with MoEF’s notification to the FRA of August 2009. POWERGRID has 29 It should also be noted that the probability of abnormal RoW issues of very high severity as faced in SRSS 13 is very low and rare. 30 POWERGRID is deploying various technologies such as multi circuits, compact and tall towers, High Surge Impedance Loading Lines, Fixed and Thyristor Controlled Series Compensation, and High Temperature Low Sag (HTLS) Conductors. 29 exclusively deputed one officer in each region for regular follow-up and monitoring of forest proposals at the state level and concerned Regional Ministry of Environment and Forest (RMoEF) to expedite forest clearance. h. Adequate handling of land acquisition issues. The land acquisition procedures/laws are too cumbersome. These might be counterproductive to sector development and to network expansion (as they create delays) and they might have a negative impact on the sustainability of POWERGRID’s operations. Considering the ramifications, POWERGRID has already initiated preemptive measures and has developed a policy for procurement of land on ‘willing-seller willing-buyer’ basis on negotiated rate without enforcing the provisions of land acquisition laws to smoothen procurement of land without any resistance and delay. Such measures may come handy in offsetting the delays associated with land acquisition as has been demonstrated in case of the Aurangabad substation funded under PSDP V. Further, as land has become a scarce resource, POWERGRID is adopting new technologies like Gas Insulated Substation (GIS) which requires less land area (about 25 percent) as against conventional Air Insulated Switchyard (AIS) substations. It is also following the practice of land management to minimize the land requirement to the barest minimum under which it has taken a policy decision to have GIS substations in the city area and to install multicircuit towers around a 1-km radius of all new substations. Wherever possible, POWERGRID tries to locate substations on government land/waste land/non-fertile land to reduce the impact of land acquisition on PAP. i. Review and updating of procurement documents to promote new technologies. As part of this loan and in line with the Bank’s procedures, procurement for some of the unique and emerging technologies in India (HVDC for Balia-Bhiwadi and 765 kV technology) was carried out. The procurement documents were reviewed and suitably updated to promote scaling up to new technologies as part of the loans. j. Vendor conferences resulted in higher participation and competitive prices. POWERGRID, in association with the Bank, organized conferences for conductor and insulator vendors in April 2009 and September 2010 with the objective of increasing participation. Such conferences have resulted in more participation and competitive prices as evident from the bids received for the packages floated after these conferences. Further, a conference on common mistakes and discrepancies during bidding was also organized with prospective bidders in September 2010 by POWERGRID in association with the Bank. This conference resulted in significant improvement in the bids being submitted and helped reduce the delay in bid evaluation on account of common errors or inconsistencies in the bids. k. Restructuring of loans to optimize utilization. The restructuring of the project was triggered by the significant savings/surplus resulting from the combined effects of a highly competitive market, the continuing devaluation of the Indian rupee (INR) against the U.S. dollar since loan approval and the regulatory requirements to maintain a debt-equity ratio of 70:30 for all the schemes financed by POWERGRID. In addition to inclusion of a new scheme, shifting of one scheme from PSDP V to PSDP IV AF enabled leveraging of flexibility in the POWERGRID portfolio that had the same PDO and KPIs, resulting in optimal utilization of the available funds across its various engagements. l. With large size of package, it is useful to have higher prior review threshold. In view of POWERGRID’s procurement of large and costly packages, it is recommended that the US$25 million limit for prior review packages be increased. This change should help POWERGRID manage the procurement process of large contracts. In January 2014, the Operational Procurement Review Committee (OPRC) threshold limits were revised upward, except for high risk packages, from US$50 million to US$200 million for low-risk packages and to US$115 million for moderate-risk packages that are generally the risk profile of POWERGRID packages. 30 m. Engagement with a capable borrower results in mutual learning. Both the Bank and POWERGRID learned from each other during this partnership. The learnings have been in terms of better project management that includes contract management. For instance, for ease of reconciliation of the disbursement applications by the Bank and the borrower, it is suggested that changes in the contract value on account of price variation and amendments to the contracts should reflect on the Client Connection website. This system will help both the Bank and the borrower in monitoring and reconciling the funds available against each contract for disbursement and facilitate optimal utilization of the fund by keeping a tab on the savings, if any, being envisaged. 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/implementing agencies 88. All comments have been appropriately incorporated in the final ICR. POWERGRID’s completion report (refer to annex 9 for summary) reflects most of the evaluation in the Bank’s ICR and also assesses the achievement of the project’s PDO as Satisfactory. POWERGRID’s comments, which were mostly of an editorial nature, have been reflected adequately in the report. The Bank team’s response to each comment is indicated in annex 9. (b) Co-financiers Not Applicable (c) Other partners and stakeholders Not Applicable 31 Annex 1. Project Costs and Financing (a) Project Cost by Component (in USD Million equivalent) Actual/Latest Appraisal Estimate Percentage of Components Estimate (US$, millions) Appraisal (US$, millions) Transmission System Strengthening 1,838 1,300.72 Total Baseline Cost 1,838 1,300.72 Physical Contingencies 158 n.a. Price Contingencies 118 n.a. Total Project Costs 2,114 1,300.72 Front-end fee 0 n.a. Front-end fee IBRD 0 n.a. Total Financing Required 1,00031 855.22 (b) Financing Appraisal Actual/Latest Source of Estimate Estimate32 Remarks Funds (US$, millions) (US$, millions) Borrower 811 445.50 Figures are for PSDP IV and PSDP IV AF only. New scheme, SRSS 13, was added to use the surplus funds (available up to US$60 million) available from the originally approved schemes. Due to severe RoW issues, this scheme is now expected to be completed not before March 2015. Disbursement under this new PSDP IV 600 538.92 scheme was about US$37 million, taking the disbursement under the loan to US$576.86 million. The undisbursed balance of US$23.14 million represents savings on the loan amount that are to be returned to the loan account at the Bank. A scheme was shifted from PSDP V to gainfully use the surplus from the original schemes (available up to US$85 million) and to leverage flexibility across POWERGRID loans that had the same PDO and KPIs. PSDP IV AF 400 316.30 Disbursement under the shifted scheme (System Strengthening in Western Region for Sasan UMPP) was about US$84 million. Thus, the entire loan stands disbursed. IBRD Total33 1,000 855.22 31 As PSDP IV and PSDP IV AF are repeater projects of PSDP III, the estimates were reviewed for the portfolio at appraisal of PSDP IV. Hence, the table includes details of both PSDP IV and PSDP IV AF. 32 These estimates do not include the project costs of the schemes added through a Letter of Amendment to the Loan Agreement dated May 23, 2014 (restructuring). 33 This is ‘total financing required’ in table (a) above. 32 (c) Disbursement Graph 33 Annex 2. Outputs by Component 1. The Bank had a programmatic engagement with POWERGRID to the tune of US$1.4 billion provided to it in a phased manner. The first tranche of US$400 million was availed under the PSDP III loan that closed in July 2011, and ICR Report (No. ICR1862) was disclosed on January 30, 2012. The following schemes were covered under PSDP III: Table 2.1: Schemes Funded under PSDP III Sl. No. Project Transmission Elements 1. 765 kV Seoni-Bina  Seoni-Bina 765 kV S/C (initially to be operated at 400 kV) - 293 Transmission Line ckm 2. Seoni-Wardha-Akola-  Seoni-Wardha 765 kV S/C line (initially to be operated at 400 Aurangabad kV) - 269 ckm Transmission System  Wardha-Akola (MSETCL) 400 kV D/C line - 324 ckm  Akola (MSETCL)-Aurangabad (MSETCL) 400 kV D/C line - 482 ckm  2x315 MVA, 400/220 kV Wardha (POWERGRID) Substation (New), with a provision to upgrade it to 765 kV  400 kV Seoni (POWERGRID) Substation (Extension)  400 kV Akola (MSETCL) Substation (Extension)  400 kV Aurangabad (MSETCL) Substation (Extension) 3. ±500 kV, 2,500 MW  Balia-Bhiwadi 500 kV HVDC bipole line - 1,580 ckm Balia and Bhiwadi HVDC Bipole System 4. NWTC Strengthening  Agra-Gwalior 765 kV S/C (initially to be operated at 400 kV) - Scheme 128 ckm  Zerda-Kankroli 400 kV D/C - 470 ckm 5. WRSS II  Bina-Gwalior 765 kV 2nd S/C line (initially to be operated at 400 kV) - 233 ckm 2. The second and third phases of US$600 million and US$400 million were made available to POWERGRID under the PSDP IV and PSDP IV AF loans that closed on July 31, 2014. The original schemes, approved at appraisal and funded under PSDP IV and PSDP IV AF, were implemented and completed within the project period. One of the new schemes that was shifted from PSDP V was also completed within the loan closing period. Only one new scheme (SRSS 13) is not complete due to severe RoW issues at the state level (Karnataka). This scheme is now expected to be completed not before March 2015 and its implementation will be monitored under PSDP V, which is an active POWERGRID loan with the Bank. The scheme will be completed using POWERGRID funds. Table 2.2 compares the total project costs at the time of appraisal, the corresponding Bank funding at that time, final committed value to be financed by the Bank funds after the award of the contract, and disbursements as on December 19, 2014. 34 Table 2.2: An Overview of Financing (Figures in US$, Millions) PSDP IV PSDP IV AF Sl. Total Envisaged Committed Disbur- Envisaged Commit Disb No. Project Project Bank Funding Value sement Bank ted urse Cost as per PAD Funding as Value ment as per PAD per PAD 1. EWTC 198 56 53 53 7 6 6 2. WRSS II 884 174 153 153 336 259 259 3. ERSS I 241 65 60 60 57 51 51 4. Balia & Bhiwadi 683 295 265 265 – – – System 5. NWTC 119 10 8 8 – – – Schemes added through Restructuring 6. SRSS 1334 – – 48 38 – – – 7. System Strengthen ing in Western – – – – – 89 84 Region for Sasan UMPP35 Total 600 587 577 400 405 400 3. Table 2.3 chalks out all the elements that were financed under the PSDP IV and PSDP IV AF loans. It also provides the details of the commissioning schedule of each of these elements. All the above schemes have been completed except the SRSS 13 scheme whose implementation has been adversely affected due to severe RoW problems. Table 2.3: Elements under the Schemes Funded under PSDP IV and PSDP IV AF Commissioning World Bank Elements Commissioning Details of the Date Project Elements a. ±500 kV, 2,500 MW Balia and Bhiwadi HVDC Bipole System July 2012 PSDP III Balia-Bhiwadi HVDC Line test charged in March 2010 bipole line (1,580 ckm) PSDP IV Balia-Bhiwadi HVDC First pole commissioned & under terminal stations commercial operation since September, 2010. Second pole test charged and commissioned in July 2012. b. North-West Transmission Corridor Strengthening Scheme April 2009 PSDP III 765 kV S/C Gwalior-Agra Commissioned in March 2009 line (128 ckm) 400 kV D/C Zerda- Commissioned in April 2009 Kankroli line (470 ckm) 34 According to the PIP, the estimated completion cost was US$76 million of which envisaged Bank funding was US$47 million. 35 According to the PIP, the estimated completion cost was US$200 million of which envisaged Bank funding was US$134 million. 35 Commissioning World Bank Elements Commissioning Details of the Date Project Elements PSDP IV Extension of Agra, Agra and Gwalior substations Kankroli, Gwalior, and commissioned in March 2009. Zerda Zerda substations and Kankroli substations commissioned in April 2009. 36 c. Western Region System Strengthening Scheme II December 2012 PSDP IV 400 kV D/C Korba- Line commission in February 2012 Birsinghpur line (454 ckm) 400 kV D/C Birsinghpur- Line commissioned on February 2011 Damoh line (508 ckm) 400 kV D/C Damoh- Line commissioned in March 2010 Bhopal line (432 ckm) New 400/220 kV Pune &  Pune substation: Completed in Solapur substations and October 2010 extension of Aurangabad,  Solapur substation: Completed in Parli, Kolhapur, Damoh, March 2010 Gwalior, Bina, Korba, and  Bina and Gwalior substation Bhopal substations extension: Commissioned in February 2010  Damoh and Bhopal substation extension: Commissioned in February 2011 and March 2011, respectively  Kolhapur substation extension: Completed in February 2011  Parli substation extension: Completed in August 2011  Korba extension: Commissioned in February 2012 PSDP IV AF 400 kV D/C Wardha-Parli Line commissioned in July 2011 quad line (674 ckm 400 kV D/C Bhadrawati- Line charged in March 2011 Parli line (776 ckm) 400 kV D/C Raipur- Line commissioned in December 2012 Wardha line (741 ckm) 400 kV Parli (MSETCL)- Line commissioned in February 2011 Parli (POWERGRID) line (10 ckm) 400 kV Parli (New)  Parli (New) substation and substation and extension of Bhadrawati substation extension: 400 kV Bhadrawati, Seoni, Commissioned in March 2011. Parli (MSETCL), Wardha,  Parli (MSETCL) substation and Raipur substations extension: Completed in March 2011.  Wardha and Raipur substation extension: Commissioned matching with the line in December 2012. 36 Part financed under PSDP III also. 36 Commissioning World Bank Elements Commissioning Details of the Date Project Elements Extension of 400 kV  Birsinghpur substation extension: Rajgarh, Karamsad, Commissioned in February 2011. Limbdi, Zerda,  Ranchodpura substation extension: Ranchodpura, and Completed in March 2011. Birsinghpur substations  Works for extension of other substation completed progressively by September 2011. FSC package at Rajgarh Completed in November 2011 substation for 400 kV Rajgarh-Karamsad D/C line FSC package at Wardha Commissioned in December 2012 substation for 400 kV Wardha-Raipur D/C line d. East-West Transmission Corridor Strengthening Scheme June 2011 PSDP IV 400 kV D/C Ranchi- Commissioned in November 2010 Rourkela line (290 ckm) 400 kV D/C Rourkela- Commissioned in June 2011 Raigarh line (420 ckm) 400 kV D/C Raigarh- Commissioned in September 2010 Raipur line (440 ckm) Extension of Ranchi,  Extension of Raigarh and Raipur Rourkela, Raipur, and substations commissioned in Raigarh substations September 2010  Extension of Ranchi and Rourkela substations commissioned in November 2010 PSDP IV AF FSC at Raipur substation Test charged in March 2011 for 400 kV D/C Rajgarh- Raipur line e. Eastern Region System Strengthening Scheme I March 2014 PSDP IV 400 kV D/C Durgapur- Line short terminated and Jamshedpur line (314 ckm commissioned in April 2012 400 kV D/C Jamshedpur- Line commissioned in May 2013 Baripada line (282 ckm) 400 kV D/C Baripada- Line commissioned in August 2011 Mendhasal line (544 ckm) Extension of Durgapur, Commissioned by May 2013 Jamshedpur, Baripada, and Mendhasal substations PSDP IV AF Re-conductoring of Commissioned in March 2014 Purnea-Siliguri 400 kV D/C line (346 ckm) Schemes Added Through Restructuring f. System Strengthening in Southern Regional XIII March 2015 PSDP IV 400 kV D/C Gooty- Under implementation. Implementation (anticipated) Madhugiri line (417 ckm) of the elements affected since February 400 kV D/C (Quad) 2013 due to severe RoW issues in the Madhugiri-Yelahanka line state of Karnataka. (132 ckm) 400/200 kV Madhugiri 37 Commissioning World Bank Elements Commissioning Details of the Date Project Elements substation and 400 kV Bay extension at Gooty g. System Strengthening in Western Region for Sasan UMPP October 2014 PSDP IV AF 765/400 kV Indore Completed in June 2013 substation and extension of 400 kV Indore (MPPTCL) substation 765 kV & extension of 400 Completed in March 2013 kV Gwalior substation 7x333 MVA, 765/√3 / Completed in March 2013 400/√3 kV Single Phase Transformers at Bina substation 7x500 MVA, 765/√3 / Completed in October 2014 400/√3 kV Single Phase (one spare transformer was test charged Transformers at Gwalior in October 2014) substation and 7x500 MVA, 765/√3 / 400/√3 kV Single Phase Transformers at Indore substation 765 kV Bus Reactor & Completed in March 2014 Shunt Reactors at Gwalior, Bina, and Indore substations 4. The following section elaborates further on the various schemes and their components funded under PSDP IV and PSDP IV AF. a. ±500 kV, 2,500 MW Balia and Bhiwadi HVDC Bipole System 5. The objective of the scheme was to transfer power to the Northern and Western regions from the Balia Pooling Point (in Uttar Pradesh), which gets power from surplus generated in the Eastern region. A 2,500 MW HVDC bipole system between Balia and Bhiwadi was required to meet the power demand for the states of Punjab, Haryana, Rajasthan, and Delhi in the western part of the Northern Grid. The HVDC system has some inherent features which help in maintaining grid stability and reliability efficiently:  The HVDC system allows controlled power flow.  Control features of the HVDC system helps in damping system oscillation after any disturbance.  The HVDC system does not contribute any additional short circuit current to Balia whereas AC systems do.  The HVDC system provides flexibility of operation. 6. Further, it was anticipated that the Northern region would be importing a large quantum of power from the Eastern region and accordingly a number of interregional links are envisaged to be established between the Eastern and Northern regions. It was felt prudent to develop a hybrid system comprising high-capacity transmission links. Keeping this in view, a pooling station at Balia in the Northern region is envisaged where power will be pooled from various projects in the Eastern region and thereafter 400 kV AC and HVDC lines are envisaged to be established for dispersal of power to various constituents of the Northern region. 38 7. Pole I of the HVDC line along with the terminal station was commissioned in September 2010. The 500 kV HVDC bipole line of this project was covered under the PSPD III loan from the Bank. The second HVDC terminal was covered under the PSDP IV loan. Pole II of the scheme was originally scheduled for completion in December 2009 but could only be commissioned in July 2012 due to delays in supply of converter transformers at the Biwadi terminal station by the contractor. According to the contract, eight (8) converter transformers were to be manufactured and supplied by M/s BHEL in technical collaboration with M/s Siemens AG, Germany, which were the Joint Venture (JV) partners for the package, from July 2008 to March 2009, whereas it could only be supplied from October 2011 to March 2012. 8. Both Pole I and Pole II of the Balia-Bhiwadi HVDC project were successfully commissioned and tested for rated power of 1,250 MW each and overload power of 1,500 MW each. Presently, the ±500 kV, 2,500 MW Balia-Bhiwadi HVDC bipole project is in successful operation and maximum power flow was of the order of 2,500 MW. It will be operated at full capacity progressively with commissioning of the Barh generation units. The ±500 kV Balia- Bhiwadi HVDC link is facilitating bulk power exchange between the Northern and Eastern regions and has become an important HVDC link in strengthening the Northern Grid. 9. Under PSDP III, the works consisted of transmission lines: • Balia-Bhiwadi 500 kV HVDC bipole line (1,580 ckm) 10. Under PSDP IV, the works consisted of substations (initially proposed to be funded under PSDP III but to match the commissioning of the associated generation projects it was later financed under PSDP IV): • HVDC Terminal Station for 2,500 MW at Balia and Bhiwadi along with associated works b. North-West Transmission Corridor Strengthening Scheme 11. Synchronous operation of Western Region (WR) and Northern Region (NR) was envisaged through a 765 kV line between Agra (NR) and Gwalior (WR) as a part of transmission system of Kahalgaon-II (1,500 MW) generation project in the Eastern Region. With more generation projects coming in the Eastern Region (ER) with beneficiaries in the NR and WR, the power flow on lines connecting Northern and Western Regions was envisaged to increase. Thus, a need was felt to enhance the power transfer capacity between the Northern and Western regions. Accordingly, the second circuit of the Agra-Gwalior 765 kV line (initially to be operated at 400 kV) was envisaged under the project. 12. With the completion of the Agra-Gwalior 765 kV first circuit, the Eastern, Western, and Northern regions are operating as a single unit having large capacity. The common geographical boundary of the Western and Northern regions is spread longitudinally. Therefore, to maintain system stability as well as security of the single grid under all operating conditions, it was felt necessary to connect both the regions through interconnection at different locations along the boundary. Accordingly, another interconnection between the two regions was envisaged by connecting Kankroli (NR) and Zerda (WR) through a 400 kV D/c line. 13. Under the project, two interregional lines (between the Northern and Western regions), namely Agra-Gwalior 765 kV S/C line and Zerda-Kankroli 400 kV D/C line, were implemented (funding under the PSDP III loan). Extension works of bays for termination of these lines were 39 covered under the PSDP IV loan. Extension of substations covered under the PSDP IV loan was commissioned matching with the associated transmission lines, that is, Agra-Gwalior 2nd 765 kV S/C and Zerda-Kankroli 400 kV D/C lines covered under the PSDP III loan. These lines have added about 2,100 MW in interregional power transfer capacity. 14. Under PSDP III, the works consisted of transmission lines: • Agra-Gwalior 765 kV S/C (initially to be operated at 400 kV) (128 ckm) • Zerda-Kankroli 400 kV D/C (470 ckm) 15. Under PSDP IV, the works consisted of substations: • 400/220 kV Agra (POWERGRID) Substation Extension • 400/220 kV Gwalior (POWERGRID) Substation Extension • 400/220 kV Kankroli (POWERGRID) Substation Extension • 400/220 kV Zerda (GEB) Substation Extension c. Western Region System Strengthening Scheme II 16. In India, major energy resources are concentrated in a few pockets like the large belt of coal deposit confined to the eastern part, while most of the hydro potential is located in the northeastern and upper northern parts of the country. Therefore, to meet the power requirement of deficit regions like the Western region, bulk power transfer over long distances from the generation resources to the load centers located across the country is required. Further, major generation sources in the Western region are located in its eastern part while load centers are in the western and central part of the region. Therefore, to transfer power from major generation plants in the eastern part to load centers like Wardha, Pune, Aurangabad, Gwalior, Bhopal, Indore, and Karamsad, there was a need to develop transmission corridors of adequate capacity. Accordingly, the WRSS II was designed to strengthen various parts of the WR. The scheme was evolved consisting of four sets (A, B, C, and D). While transmission lines under sets A and D along with all the substations were implemented by POWERGRID, transmission lines under sets B and C were to be implemented through private participation. 17. Out of this, POWERGRID implemented the Bina-Gwalior 765 kV second S/C transmission line (initially to be operated at 400 kV) under PSDP III funding. The line was commissioned in February 2010. It may be mentioned that other important lines, such as Seoni- Wardha were also implemented through Bank financing under the PSPD III loan. The Seoni-Bina 765 kV S/C line is under commercial operation since April 1, 2010, and has helped to connect the major load center (Bina) in the northern part of the state of Madhya Pradesh to a power pooling point in the south-eastern part of the state (Seoni) as well as to complete the 765 kV ring interconnecting the Eastern, Western, and Northern regions of India as part of the development of the National Grid. The Seoni-Wardha transmission system has been commissioned progressively from April 2009 to November 2009 and has provided adequate transmission arrangements to enable the state of Maharashtra to draw power reliably from a pooling point in the central part of the WR, where power imported from the ER and other sources are being pooled. 18. Major components of the balance scheme were covered for financing under the PSPD IV and PSDP IV AF. Various elements of the project have been commissioned progressively from February 2010 to December 2012 and are under commercial operation. 19. Under PSDP IV, the works consisted of the following components: 40 Transmission Lines • From Korba to Birsinghpur 400 kV D/C (454 ckm) • From Birsinghpur to Damoh 400 kV D/C line (508 ckm) • From Damoh to Bhopal (MP transco) 400 kV D/C line (432 ckm) Substations • New 400/220 kV substations at Pune and Solapur • Extension of 400/220 kV substations at Aurangabad, Parli, Kolhapur, Damoh, Gwalior, Bina, Korba, and Bhopal 20. Under PSDP IV AF, the works consisted of the following components: Transmission Lines • From Wardha to Parli 400 kV D/C line (674 ckm) • From Bhadrawati to Parli 400 kV D/C line (776 ckm) • From Raipur to Wardha 400 kV D/C line (741 ckm) • From Parli (MSETCL) to Parli (POWERGRID) 400 kV D/C (10 ckm) Substations • A new 400/220 kV substation at Parli • Extension of 400/220 kV substations at Bhadrawati, Parli (MSETCL), Wardha, and Raipur • Extension of 400/220 kV substations at Rajgarh, Karamsad, Limbdi, Zerda, Ranchhodpura, and Birsinghpur • FSC at Rajgarh substation for 400 kV D/C Rajgarh-Karamsad line • FSC at Wardha substation for 400 kV D/C Wardha-Raipur line d. East-West Transmission Corridor Strengthening Scheme 21. In the Eastern region, a large number of generation schemes like Kahalgaon Stage-II (1,500 MW), Barh (1,980 MW), North Karanpura (1,980 MW), Maithon (1,000 MW), and Nabinagar (1,000 MW) were planned with beneficiaries located in Western and other regions. According to the projected load-generation scenario of the Western region, it was envisaged that a large quantum of power needed to be imported from the Eastern region to the Western region. Accordingly, 400 kV Rourkela-Raigarh-Raipur D/C line was proposed to strengthen the existing Rourkela-Raipur interregional transmission corridor between the Eastern and Western regions and to enable increase in the level of power transfer to the Western region. However, to pool surplus power from various generation projects in the Eastern region for onward transmission to Rourkela, a 400 kV D/C line between Ranchi, a pooling point in the Eastern region, and Rourkela were also proposed to provide a parallel Transmission Corridor from the central part of the region toward Rourkela. 22. Further, to enhance power transfer capacity over the proposed 400 kV Rourkela-Raigarh- Raipur interregional link, 40 percent FSC along with 5–15 percent Thyristor Controlled Series Capacitor (TCSC) on both the circuits of the Raigarh-Raipur 400 kV D/C line at the Raipur end was made part of this scheme. 23. The scheme was originally scheduled for completion in June 2009 but could only be completed and commissioned in July 2011 due to delays in obtaining forest clearances. Details are as below: 24. Forest clearance proposal for diversion of forest land of about 18.8 ha (3.94 ha in Ranchi, 8.89 ha in Khunti, and 6.007 ha in Simdega) was submitted to the nodal officer on January 3, 41 2006. The nodal officer forwarded the proposal to the concerned three district forest officers (DFOs). During joint site inspection, forest officials advised a change in alignment in forest area. Accordingly, realignment was done. While carrying out a survey for realignment, identification of khasra plots, and tree enumeration of the revised route, stiff resistance and disturbances were faced from the extremists since the entire line route passes through extremist-prone areas. Therefore, this process of survey for realignment and khasra plot identification, including tree enumeration, took considerable time. The proposal was revised after getting the plot identification report for the revised route from concerned six circle officers and enumeration of forest trees. The process for the No Objection Certificate (NOC) for jungle-jhari land from the concerned deputy collectors was done in parallel, which took considerable time. Finally, the proposal reached the Principal Secretary (Forest) on October 24, 2008, through the proper channels, that is, the DFO to the Conservator of Forest (CF), CF to the Regional Chief Conservator of Forest (RCCF), RCCF to the Nodal Officer, the Nodal Officer to the Principal Chief Conservator of Forests (PCCF), and the PCCF to the Principal Secretary (Forest), who forwarded it to the Minister (Forest), government of Jharkhand on November 13, 2008. The proposal was approved by the ministry and returned to the Principal Secretary (Forest) on February 23, 2009, and it was forwarded to the CCF (C), Bhubaneshwar on February 28, 2009. A meeting of the State Advisory Group (SAG) at Ranchi was held on July 17, 2009. The CCF (C), Bhubaneshwar forwarded the proposal with SAG recommendations to the MoEF, New Delhi on August 3, 2009. The MoEF in turn advised the CCF (C), Bhubaneswar for submission of the wildlife mitigation plan duly vetted by the Director, Elephant Project, New Delhi by the state government. The Director, Elephant Project, approved the plan and communicated to the PCCF, Ranchi with a copy to the Principal Secretary (Forest), Jharkhand on February 1, 2010. Stage-I approval was issued on March 23, 2010, with a new condition for compliance of FRA, 2006. This was processed from the village level and completed by July 2010 from all the three districts. Then, the Principal Secretary (Forest), Jharkhand forwarded the Stage-I compliance report to the CCF (C), Bhubaneswar on July 19, 2010, and Stage-II approval was issued on August 4, 2010. Only upon receipt of the final clearance, the works on the scheme could be taken forward. 25. Under PSDP IV, the works consisted of the following components: Transmission Lines • From Ranchi to Rourkela 400 kV D/c line (290 ckm) • From Rourkela to Raigarh 400 kV D/c line (420 ckm) • From Raigarh to Raipur 400 kV D/c line (440 ckm) Substations • Extension of 400/220 kV substation at Ranchi • Extension of 400/220 kV substation at Rourkela • Extension of 400/220 kV substation at Raipur37 • Extension of 400/220 kV substation at Raigarh 26. Under PSDP IV AF, the works consisted of substations: • FSC at Raipur substation for 400 kV D/C Rajgarh-Raipur line e. Eastern Region System Strengthening Scheme I 37 Provision of 40 percent FSC along with 5–15 percent TCSC on both the circuits of the Raigarh-Raipur 400 kV D/C line at the Raipur end. 42 27. Many new generation projects were envisaged to come up under the Central and State sector in the eastern part of the Eastern region. Such generation projects included Sagardighi (600 MW), Bakreshwar Extn (420 MW) and Santaldih Extn (250 MW) of WBPDCL, Purulia PSP (900 MW) of WBSEB, DPL Extn (1,200 MW), Mejia Extn (500 MW), and Chandrapura Extn (500 MW) of DVC. Accordingly, it was necessary to strengthen the transmission grid of the Eastern region to facilitate transmission of additional surplus power, which would be available due to addition of these generation projects. In view of this, implementation of ERSS I was proposed to facilitate evacuation of surplus power from the eastern part of the Eastern Region Grid to the central areas from where it was designed to get further transmitted through the existing transmission system. Further, in order to transfer additional power in a reliable manner from the planned generation projects in Sikkim, Bhutan, and the North-Eastern Region (through the chicken neck area), strengthening of the Siliguri-Purnea corridor has also been carried out. 28. The scheme was originally scheduled for completion in October 2009 but could progressively be completed from August 2011 to March 2014. The delay in commissioning is due to delays in obtaining forest clearances and severe RoW issues being faced on the various transmission lines under the funding. Re-conductoring of the Purnea-Siliguri 400 kV D/C line was affected due to delays in conductor supply and the devastating earthquake and tsunami in Japan and could be completed by March 2014. After commissioning, the scheme has been successfully transmitting power across the regions. Further, strengthening of the Siliguri-Purnea line has resulted in transferring additional power from the planned generation projects in Sikkim, Bhutan, and North-Eastern Region through the chicken neck area with reliability. It was already evacuating hydel power from Tala and Teesta projects. 29. Under PSDP IV, the works consisted of the following components: Transmission Lines • From Durgapur to Jamshedpur 400 kV D/c line (314 ckm) • From Jamshedpur to Baripada 400 kV D/c line (282 ckm) • From Baripada to Chandaka (Mendhasal) 400 kV D/c line (544 ckm) Substations • Extension of 400/220 kV substation at Jamshedpur • Extension of 400/220 kV substation at Durgapur • Extension of 400/220/132 kV substation at Baripada • Extension of 400/220 kV substation at Mendhasal (Chandaka) (GRIDCO) • Renovation of 400/220 kV substation at Siliguri38 • Renovation of 400/220 kV substation at Purnea39 30. Under PSDP IV AF, the works consisted of: Transmission Lines • Re-conductoring of the Siliguri-Purnea 400 kV D/c line with twin INVAR moose conductor (346 ckm) 38 Re-conductoring of 400 kV bays, including dismantling and replacement of equipment and associated works. Dismantled equipment of the Siliguri and Purnea substations shall be used at the Jamshedpur and Durgapur substations. 39 Re-conductoring of 400 kV bays, including dismantling and replacement of equipment and associated works. Dismantled equipment of the Siliguri and Purnea substations shall be used at the Jamshedpur and Durgapur substations. 43 f. Southern Region System Strengthening – XIII (New Scheme Added Through Restructuring) 31. In the Southern region, a number of generation projects under the Central Sector such as Neyveli TS-II Expansion (500 MW), Kalpakkam PFBR (500 MW), and Krishnapatnam UMPP (4,000 MW) are envisaged for commissioning during the 12th Plan period. All the regional constituents will have shares from these new generating projects, which will result in enhancement of shares of beneficiaries, including Karnataka. The power from some of these generating stations is available at Raichur/Gooty through various transmission lines and the power is required to be supplied to the major load centers in the state of Karnataka like Bangalore. 32. Presently, the load of the Bangalore area is being supplied through three 400/220 kV substations, namely, Hoody, Somanhalli, and Neelamangla. These substations are fully utilized and do not have adequate capacity to accommodate additional transmission line strengthening or transformer augmentations. To enable delivery of enhanced share of power as well as to meet growing load demand, augmentation of the transmission system, including establishment of a new 400/220 kV substation shall be required. Madhugiri, near Bangalore in Karnataka State, is one such location that is identified for establishing a new 400/220 kV substation, which is to be connected to Gooty and Yelahanka to feed the growing power demand in and around the Bangalore area, as a regional strengthening scheme. 33. However, implementation of the transmission lines covered under SRSS 13 has been affected due to severe RoW issues faced since February 2013 in the state of Karnataka. Since the start of the detailed survey/field work, there was severe resistance and protests by the landowners and villagers on the Gooty-Madhugiri transmission line route. 34. Foundation work on the Madhugiri-Yelahanka transmission line commenced in August 2012 and progressed smoothly in the beginning. Tower erection work also commenced in February 2013 although works at many locations were frequently obstructed by landowners under the influence of the Karnataka Rajya Raitha Sangha (Karnataka State Farmers Forum [KRRS]). The protests from the landowners were consolidated once the KRRS started the campaign among the landowners by distributing pamphlets and organizing meetings in every village along the line route, and foundation work came to a standstill by January 2014 due to the organized protests. 35. POWERGRID approached the Assistant Commissioner of Madhugiri and District Collector of Tumkur in June 2013 and a number of petitions were filed before the District Magistrate of Tumkur for resolving the RoW problems. In October 2013, a series of meetings were conducted by the revenue authorities at the district, division, and taluk levels between the farmers and landowners, represented by the KRRS, and POWERGRID to address their grievances and resolve the issue. However, no consensus was arrived at in these meetings. Subsequent to this, location-specific hearings were also conducted with specific landowners for select locations and orders were passed on January 7, 2014, by the District Magistrate for one location with a directive to POWERGRID to make an ex gratia payment of INR 50,000 to the landowners. However, the landowners collectively stopped the work at the above location, demanding higher compensation. POWERGRID again approached the district administration to resolve the issue and a senior level meeting was held at the District Collector’s office on February 22, 2014, between officials of POWERGRID and the Revenue and Police departments. Subsequently, the District Magistrate, Tumkur passed an order on February 28, 2014, directing POWERGRID to pay the landowners an ex gratia amount ranging from INR 0.15 million to 0.3 million (according to the type of tower) per tower location in addition to tree and crop compensation. Landowners were generally satisfied with the compensation package, including 44 the ex gratia amount, and therefore work at some locations in the Katenahalli and Kora-Hobli villages started in March 2014 with the consent of the respective landowners, after notices were served. However, the work was again stopped after severe protest by a certain group of people. POWERGRID tried to start work at another location with consent from the landowner in Honnenahalli village in the first week of April 2014. However, a similar group of people gathered and work was stopped at this location also. The group even prevented the landowner from accepting the compensation check for cutting of trees. These incidents were reported to the District Collector, Tumkur, who in turn called the state leader of the KRRS for a meeting on April 26, 2014. However, the meeting could not take place as the state leader failed to come for the meeting and the stalemate continued. The matter regarding compensation was decided in the meetings held on June 3 and June 26, 2014, and the Deputy Commissioner, Tumkur issued an order dated July 8, 2014, in respect of compensation, which includes special compensation for tower locations and compensation toward temporary damages for the Tumkur portion of the 400 kV D/C Gooty-Madhugiri-Yelahanka line. On July 18, 2014, Taluk Committee(s) were constituted for conducting of Panchnama of the tower footing, landowner identification, and enumeration of trees and crops in the tower footing area. Committees were constituted in the taluks of Pavagada, Madhugiri, Koratagere, and Tumkur rural. On August 8, 2014, orders were passed by the DC, Bangalore Rural toward enhanced compensation in the Bangalore Rural portion of the 400 kV D/C Madhugiri-Yelahanka line. However, orders from the District Collector, Bangalore Urban was yet to be issued. Further, on August 10, 2014, the District Collector, Tumkur reviewed the progress of the Gooty-Madhugiri and Madhugiri-Yelahanka lines. A meeting was conducted with the DCs and POWERGRID by the Honorable Secretary, MoP, GoI at New Delhi on August 26, 2014. During November to December 2014, Panchnamas were carried out in the Pavagada Taluk area. The Taluk Committee visited the locations, both in Tumkur and Bangalore Rural, and after completion of assessment it will give their recommendations to POWERGRID for compensation payment. POWERGRID is making all efforts, with the support of state government authorities, to resolve the RoW constraints. 36. POWERGRID has assured that completion of the project is top priority. As soon as resolution is achieved, mobilization through contractors for commencing the work will be undertaken. Implementation of this scheme will be monitored under PSDP V, which is an ongoing lending investment with POWERGRID. 37. Under PSDP IV, the works consisted of the following components: Transmission Lines • From Gooty to Madhugiri 400 kV D/C line (417 ckm) • From Madhugiri to Yelahanka 400 kV D/C (Quad) line (132 ckm) Substations • New 400/220 kV substation at Madhugiri • Extension of 400/220 kV substation at Gooty Note: Extension of bays at the Yelahanka substation is being funded through domestic sources. g. System Strengthening in Western Region for Sasan UMPP (Scheme Shifted from PSDP V Through Restructuring) 38. In the WR, a number of generation projects including the Sasan and Mundra UMPPs (4,000 MW capacity each) in Madhya Pradesh and Gujarat, respectively, were being set up. Power from these projects is to be transferred to various beneficiaries in the Western and Northern regions. For evacuation of power from these projects, separate transmission systems 45 are/were implemented (not funded by the Bank). For dispersal of power to major load centers in the WR with reliability and security, strengthening of the regional transmission system in the WR were to be implemented to match with the time frame of these UMPPs. 39. For transfer of power from the Sasan UMPP, the transmission corridor from Sasan to Bina via Satna has been implemented. However, system strengthening was also required beyond Bina in Madhya Pradesh for transfer of power to the load centers of the WR for which a separate high-capacity 765 kV transmission corridor from Bina to Indore and a major load center in Madhya Pradesh along with establishment of a new 765/400 kV substation at Indore, was taken up. Establishment of 765/400 kV substations at Bina and Gwalior were also taken up as part of this scheme to facilitate charging of 765 kV lines interconnecting the Bina and Gwalior substations. The transmission system has been completed and the new 765/400 kV substation at Indore and upgrade of the Bina and Gwalior substations have been carried out under PSDP IV AF. 40. The scheme was originally scheduled for completion in December 2012 (as per PAD of PSDP V) but it could only be commissioned progressively from March 2013 to October 2014 due to multiple reasons such as nonperforming contractor at the Indore substation, leading to termination and re-award of the site levelling works contract and repairs and maintenance facility for the 765 kV transformers and reactors and its suitable incorporation in qualification requirement and in contract. With successful commissioning of the transmission scheme, a total transformation capacity of 8,000 MVA has been added to cater to the load demand of major load centers in Madhya Pradesh. 41. Under PSDP IV AF, the works consisted of the following substations: • A new 765/400 kV substation at Indore and extension of the 400/220 kV substation at Indore (MPPTCL) • Establishment of a 765 kV and extension of the 400/220 kV substation at Gwalior • 7x333 MVA, 765/√3 / 400/√3 kV Single Phase Transformers at Bina substation • 7x500 MVA, 765/√3 / 400/√3 kV Single Phase Transformers at Gwalior substation and 7x500 MVA, 765/√3 / 400/√3 kV Single Phase Transformers at Indore substation • 765 kV Bus Reactor and Shunt Reactors at the Gwalior, Bina, and Indore substations Overview of the Operations of the Bank-funded Transmission Lines 42. Table 2.4 provides details in respect of capacity, actual maximum power flow that took place over the link and availability of transmission lines over a specified period, covered under the Bank funding. As noted, availability of all the Bank-funded lines has been above 99.5 percent. However, this does not imply that the lines have to be loaded to the full capacity due to reasons mentioned in the following paragraphs. 43. It is to be noted that planning of transmission systems is done based on envisaged generation and peak load demand and system requirements to transfer the same is based on CEA’s planning criteria (guided by factor of reliability/contingency margin) after considering the margins available in the existing network, if any, to evolve an optimal system. 44. After commissioning of a transmission system, sometimes the load on the lines is less during the initial phase due to delay in envisaged generation and/or the capacity of the state’s transmission network to absorb power. However, the load increases with increase in power transfer requirements and materialization of envisaged generation projects. It is also imperative to 46 mention here that according to technical norms, it is essential to maintain redundancy in the system so that in case of grid indiscipline, grid security is not compromised. 45. Further, the transfer capability in any system is determined by the capacity of the weakest link in the system during system contingencies, voltage profile, status of parallel transmission network, and availability of envisaged generation. The gap between total transfer capacity and loading of the system narrows down with sufficiency of planned generation and load demand and is guided only by the factor of reliability/contingency margin as prescribed in the CEA’s planning criteria. Table 2.4: Maximum Power Flow and Availability of the Bank-funded Transmission Lines Maximum Capacity Project Transmission Line Power Flow % Availability (MW) (MW) ±500 kV, 2,500 Balia-Bhiwadi 500 kV MW Balia and HVDC bipole line 2,500 2,500 99.53 FY2013/14 Bhiwadi HVDC Bipole System NWTC 765 kV S/C Agra-Gwalior Average - Strengthening (Ckt-II) 2,100 983 99.99 Jan–Nov Scheme 2014 400 kV D/C Zerda- 1,200 466 99.99 FY2013/14 Kankroli 400 kV D/C Ranchi- Rourkela Line 1,200 438 99.99 FY2013/14 400 kV D/C Rourkela- Raigarh Line (Line-I) 261 98.52 – 1,200 EWTC 400 kV D/C Rourkela- Strengthening Raigarh Line (Line-II) 610 89.52 – Scheme 400 kV D/C Raigarh- Average - Raipur Line (Line-I) 532 99.90 Apr–Aug 2014 1,200 400 kV D/C Raigarh- Average - Raipur Line (Line-II) 363 99.98 Apr–Aug 2014 Bina (POWERGRID) – Gwalior (POWERGRID) Average - 765 kV 2nd S/C line 2,100 874 99.32 Jan–Nov 2014 400 kV D/C Korba-Balco Average - Line 1,200 430 100.00 Apr–Aug WRSS II 2014 400 kV D/C Balco- Average - Birsinghpur Line 1,200 390 100.00 Apr–Aug 2014 400 kV D/C Birsinghpur - Average - Damoh Line (Line-I) 1,200 525 99.77 Jan–Nov 2014 47 Maximum Capacity Project Transmission Line Power Flow % Availability (MW) (MW) 400 kV D/C Birsinghpur - Average - Damoh Line (Line-II) 524 99.80 Jan–Nov 2014 400 kV D/C Damoh- Average - Bhopal Line (Line-I) 405 100.00 Jan–Nov 2014 1,200 400 kV D/C Damoh- Average - Bhopal Line (Line-II) 432 100.00 Jan–Nov 2014 400 kV D/C Wardha-Parli Average - Quad Line (Line-I) 883 99.86 Apr–Aug 2014 1,600 400 kV D/C Wardha-Parli Average - Quad Line (Line-II) – 99.85 Apr–Aug 2014 400 kV D/C Bhadrawati- Average - Parli Line (Line-I) 557 99.87 Apr–Aug 2014 1,200 400 kV D/C Bhadrawati- Average - Parli Line (Line-II) 530 99.98 Apr–Aug 2014 400 kV D/C Parli Average - (MSETCL)-Parli 720 99.94 Apr–Aug (POWERGRID) line 2014 (Line-I) 1,200 400 kV D/C Parli Average - (MSETCL)-Parli – 99.96 Apr–Aug (POWERGRID) line 2014 (Line-II) 400 kV D/C Raipur- Average - Wardha Line (Line-I) 919 99.77 Apr–Aug 2014 1,200 400 kV D/C Raipur- Average - Wardha Line (Line-II) – 99.91 Apr–Aug 2014 400 kV D/C Durgapur- Jamshedpur Line 1,200 308 99.50 – 400 kV D/C Jamshedpur- ERSS I Baripada Line 1,200 514 99.99 FY2013/14 400 kV D/C Baripada- Mendhasal Line 1,200 223 99.98 – OUTCOME Growth in Power Exchanges between the Regions 46. The completion of interregional lines, namely, the 400 kV Rourkela-Raigarh-Raipur D/C line, funded under PSDP IV, has contributed to an addition of about 1,400 MW to the interregional power transmission capacity of the National Grid. Together with works on 48 associated bays (funded under PSDP IV) under NWTC strengthening, completion of the interregional lines, namely, the Agra-Gwalior 765 kV S/C line and the Zerda-Kankroli 400 kV D/C (lines funded under PSDP III), has resulted in an increase of interregional power transfer capacity by about 2,100 MW. Completion of these schemes has contributed to an increase in interregional power transfer capacity of the grid to 44,250 MW (as on September 30, 2014), significantly up from 14,000 GW in FY2007. Further, the rest of the schemes have also contributed significantly toward improved grid stability and security. 47. During FY2014, POWERGRID’s strong transmission network and modernized RLDCs have facilitated about 78,384 MU of power exchange across regions. Power exchange between the regions has increased by about 40,634 MU, which is more than double in comparison to the baseline of 37,750 MU (FY2007). 48. Figure x shows the performance since the start of PSDP III (with baseline as FY2005). It also reflects the baseline for PSDP IV and PSDP IV AF, that is, FY2007. The indicator outperformed targets for all the years, as set in the PAD. During project appraisal, it was envisaged that growth in power exchange between the regions will increase from 37,752 MU by about 54 percent to reach 58,000 MU but the actual addition was about 108 percent and touched 78,384 MU. The targets for this indicator were never revised except for FY2014 for which it was revised upward (PAD target: 58,000 MU; revised target: 68,000 MU) during the midterm review of PSDP V, which was also the implementation support mission for PSDP IV and PSDP IV AF. OUTPUT 49. The implementation of any transmission scheme has a direct impact on the addition to the transmission capacity measured in ckm and in the transformation capacity measured in MVA of the transmission utility. Once the lines are commissioned, they contribute to the company’s transmission and transformation capacity. The same holds true for POWERGRID, the CTU in the Indian power sector. Thus, these two measures were adopted as result indicators for the project. This also ensured consistency across the various repeater projects with POWERGRID (PSDP III, PSDP IV, and PSDP IV AF) as PDO and KPIs were kept the same. 50. Growth in transformation capacity (MVA). This indicator also outperformed all targets set in the PAD. The chart below shows the performance since start of PSDP III (with baseline as FY2005) and of PSDP IV and PSDP IV AF (with baseline of FY2007). The indicator outperformed by almost 2.5 times the targets as set in the PAD for the project end year. During project appraisal, it was envisaged that growth in transformation capacity will increase from 59,417 MVA by about 55 percent to reach 92,000 MVA, but the actual addition was about 247 percent and touched 205,923 MVA. The targets for this indicator were never revised except for FY2014 for which it was revised upward (PAD target: 92,000 MVA; revised target: 185,000 MVA) during the midterm review of PSDP V, which was also the implementation support mission for PSDP IV and PSDP IV AF. 49 Figure 2.1. Transformation Capacity Source: POWERGRID 51. Growth in transmission capacity (ckm). Figure 2.2 shows the performance since start of PSDP III (with baseline as FY2005) and of PSDP IV and PSDP IV AF (with baseline of FY2007). This indicator also outperformed all targets set in the PAD except for FY2010 and FY2011 due to factors that impacted progress and were outside POWERGRID’s control. Figure 2.2. Growth in Power Exchange Source: POWERGRID 52. In FY2010, the actual was lower than the target by almost 6 percent (PAD target: 80,000 ckm; actual: 75,291 ckm). Consequently, KPI targets for transmission capacity were revised downward (compared to PAD targets) for FY2011 and FY2012 by 4.7 percent (from 84,000 ckm to 80,000 ckm) and by 3.4 percent (from 88,000 ckm to 85,000 ckm), respectively during MTR in April 2010 as the main reason for such underperformance was external factors: RoW issues and delays in obtaining forest clearances, especially after the GoI’s notification regarding FRA in August 2009 under which the project implementing authority (here, POWERGRID) had to take a no objection certificate from every gram sabha (at the village level) for all proposals involving diversion of forest land under the Forest (Conservation) Act. POWERGRID was able to 50 successfully achieve the revised targets for both the years. This FRA requirement was later waived off for linear projects40 (including transmission projects) in February 2013. Figure 2.3. Transmission Capacity (ckm) Source: POWERGRID 53. However, it is noted that all the indicators already outperformed their original (as per the PAD) targets in FY2013 after which the end-project targets (FY2014) were revised upward during the implementation support mission in September 2013, which was also the midterm review mission for PSDP V. POWERGRID outperformed all the revised targets except for a marginal gap of 0.18 percent in transmission capacity for FY2014 (PAD target: 95,000 ckm; revised target: 107,000 ckm; actual: 106,804 ckm). Overall, the indicator was expected to attain a growth of about 60 percent over the project period (PSDP IV and PSDP IV AF) but added almost 80 percent of the targets set in PAD for the project end year. 54. The following table contains the details about the figures against various indicators agreed during appraisal. Table 2.5: Data on KPI Outcome Baseline FY08 FY09 FY10 FY11 FY12 FY13 FY14 Indicator Values FY07 Growth in power Actual 42,932 46,027 52,000 56,747 58,999 65,860 78,384 exchange 37,750 across regions Target 42,000 46,000 50,000 52,000 54,000 56,000 68,000** and state (MU) Growth in Actual 66,809 71,440 75,291 82,355 92,950 100,200 106,804 transmission 59,400 capacity (ckm) Target 65,000 71,000 80,000 80,000* 85,000* 90,000* 107,000** Transformation Actual 59,400 73,122 79,522 83,402 93,050 124,525 164,763 205,923 capacity (MVA) 40 Transmission lines usually need narrow, long strips of land and hence, these are considered linear projects. Roads, canals, and optical fiber lines are other examples of linear projects. 51 Target 68,000 75,000 82,000 85,000 88,000 90,000 185,000** Note: FY07 means April 2006–March 2007. * Revised during the MTR mission in April 2010 in view of the FRA notification in August 2009 under which no- objection was to be taken from every gram sabha (at the village level) for all the proposals involving diversion of forest land under the Forest (Conservation) Act, which resulted in delay in obtaining forest clearance. ** As all the indicators have outperformed their original targets (as per the PAD), the targets were revised upward for FY2014 after restructuring of the loans through amendments dated May 23, 2014, to Loan Agreements. Grid Disturbance of July 2012 55. In July 2012, a nationwide grid failure occurred in India. The Northern Grid failed on July 30, 2012, whereas the Northern, Eastern and Northern-Eastern grids failed on July 31, 2012. The grid failures resulted in multiple outages for many hours and affected the load of about 48,000 MW.41 This prompted an enquiry committee constituted by the MoP, GoI to take several measures to stabilize the system and thereby ensure grid discipline. In the report on grid disturbance in August 2012, Enquiry Committee constituted by MoP concluded that the grid failure was linked to a series of events like multiple forced outages leading to weak interregional corridors, transmission line overloading due to overdrawing by some of the Northern Region constituents, inadequate response by the SLDCs to the instructions of the RLDCs, and loss of the 400 kV Bina-Gwalior link. The report brought out the following underlying causes of the aforesaid grid disturbances: a. Skewed load generation balance across the regional grids b. Grid indiscipline c. Depleted reliability margins d. Failure or inadequate response of defense mechanism/protection system e. Insufficient visibility and situational awareness at load despatch centers f. Inadequate appreciation of transfer capability compared to transmission capacity g. Institutional issues 56. One of the major reasons for the grid failure was the weak interregional corridor between WR and NR due to multiple outages including the 400 kV Bina-Gwalior-Agra line, which was the only main AC circuit available between the two regions before grid disturbance. Even though outage of the 400 kV Bina-Gwalior-Agra line was planned in advance, the works on the line could not be completed within the stipulated time frame due to heavy rains. The 400 kV Bina- Gwalior-Agra line was to be upgraded from 400 kV to 765 kV and included some construction activities. Meanwhile, the first circuit of the Bina-Gwalior line tripped on July 29, 2012, and available manpower and material from the other circuit (under planned outage) was diverted urgently to this circuit to restore the line at the earliest. Since the resources (manpower and material) were diverted to restore the other circuit, the works on the planned outage circuit could not be finished in time. Under outage of the Bina-Gwalior line, low voltage at Gwalior is a limiting constraint. Hence, availability of this line is a critical factor for determining transfer capability for the WR-NR corridor. 57. These were the steps taken by POWERGRID for grid restoration during the July 2012 disturbances: 41 Report of the Enquiry Committee on Grid Disturbance, CEA, August 2012. 52 a. The first system disturbance took place at 0233 hours on July 30, 2012, which resulted in power supply failure in the Northern Region and a small pocket of Madhya Pradesh in the Western Region. The rest of the system was normal. Within the Northern Region, Badarpur thermal power stations survived with a portion of Delhi’s load; however, this portion suffered a blackout at 0648 hours. Supply was provided to all emergency loads such as railways, metros, and airports by about 0800 hours. By 1000 hours, all thermal power stations were provided startup supply. The Northern Regional system was restored by 1600 hours with the normal scheduling process commencing from then. b. The second system disturbance affecting the Northern, Eastern, and North-Eastern electricity grids and a small pocket in Madhya Pradesh occurred at 1300 hours of July 31, 2012, leading to loss of power supply in these areas. Nearly 55,000 MW of consumer load was affected in the disturbance. The areas which survived included the Western Region, Narora atomic power station on house load, and system comprising Sterlite/IB TPS, Bokaro Steel, TISCO, and CESC Kolkata systems in the Eastern Region (ER). Immediate steps were initiated for restoration of the areas affected in the incident. Start-up supply was extended from the Western Region and the Southern Region, which were intact. Hydro units in the Northern Region, Eastern Region, and North-Eastern Region were self-started. Supply was extended to emergency loads such as railways, metros, mines, and airports by about 1530 hours. The system was restored by 2400 hours on July 31, 2012, when the normal scheduling process commenced. 58. Some of the key actions as proposed by the enquiry committee were: a. third-party protection audits; b. formulation of islanding schemes in different states; c. review of the UI mechanism; and d. further tightening of frequency band.42 59. Table 2.6 provides details about the key recommendations to the CTU and POSOCO and the implementation status as on October 10, 2014:43 Table 2.6: Status of Recommendations of Enquiry Committee as on October 10, 2014 Sl. Recommendations Implementing Status No. Agencies 1. There is a need to review protection RPCs, CTU, Activity in Progress schemes. This committee concurs with STUs Third-party protection audit in all the the recommendation of previous states of the country was completed by enquiry committees that a thorough April 2013. Corrective action 42 “…the frequency band of the Northern Grid has been tightened to 49.7 Hz7Hz to 50.5 Hz5Hz. This will make dependence on the Grid for meeting peak load an expensive proposition. Central Electricity Regulatory Commission (CERC) has done this mainly to increase grid security and encourage distribution companies (discoms) to look at other options for arranging power supply. There have been several instances of grid indiscipline in the past with states continuing to overdraw despite low frequency. With the new regulations in force, city discoms are exploring all options to ensure they are able to meet the peak summer demand. Power sector officials said the only way discoms can provide smooth power supply is by contracting assured agreements in the organized market.””. (Source: The Times of India, 2012, 04-03). 43 Status of action taken on implementation of recommendations of the Grid Disturbance Enquiry Committee, CEA, October 2014. 53 Sl. Recommendations Implementing Status No. Agencies third-party protection audit needs to be according to the observations of the carried out in a time-bound manner. audit has been initiated and is likely to This exercise should be repeated be completed by March 2015. periodically and monitored by the Regional Power Committees (RPC). 2. The application of synchrophasor RPCs, CTU Partly Completed measurements from Phasor As per international practice, the use Measurement Units (PMU) should be of PMUs for protection system is still explored for protection systems. There being tested. However, the status of is also an urgent need to deploy Special deployment of PMU and SPS in the Protection System (SPS) in critical various regions is given below. transmission elements. Also, there is a PMU need to make already approved SPS  Functional: NR - 14; SR -13; WR operational. - 10; and NER - 8  Under implementation: ER - 12; WR - 7 SPS  Implemented: NR - 9; SR - 4; ER - 3; and WR - 8  Under implementation: NER - 1 3. Frequency band needs to be further POSOCO Completed tightened and brought close to 50 Hz. Frequency band has been further POSOCO may file an urgency tightened to 49.90 to 50.05 Hz with application in the Supreme Court for effect from 02/17/2014 by CERC. early resolution of the issue in view of the recent grid disturbances. NLDC has separately filed a petition for further tightening of frequency from 49.9 to 50.1 Hz. 4. A review of the UI mechanism should POSOCO Completed be carried out in view of its impact on Subsequent to review of the UI recent grid disturbances. mechanism, CERC (Deviation Settlement Mechanism and related matters) regulations have been implemented with effect from Frequency control through UI may be 02/17/2014. phased out in a time-bound manner and generation reserves/ancillary services Activity in Progress may be used for frequency control. Regarding the generation Appropriate regulatory mechanism reserves/ancillary services, the petition needs to be put in place for this for introducing these services in the purpose. POSOCO should take up the country was filed by NLDC with matter with CERC. CERC on 11/29/2010. CERC circulated the staff paper on the matter in April 2013 to invite comments from stakeholders up to May 15, 2013. The matter is under the consideration of CERC. 5. POSOCO should take up with CERC POSOCO Completed the issue of inconsistency between CERC, vide order dated April 22, congestion regulation and the detailed 2013, approved the revised procedure procedure framed thereunder so that submitted by POSOCO for relieving congestion due to forced outages and the congestion in real time. This has 54 Sl. Recommendations Implementing Status No. Agencies UI can be handled effectively. been implemented by NLDC/RLDCs. 6. NLDC and each RLDC should have POSOCO Completed one real-time security desk in all the Real-time security desk has been shifts to be manned by an engineer installed in NLDC. In case of planned capable of carrying out total transfer outages, simulation studies are being capability (TTC) calculations. To conducted by RLDCs/NLDC for facilitate this, manpower at NLDC and revision of TTC and results are being RLDCs needs to be enhanced, with shared by operators. Updated PSS/E regulatory support to take care of version 33.2 is installed in control financial aspects. Till this arrangement rooms for carrying out simulation can be firmed up, various scenarios of studies. outages could be built, which then can be used by the despatcher in real time. Faster algorithm for calculation of TTC may be adopted by the load. 7. Installation of adequate static and CEA, CTU, Ongoing Continuous Activity dynamic reactive power compensators STUs Installation of fixed reactors as should be planned to avoid frequent planned by CEA and CTU and outages/opening of lines under over- approved by the Standing Committee voltages and provide voltage support on Transmission Planning of the under steady-state and dynamic concerned Region and in the RPCs is conditions. already being done. Further study on dynamic reactive compensation is in progress by CTU and POSOCO in consultation with CEA. 8. The regulatory provisions regarding POSOCO Ongoing Continuous Activity absorption of reactive power by As per system requirement the generating units needs to be generators are being advised to absorb implemented. reactive power to control voltage. All RLDCs have issued communication to the Generators in this regard. The matter is also being discussed regularly in the Operation Co- ordination Sub-committee meetings of RPCs. 9. Functioning of existing PMUs and CTU, Completed availability of their output to RLDCs POSOCO POWERGRID has time synchronized and accuracy of time synchronization all the existing PMUs that have been should be monitored on daily basis and, installed under pilot project in if required, corrective actions should be identified substations in the country taken on priority basis. and made them fully functional. The real time output displays of the PMUs are now being accordingly made available to the respective system operators in the concerned RLDC. The PMU data from various locations is also available at the NLDC Control Room. 10. The synchrophasor based Wide Area CTU Activity in Progress Measurement Technology (WAMS) Unified Real Time Dynamic State employing PMUs offer wide Measurement (URTDSM) system applications for real time monitoring with large scale deployment of PMUs and control of the system, especially has been approved by CERC vide its under the dynamic conditions. Order dated 06-09-2013. 55 Sl. Recommendations Implementing Status No. Agencies Adequate number of PMUs should be POWERGRID has been directed to installed to improve the visibility and implement the scheme in consultation real time monitoring of the system. with CEA and POSOCO. Broadly the scope under the scheme involves Further the applications related to the installation of PMUs at 400 kV and synchrophasor based wide area above substations, HVDC substations monitoring, protection and control and 220 kV and above Power Plants. should be embedded in the system. The said scheme is to be implemented in two phases. ERPC has agreed to implement URTDSM. 11. Efforts should be made to design CEA, RPCs, Partly Completed/Activity in islanding scheme based on frequency POWERGRID Progress sensing relays so that in case of , imminent grid failure, electrical islands STUs, SLDCs can be formed. These electrical islands and can not only help in maintaining supply Generators to essential services but would also help in faster restoration of the grid. 12. The communication network should be CTU and Activity in Progress strengthened by putting in place a fiber STUs The fiber optic link for effective optic communication system. Further, communication is being worked out the communication network should be by POWERGRID with STUs through maintained properly to ensure different RPCs and its implementation reliability of data at Load Despatch is being done in a progressive manner. Centers. The work of laying fiber optic cables in all the regions is being awarded progressively from December 2012 and is likely to be completed by 2014. 13. RTUs and communication equipment CTU and Partly Completed/Activity in should have uninterrupted power STUs Progress supply with proper battery backup so Batteries at all locations have been that in case of total power failure, replaced except 6 locations in NR supervisory control and data acquisition where it is to be done by Delhi channels do not fail. Transmission Company Limited, which will also be replaced by 2014. 14. For existing generating stations or RPCs, Activity in Progress transmission elements without POSOCO The status of availability of Telemetry telemetry facility, the same should be from various stations is being put in place at the earliest. If prolonged monitored closely by the operation without telemetry continues, RLDCs/NLDC. In case of non- POSOCO should approach CERC. availability of data from any location, the matter is being taken up with the concerned agency. 15. There is a need to reinforce system CEA, CTU, Completed study groups in power sector and STU The CTU has procured system study organizations to analyze the system software for distributing to various behavior under different network utilities. Training on system studies statuses/tripping of lines/outage of has been completed in all regions by generators. Where these system study the CTU. groups do not exist, they should be created. 16. For smooth operation of grid systems, CTU, STUs Activity in Progress 56 Sl. Recommendations Implementing Status No. Agencies it is absolutely important that all the The CTU already has a dedicated power generating and distributing independent communication network stations are connected on a very in place. Further, it is in the process of reliable telecom network. developing a Grid Security Expert (i) A proper network may be built up System (GSES), which involves preferably using Multi Protocol Label laying of optical fiber network for Switching (MPLS), which is simple, reliable communication as well as cost effective, and reliable. In remote control of under-frequency and df/dt places where connectivity is a problem, relay based load shedding. System the stations can use dedicated fiber will include substations of 132 kV cables from the nearest node. level and above. (ii) Since POWERGRID has its own fiber optic cables covering all major nodes and power stations, a proper communication/IT network may be built using dedicated cables to avoid any cyber-attack on the power system. 60. It is to be noted that grid disturbances, mainly triggered by faults at critical system locations, occur from time to time in all large transmission systems across the world. Since no system design is capable of removing all constraints (to attempt this would in any event be prohibitively costly), in power system operation, a specific emphasis needs to be put on robust planning, efficiency, and speed of service restoration, all of which POWERGRID is practicing in a collaborative manner with key stakeholders. Using POWERGRID’s robust transmission system, POSOCO was able to wheel hydropower from Bhutan to restore supply to emergency loads such as hospitals, railways, and other critical functions within 5.5 hours on July 30 and within 2.5 hours on July 31. It was able to restore the entire system within 13.5 hours on July 30, 2012, and 8.5 hours on July 31, 2012. These restoration times compare extremely favorably with restoration times in major power system disruptions in other countries. In addition, POSOCO, in consultation with the CEA, made several adjustments to operational power flow limits on interregional power transmission links and is in the process of buying specific monitoring and protection equipment to avert the reoccurrence of any such incident as explained in detail in the above table. Performance Indicator Pertaining to Environment 61. In addition to the above KPIs, ‘cumulative forest area impacted/cumulative line length in ckm’ was selected as a performance indicator with reference to environment. Subsequently, during the ICR Mission of PSDP III in October 2011, it was decided to use ‘cumulative transmission capacity (MW) per meter width of right of way within the forest area’ as a performance indicator on environment (for consistency with the performance indicator being followed under the ongoing PSDP V loan). Accordingly, the indicator has been calculated for the PSDP IV and PSDP IV AF loans considering 2004–05 as the base year (as mentioned in the PAD of PSDP III). Table 2.7: Performance Indicator on Environment Sl. No. Year KPI (MW/m/No. of TL) in Forest Area 1 2004–05 (Base) 17.39 57 Sl. No. Year KPI (MW/m/No. of TL) in Forest Area 2 2005–06 17.64 3 2006–07 19.62 4 2007–08 19.92 5 2008–09 19.78* 6 2009–10 20.05 7 2010–11 20.16 8 2011–12 20.51 9 2012–13 21.01 10 2013–14 22.15 Note: * There is a dip during 2008–09 as more low-capacity lines (220 kV and 400 kV) were implemented, which has dragged the bar down. 62. In addition to the KPIs as elaborated above, POWERGRID was monitored on indicators additional to these KPIs and covenanted targets. These additional indicators were also agreed upon with the Bank to objectively measure improvements in power sector performance as well as POWERGRID's corporate performance. Given the satisfactory performance of POWERGRID in achieving and reporting such indicators, it was decided that these would be discontinued during the MTR of PSDP IV and its AF. Later, during the MTR of PSDP V in September 2013, the monitoring of these additional indicators was reinstated to allay concerns linked to the slower disbursement of PSDP V, reversing the decision taken at the MTR of PSDP IV and PSDP IV AF. 63. As indicated in table 2.8, the corporate level indicators depict a strong performance of POWERGRID across several metrics. The availability of POWERGRID’s transmission network has also improved from 99.2 percent in FY2007 to 99.9 percent in FY2014. Strengthened transmission network is also reflected through decrease in the number of trippings per line due to factors attributable to POWERGRID over the loan period. 64. Further, the sectoral indicators reflect that private sector participation has increased by more than 4.5 times in terms of ckm of line constructed. Power traded as a percentage of total power generated in the country has shown an upward trend from 3.6 percent in FY2007 to 11 percent in FY2014. This implies an improved utilization of existing capacities as the power trade ensures that surplus regions/states can easily transfer generated power to deficit regions/states when needed. After July 2012 grid failure, CERC has tightened the grid frequency band44 to put a check on overdrawing by various constituents and hence, ensuring grid security and encouraging distribution utilities to procure power through contracts in organized markets. Further, the southern region was also connected synchronously with rest of the National Grid in December 2013. Given these factors, the grid frequency has shown a downward trend but all measures are being adopted to bring back frequency within the prescribed band. POWERGRID along with POSOCO are now handling one of the largest transmission networks at a single frequency in the world. 65. The following table presents the additional indicators that were monitored at corporate and sectoral level: 44 IEGC Range: Till September 16, 2012: 49.5 Hz to 50.2 Hz and from September 17, 2012 onwards: 49.7 Hz to 50.2 Hz 58 Table 2.8: Selected Technical/Operational Performance Indicators Additional Indicators FY2007 FY2014 Indicators for Entity Performance Cumulative transmission capacity (ckm) 59,461 106,804 Cumulative transformation capacity (MVA) 59,417 205,923 Interregional transmission capacity (MW) 14,100 37,950 Availability of transmission system (%) 99.20 99.92 Trippings per line attributable to POWERGRID 3.64 0.56 Interregional power exchange Northern Region (MW) 18,740 42,774 Western Region (MW) 14,193 40,331 Southern Region (MW) 11,338 36,048 Eastern Region & North Eastern Region (MW) 10,577 17,646 Total power exchange between regions (BU) 38 78 O&M cost per ckm (INR/ckm) 91,653 104,025 Indicators for Sector Performance Private sector participation in central transmission sector 2,332 13,385 (Cumulative ckm of lines in private sector) Efficient utilization of generation capacity (Peak demand met as a percentage of installed capacity at 67.71% 53% national level) Transmission grid stability and grid discipline # (Percentage of time frequency is within the IEGC band) Northern Region 78.83% 86.2% (till Jan Western Region 2014) 89.3% (from Jan– Eastern Region mid-Feb 2014, after North Eastern Region SR sync) 89.52% 43.3% (in Feb 2014) 53.8% (in Mar 2014) Southern Region 87.9% (till Jan 2014) 89.3% (from Jan– Feb 2014, after SR 93.96% sync) 43.3% (in Feb 2014) 53.8% (in Mar 2014) Development of power markets including intraregional trading45 (Power traded as a percentage of total power generated in the 3.6% 11% country) Note: # Indian Electricity Grid Code (IEGC) Range: Till September 16, 2012: 49.5 Hz to 50.2 Hz and from September 17, 2012 onwards: 49.7 Hz to 50.2 Hz. Further, the SR grid was synchronized with rest of the grid on December 31, 45 Source: Report on short-term Power Market in India, 2013-14, CERC. 59 2013. Further, stipulated frequency range according to Amended IEGC is 49.9 to 50.05 Hz. with effect from 02/17/2014. Other Key Developments at Entity Level 66. Some other key developments that took place at the entity level during the implementation of the project are listed: a. POWERGRID was conferred the ‘Navratna’ status by the GoI in May 2008, implying a greater commercial and financial autonomy for the company. b. POWERGRID entered the capital market with an IPO during FY2008 with 10 percent of fresh issue of existing paid-up capital along with the divestment of 5 percent of GoI’s shareholding. In the post issue scenario, GoI’s holding stood at 86.36 percent with the balance held by the public. c. In FY2011, POWERGRID floated an FPO comprising fresh issue of 10 percent paid-up capital along with divestment of 10 percent of GoI’s shareholding. The FPO received an overwhelming response and was oversubscribed by 14.84 times, reflecting the sound corporate governance policies of the company. In the post issue scenario, GoI’s holding stands at 69.42 percent, with the balance being held by the public. d. In December 2013, POWERGRID again issued its second FPO constituting 17 percent of existing paid-up capital and was oversubscribed 6.7 times. The shares are listed on the National Stock Exchange and Bombay Stock Exchange. e. In February 2009, POWERGRID established and commissioned the NLDC as the apex structure for national grid management and operation. According to POWERGRID, this four- tier system is a complex and globally unique mode of grid operation. It minimizes grid disturbances and facilitates quick restoration in case of failure. Further, NLDC & RLDCs, now being managed by POSOCO, are upgraded and modernized continuously to establish an effective grid management infrastructure in the country. f. POSOCO was constituted as a fully owned subsidiary of POWERGRID in March 2009. This step represented the beginning of the separation of the role of the system operator from that of the CTU, as the owner of transmission assets. g. POWERGRID’s ESPP were adopted by the World Bank as a pilot under UCS (OP 4.00). This was formally adopted under PSDP V. h. POWERGRID developed a CSR policy enabling it to contribute to the society at large with emphasis on socioeconomic and integral development of areas/communities primarily in and around its areas of operations. They have carried out various community development activities such as skill development and capacity building, livelihood generation, health care, education, plantation, sanitation, drinking water, besides infrastructure developments like classrooms, roads, and community center. i. POWERGRID is the first among the Bank’s clients in India to have prepared a Sustainability Report in 2009, covering its environmental and social performance. The second such report was published in March 2013, providing all stakeholders a clear picture of POWERGRID’s contributions to sustainable development through its activities. j. During FY2013, POWERGRID also obtained its international credit ratings for the first time and were initially rated by S&P Rating Services and Fitch Ratings at ‘BBB - (outlook negative)’ consistent with India’s sovereign rating. Fitch Ratings was later upgraded to ‘BBB - (outlook stable)’ and stands true for FY2014. k. In July 2012, POWERGRID also signed loan agreements with International Finance Corporation (IFC) and Infrastructure Crisis Facility Debt Pool Limited Liability Partnership (ICF Debt Pool LLP) for a total amount of US$270 million. l. In January 2013, the company made its maiden foray into foreign currency markets and raised US$500 million through issuance of 10-year foreign currency notes at an attractive 60 coupon rate of 3.875 percent per year and was over-subscribed nearly 19 times. The bonds are listed in Singapore stock exchange. m. On December 31, 2013, POWERGRID achieved a milestone by interconnecting the Southern Grid synchronously with the rest of the National Grid through commissioning of the 765 kV Raichur (Karnataka)-Solapur (Maharashtra) S/C line. With this, ‘One Nation-One Grid-One Frequency’ has become a reality. This has facilitated not only in augmentation of transmission capacity by 2,100 MW. n. Experienced with construction of 765 kV Extra-High-Voltage AC (EHVAC) and ±500 kV HVDC transmission system, POWERGRID has been working on next higher transmission voltages of ±800 kV HVDC and 1,200 kV Ultra-High-Voltage AC (UHVAC) system to achieve efficient utilization of RoW and increased power transfer capability for transfer of bulk power over long distances. In this direction, ±800 kV, 6,000 MW HVDC lines, one from Biswanath Chariyali (Assam) to Agra (Uttar Pradesh) of about 1,750 km length and another from Champa (Chhattisgarh) to Kurukshetra (Haryana) of about 1,400 km length (latter funded under PSDP V) are under construction. Further, POWERGRID has successfully established 1,200 kV Test Station at Bina including test-charge of 1,200 kV single and D/C transmission lines as a pilot project. Construction of 1,200 kV upgradable transmission line from Wardha to Aurangabad (approximately 350 km length, to be initially charged at 400 kV level) is also underway and shall be charged after field trials. o. POWERGRID is also playing a catalyst role in formation of the SAARC grid for effective utilization of resources for mutual benefits. Transmission links with Bhutan and Nepal already exist and are being further strengthened. Interconnection between India and Bangladesh through 500 MW HVDC back-to-back terminals along with Bheramara (Bangladesh)-Baharampur (India) 400 kV D/C line was commissioned in September 2013, enabling power flow of the order of 500 MW from India to Bangladesh. p. Recognizing the importance of integrating renewable energy resources with the grid, POWERGRID took the lead and developed a comprehensive master plan for grid integration of renewable generation capacity addition of about 33 GW envisaged during the 12th Five Year Plan through Green Energy Corridors across India. The company has also evolved an integrated plan (under review) for desert power development (Desert Power India – 2050), for harnessing the huge renewable energy potential of about 300 GW, primarily solar and wind at desert/cold desert waste land in Kutch, Thar, Lahaul and Spiti, and Ladakh areas by 2050. The plan includes establishment and grid integration of renewables through hybrid transmission corridors utilizing HVDC (including voltage-source converter [VSC] based) as well as 1,200 kV UHV AC/ High temperature superconductor technologies. q. POWERGRID has developed a Smart Grid pilot project in the country through open collaboration at Puducherry. The company has been appointed as advisor-cum-consultant for implementation of the Smart Grid project by eight utilities during FY2013/14. In addition, POWERGRID has been indigenously developing smart products like smart meter, data concentrator unit, home energy management system, micro grid controller, smart cap utilizing solar energy, and active filter for varied applications. r. The company continues to excel over its competitors under TBCB. As on October 31, 2014, the company has secured 5 transmission projects, which is more than 30 percent of the projects floated under TBCB since January 2011 when the regime was changed from cost- plus basis to TBCB. s. POWERGRID diversified into the telecom business under the brand name ‘POWERTEL’ to expand its revenue stream by installing overhead optic fiber network using OPGW, leveraging its existing countrywide transmission infrastructure. The company has an all-India broadband telecom network of about 29,640 km, providing connectivity to all metros, major cities, towns, and state capitals, including remote areas of the North-Eastern Region and 61 covering about 317 Points of Presence (PoP) across the country from where services are being rendered. t. POWERGRID was one of the implementing partners of the NKN, a scheme devised by the GoI to provide a unified high-speed network backbone for educational institutions in India such as the Indian Institutes of Technology (IITs) and the Indian Institute of Science (IISc), and the scheme is operational. u. POWERGRID is also a member of the Advisory Body and Core Committee of the National Optical Fiber Network (NOFN) project, envisaged by the GoI for providing connectivity to all the 250,000 GPs in the country through utilizing existing optical fiber facilities of Bharat Sanchar Nigam Limited (BSNL), POWERGRID, and RailTel Corporation of India Limited to connect the GPs. v. During past decade, POWERGRID has spread its global footprint in more than 18 countries and is emerging as a strong player in the transmission sector in South Asia, the Middle-east, and Africa. The company has also joined hands with other leading power sector companies to offer integrated solutions for generation, transmission, and distribution to international power utilities. Table 2.9: Major Ongoing Offshore Assignments EPC Consultant: CASA 1000 Project Capacity-building program for SAARC and Central Asian and African countries Management Contract - Ethiopia Design and engineering consultancy and Project Management in Nepal, Afghanistan, and Bhutan Feasibility Studies, Engineering & O&M of transmission lines- Bhutan Project Management - Kenya Engineering, Design Services& Project Management of 2nd Block of HVDC Station- Bangladesh w. POWERGRID have featured in the Platts list of Top 250 Energy Companies of the World since 2009, a study conducted by Platts, a division of the McGraw-Hill Companies. The company was mentioned as being number 18 on the list of fastest growing Asian energy companies, according to the Platts Top 250 Energy Company Rankings for 2010. In the list of fastest growing energy companies by Platts in 2014, POWERGRID ranked as the fastest growing electric utility in the world, on the basis of last three years compounded growth rate for revenues. The company is featured in the Forbes Global 2000 list. x. The company was also awarded the ‘Scope Award for Excellence and Outstanding Contribution to the Public Sector Management (2008–09) in the Large Scale Public sector Enterprise (PSE) Category’ by the Standing Conference of Public Enterprises and the Department of Public Enterprises (DPE) and the ‘Environmental Excellence & Sustainable Development Award-2011’ by the Indian Chamber of Commerce. y. As per Public Enterprises (PE) Survey 2013 (by Department of Public Enterprises (DPE), GoI), POWERGRID is the fifth largest Central Public Sector Enterprises (CPSE) in terms of Gross Block 62 Annex 3. Economic and Financial Analysis 1. As in the appraisal methodology (see PAD annex 9), investment schemes for PSDP IV are also considered as stand-alone projects with their own technical parameters, financing, and implementation arrangements. The ex post economic and financial justification consisted of the determination the ERR and RoE. Since PSDP IV AF funded part of the schemes already funded under PSDP IV, no separate analysis was run at its appraisal. For schemes included through restructuring, especially SRSS 13, such analysis was carried out during review and approval of the PIP. For the scheme shifted from PSDP V (System Strengthening in Western Region for Sasan UMPP), the analysis was run at its appraisal. 2. ERR and RoE for the investment schemes at completion. These were calculated using actual costs and revenues based on applicable tariffs. The sections below provide details on all the schemes (original and additional schemes) funded under PSDP IV and PSDP IV AF but it is important to take note of the following: a. There was a change in the regulatory regime since appraisal of the project. The CERC has announced new tariff regulations applicable from 2014 to 2019. b. Since the SRSS 13 scheme is still under implementation, its ERR and RoE at completion could not be calculated and hence are not included below. c. The actual project cost for the economic and financial analysis covers the funds spent under PSDP III, PSDP IV, and PSDP IV AF for the schemes which were partly funded under more than one project. Economic Analysis 3. As mentioned above, during appraisal, the economic analysis of only five core schemes (Balia-Bhiwadi, EWTC, WRSS II, ERSS I, and NWTC) was carried out. The economic analysis below also presents the analysis for one additional scheme (System Strengthening in Western Region for Sasan UMPP). 4. The same methodology as used during the appraisal was adopted to carry out the economic analysis at completion as well. During the project implementation period, the tariff norms as issued by the CERC were revised in 2014 effective over a period of five years (2014– 19). Any scheme of a centrally owned utility that is to be commissioned during this period has to apply CERC tariff norms. Revenue from tariff as calculated under CERC tariff norms 2014 (at completion) are almost at par with CERC tariff norms 2009 (at appraisal). 5. Since all schemes under the project are system strengthening schemes, benefits from them have been calculated as the value of the reduction in system losses. Based on load flow studies, at appraisal, POWERGRID had estimated the total reduction in transmission losses that would accrue from all the five schemes to be about 1,138 MW under peak load conditions. To obtain the average loss reduction, a loss load factor46 of 0.53 is applied to the loss reduction under peak load conditions. Since the load flow studies for each line are carried out during transmission planning, the MW of power saved by implementing these lines was assumed at the same level as 46 Loss load factor is defined as the ratio of actual losses over a period to the losses obtained under peak loading conditions for the entire period. It is used to convert peak energy losses into average energy losses. It is calculated using the following empirical formula: Loss Load Factor = 0.2 x Load Factor + 0.8 x (Load Factor)2. 63 at the time of appraisal or at the time of PIP approval. For valuing these (physical) benefits, an economic price/value of electricity has been derived based on the opportunity cost of the energy saved, for which average cost of alternate supply (here, from thermal generation plants) in respective regions of the scheme was considered. At the time of appraisal this cost was found to be INR 3.62/kWh whereas at ICR, the average cost of generation projects is between INR 3.3 per unit to INR 3.7 per unit. 6. ERR calculations were based on certain assumptions (discussed later) and their values were compared with the opportunity cost of the capital of 12 percent for projects to be financed in India. The ERR, after completion of the schemes, was calculated using the same methodology that was adopted during the appraisal. The scheme-wise ERR at the time of appraisal is compared with that at completion; two cases: (a) base case and (b) extreme case where cost escalation by 20 percent, delay in project commissioning by two years, RoE is lower by 1 percent, and foreign exchange rate is lower by 10 percent. Table 3.1: Economic Analysis of Schemes Name of the ERR as in ERR as in PAD/PIP ERR at Remarks Scheme PAD/PIP (Cost Escalation by ICR (Base Case) 20%, Delay of 2 Years) Bali-Bhiwadi 14.83% 10.46% 15.05% Outperformed NWTC 21.98% 15.52% 23.54% Outperformed EWTC 17.83% 12.77% 19.39% Outperformed WRSS II 22.44% 17.57% 15.51% ERR is low as the project was delayed by almost 2.5 years. ERSS I 15.82% 11.69% 10.86% ERR is low as the project was delayed by more than 3.5 years, adversely impacting the revenue stream (the scheme was commissioned in March 2014 when the loan repayment of the project also started). System 21.1% 14.6% 12.96% ERR is low as the scheme was strengthening delayed by 22 months due to land in WR for acquisition and as qualification Sasan UMPP requirements for repairs and maintenance (R&M) facility for 765 kV transformer and reactor took some time to be finalized. 7. As can be observed from the table, three of the six schemes outperformed the base case scenario. Also, the ERR for all schemes is higher than the opportunity cost of capital (12 percent), except for ERSS I that got delayed by more than 3.5 years due to severe RoW issues. 8. The Balia-Bhiwadi HVDC bipole transmission system has facilitated the transfer of bulk power across the regions. Even though the commissioning of the entire scheme (HVDC line, Pole I, and Pole II) was deferred due to a delay in the manufacturing of converter transformers by the contractor at the Bhiwadi terminal, commissioning of the HVDC line along with the poles has facilitated exchange of bulk power between the Northern and Eastern Regions. Most generation projects were/are planned in the Eastern Region whereas the load centers are located in the Western Region. Bridging the demand-supply gap through this line has resulted in an ERR of 64 15.05 percent compared to 14.83 percent estimated during appraisal for this scheme. The calculations included the elements funded under PSDP III also. 9. Regarding the NWTC, the ERR of 23.54 percent is higher than the 21.98 percent estimated under the base case during appraisal. The two interregional lines under this scheme, funded under PSDP III, have enhanced the interregional power transfer capacity of the National Grid by almost 2,100 MW. These lines along with the extension of the substations have also brought stability and reliability to the Indian power system. The importance of this scheme is thus reflected in a very robust ERR. The calculations included the elements funded under PSDP III also. 10. The ERR for the EWTC scheme at appraisal was 17.83 percent at appraisal compared to 19.39 percent at completion, hence outperforming the former estimates. The scheme has strengthened the existing Rourkela-Raipur interregional transmission corridor, facilitating more reliable and secure power transfer from the Eastern to Western Region. The interregional link along with installation of FSC has augmented the interregional transmission capacity of the National Grid by 1,400 MW. 11. The WRSS II scheme is a cluster of four sets of transmission lines of which two sets were to be implemented by POWERGRID and the other two sets by 100 percent private players. All substations under all sets were to be implemented by POWERGRID. The ERR at completion (15.51 percent) is lower than at appraisal because the scheme was delayed by almost 2.5 years due to delays in forest clearance. This line is also being charged at 400 kV, later to be upgraded to 765 kV. 12. The ERSS I scheme had an ERR of 15.82 percent at appraisal but could only touch 10.86 percent at completion. This is lower than the hurdle rate of 12 percent. The reason was delay in completion of project by more than 3.5 years. This was due to delays in obtaining forest clearance for various lines under the project from April 2009–April 2011 (varied from 22 to 42 months). The longest was taken by the Baripada-Mendhasal line, for which the proposal for forest clearance was submitted on February 28, 2008. However, the final clearance was received almost after 3.5 years (on August 25, 2011). 13. System Strengthening for Western Region for Sasan UMPP had an ERR of 21.1 percent at appraisal but has only 12.96 percent ERR at completion due to delay in implementation of the scheme by 22 months. The reasons for this delay were (a) delays in land acquisition at the Indore substation and (b) the Shunt Reactor Package, which could be awarded in February 2012 after 23 months from initiation of procurement process (Notice to Invite Tender [NIT] issued in March 2010) as it took time for formulation of suitable qualification requirements in the contracts for setting up R&M facilities for 765 kV transformers and reactors by the vendors, especially foreign bidders. 14. The above schemes enabled higher exchange of power from surplus to deficit regions and strengthened the transmission network making it reliable 15. Detailed calculations for the various schemes are presented in Table 3.2: 65 Table 3.2: Detailed Economic Analysis of the Schemes Balia-Bhiwadi HVDC Bipole System (R s. Million) Costs Associated With the Scheme INFLOW OUTFLOW Sl. No. Year Net Benefit * Revenue due to reduction Interest on Capital Cost O&M Cost Total Outflow in losses in the system W.C. 0 2007 - 671.62 - - 671.62 (671.62) 1 2008 - 3388.37 - - 3,388.37 (3,388.37) 2 2009 - 7928.74 - - 7,928.74 (7,928.74) 3 2010 - 7654.07 - - 7,654.07 (7,654.07) 4 2011 - 570.43 - - 570.43 (570.43) 5 2012 - 1765.79 - - 1,765.79 (1,765.79) 6 2013 4,190.12 1036.21 43.90 180.15 1,260.26 2,929.86 7 2014 5,586.82 8.96 61.86 240.20 311.02 5,275.81 8 2015 5,586.82 201.57 240.20 441.77 5,145.06 9 2016 5,586.82 216.13 240.20 456.33 5,130.50 10 2017 5,586.82 231.61 240.20 471.81 5,115.02 11 2018 5,586.82 248.35 240.20 488.55 5,098.28 12 2019 5,586.82 266.49 240.20 506.68 5,080.14 13 2020 5,586.82 266.49 240.20 506.68 5,080.14 14 2021 5,586.82 266.49 240.20 506.68 5,080.14 15 2022 5,586.82 266.49 240.20 506.68 5,080.14 16 2023 5,586.82 266.49 240.20 506.68 5,080.14 17 2024 5,586.82 266.49 240.20 506.68 5,080.14 18 2025 5,586.82 266.49 240.20 506.68 5,080.14 19 2026 5,586.82 266.49 240.20 506.68 5,080.14 20 2027 5,586.82 266.49 240.20 506.68 5,080.14 21 2028 5,586.82 266.49 240.20 506.68 5,080.14 22 2029 5,586.82 266.49 240.20 506.68 5,080.14 23 2030 5,586.82 266.49 240.20 506.68 5,080.14 24 2031 5,586.82 266.49 240.20 506.68 5,080.14 25 2032 5,586.82 266.49 240.20 506.68 5,080.14 26 2033 5,586.82 266.49 240.20 506.68 5,080.14 27 2034 5,586.82 266.49 240.20 506.68 5,080.14 28 2035 5,586.82 266.49 240.20 506.68 5,080.14 29 2036 5,586.82 266.49 240.20 506.68 5,080.14 30 2037 5,586.82 266.49 240.20 506.68 5,080.14 31 2038 5,586.82 266.49 240.20 506.68 5,080.14 32 2039 5,586.82 266.49 240.20 506.68 5,080.14 33 2040 5,586.82 266.49 240.20 506.68 5,080.14 34 2041 5,586.82 266.49 240.20 506.68 5,080.14 35 2042 5,586.82 266.49 240.20 506.68 5,080.14 36 2043 5,586.82 266.49 240.20 506.68 5,080.14 37 2044 5,586.82 266.49 240.20 506.68 5,080.14 38 2045 5,586.82 266.49 240.20 506.68 5,080.14 39 2046 5,586.82 266.49 240.20 506.68 5,080.14 40 2047 5,586.82 266.49 240.20 506.68 5,080.14 41 2048 5,586.82 266.49 240.20 506.68 5,080.14 Rate Of Return 15.05% Note : Year 2012 means Financial Year 2011-12 and so on. 66 North West Transmission Corridor (R s. Million) Costs Associated With the Scheme INFLOW OUTFLOW Sl. No. Year Net Benefit * Revenue due to reduction Interest on Capital Cost O&M Cost Total Outflow in losses in the system W.C. 0 2007 - 185.08 - - 185.08 (185.08) 1 2008 - 2338.91 - - 2,338.91 (2,338.91) 2 2009 - 748.63 - - 748.63 (748.63) 3 2010 1,234.84 365.75 74.01 73.10 512.86 721.98 4 2011 1,234.84 532.87 78.25 73.10 684.22 550.62 5 2012 1,234.84 15.29 82.72 73.10 171.11 1,063.73 6 2013 1,234.84 0.00 87.46 73.10 160.56 1,074.28 7 2014 1,234.84 0.00 92.45 73.10 165.55 1,069.29 8 2015 1,234.84 84.67 73.10 157.77 1,077.07 9 2016 1,234.84 87.50 73.10 160.60 1,074.24 10 2017 1,234.84 90.39 73.10 163.49 1,071.35 11 2018 1,234.84 93.40 73.10 166.50 1,068.34 12 2019 1,234.84 96.50 73.10 169.59 1,065.25 13 2020 1,234.84 96.50 73.10 169.59 1,065.25 14 2021 1,234.84 96.50 73.10 169.59 1,065.25 15 2022 1,234.84 96.50 73.10 169.59 1,065.25 16 2023 1,234.84 96.50 73.10 169.59 1,065.25 17 2024 1,234.84 96.50 73.10 169.59 1,065.25 18 2025 1,234.84 96.50 73.10 169.59 1,065.25 19 2026 1,234.84 96.50 73.10 169.59 1,065.25 20 2027 1,234.84 96.50 73.10 169.59 1,065.25 21 2028 1,234.84 96.50 73.10 169.59 1,065.25 22 2029 1,234.84 96.50 73.10 169.59 1,065.25 23 2030 1,234.84 96.50 73.10 169.59 1,065.25 24 2031 1,234.84 96.50 73.10 169.59 1,065.25 25 2032 1,234.84 96.50 73.10 169.59 1,065.25 26 2033 1,234.84 96.50 73.10 169.59 1,065.25 27 2034 1,234.84 96.50 73.10 169.59 1,065.25 28 2035 1,234.84 96.50 73.10 169.59 1,065.25 29 2036 1,234.84 96.50 73.10 169.59 1,065.25 30 2037 1,234.84 96.50 73.10 169.59 1,065.25 31 2038 1,234.84 96.50 73.10 169.59 1,065.25 32 2039 1,234.84 96.50 73.10 169.59 1,065.25 33 2040 1,234.84 96.50 73.10 169.59 1,065.25 34 2041 1,234.84 96.50 73.10 169.59 1,065.25 35 2042 1,234.84 96.50 73.10 169.59 1,065.25 36 2043 1,234.84 96.50 73.10 169.59 1,065.25 37 2044 1,234.84 96.50 73.10 169.59 1,065.25 38 2045 1,234.84 96.50 73.10 169.59 1,065.25 39 2046 1,234.84 96.50 73.10 169.59 1,065.25 40 2047 1,234.84 96.50 73.10 169.59 1,065.25 41 2048 1,234.84 96.50 73.10 169.59 1,065.25 Rate Of Return 23.54% Note : Year 2012 means Financial Year 2011-12 and so on. 67 East West Transmission Corridor (R s. Million) Costs Associated With the Scheme INFLOW OUTFLOW Sl. No. Year Net Benefit * Revenue due to reduction Interest on Capital Cost O&M Cost Total Outflow in losses in the system W.C. 0 2007 - 0.00 - - - - 1 2008 - 0.00 - - - - 2 2009 - 1952.03 - - 1,952.03 (1,952.03) 3 2010 - 2367.60 - - 2,367.60 (2,367.60) 4 2011 - 660.09 - - 660.09 (660.09) 5 2012 1,170.55 189.67 91.73 83.09 364.49 806.05 6 2013 1,560.73 80.14 129.30 110.79 320.22 1,240.51 7 2014 1,560.73 32.68 136.67 110.79 280.13 1,280.59 8 2015 1,560.73 125.07 110.79 235.86 1,324.86 9 2016 1,560.73 129.25 110.79 240.04 1,320.68 10 2017 1,560.73 133.53 110.79 244.32 1,316.41 11 2018 1,560.73 137.96 110.79 248.75 1,311.97 12 2019 1,560.73 142.54 110.79 253.33 1,307.40 13 2020 1,560.73 142.54 110.79 253.33 1,307.40 14 2021 1,560.73 142.54 110.79 253.33 1,307.40 15 2022 1,560.73 142.54 110.79 253.33 1,307.40 16 2023 1,560.73 142.54 110.79 253.33 1,307.40 17 2024 1,560.73 142.54 110.79 253.33 1,307.40 18 2025 1,560.73 142.54 110.79 253.33 1,307.40 19 2026 1,560.73 142.54 110.79 253.33 1,307.40 20 2027 1,560.73 142.54 110.79 253.33 1,307.40 21 2028 1,560.73 142.54 110.79 253.33 1,307.40 22 2029 1,560.73 142.54 110.79 253.33 1,307.40 23 2030 1,560.73 142.54 110.79 253.33 1,307.40 24 2031 1,560.73 142.54 110.79 253.33 1,307.40 25 2032 1,560.73 142.54 110.79 253.33 1,307.40 26 2033 1,560.73 142.54 110.79 253.33 1,307.40 27 2034 1,560.73 142.54 110.79 253.33 1,307.40 28 2035 1,560.73 142.54 110.79 253.33 1,307.40 29 2036 1,560.73 142.54 110.79 253.33 1,307.40 30 2037 1,560.73 142.54 110.79 253.33 1,307.40 31 2038 1,560.73 142.54 110.79 253.33 1,307.40 32 2039 1,560.73 142.54 110.79 253.33 1,307.40 33 2040 1,560.73 142.54 110.79 253.33 1,307.40 34 2041 1,560.73 142.54 110.79 253.33 1,307.40 35 2042 1,560.73 142.54 110.79 253.33 1,307.40 36 2043 1,560.73 142.54 110.79 253.33 1,307.40 37 2044 1,560.73 142.54 110.79 253.33 1,307.40 38 2045 1,560.73 142.54 110.79 253.33 1,307.40 39 2046 1,560.73 142.54 110.79 253.33 1,307.40 40 2047 1,560.73 142.54 110.79 253.33 1,307.40 41 2048 1,560.73 142.54 110.79 253.33 1,307.40 Rate Of Return 19.39% Note : Year 2012 means Financial Year 2011-12 and so on. 68 Western Region System Strengthening II (R s. Million) Costs Associated With the Scheme INFLOW OUTFLOW Sl. No. Year Net Benefit * Revenue due to reduction Interest on Capital Cost O&M Cost Total Outflow in losses in the system W.C. 0 2007 - 0.00 - - - - 1 2008 - 345.91 - - 345.91 (345.91) 2 2009 - 4814.21 - - 4,814.21 (4,814.21) 3 2010 - 13246.37 - - 13,246.37 (13,246.37) 4 2011 - 5585.92 - - 5,585.92 (5,585.92) 5 2012 - 993.49 - - 993.49 (993.49) 6 2013 1,661.18 458.69 176.32 138.76 773.78 887.40 7 2014 6,644.72 88.07 745.55 555.05 1,388.67 5,256.05 8 2015 6,644.72 143.59 555.05 698.64 5,946.07 9 2016 6,644.72 148.47 555.05 703.52 5,941.20 10 2017 6,644.72 153.34 555.05 708.39 5,936.33 11 2018 6,644.72 158.42 555.05 713.47 5,931.25 12 2019 6,644.72 163.70 555.05 718.75 5,925.97 13 2020 6,644.72 163.70 555.05 718.75 5,925.97 14 2021 6,644.72 163.70 555.05 718.75 5,925.97 15 2022 6,644.72 163.70 555.05 718.75 5,925.97 16 2023 6,644.72 163.70 555.05 718.75 5,925.97 17 2024 6,644.72 163.70 555.05 718.75 5,925.97 18 2025 6,644.72 163.70 555.05 718.75 5,925.97 19 2026 6,644.72 163.70 555.05 718.75 5,925.97 20 2027 6,644.72 163.70 555.05 718.75 5,925.97 21 2028 6,644.72 163.70 555.05 718.75 5,925.97 22 2029 6,644.72 163.70 555.05 718.75 5,925.97 23 2030 6,644.72 163.70 555.05 718.75 5,925.97 24 2031 6,644.72 163.70 555.05 718.75 5,925.97 25 2032 6,644.72 163.70 555.05 718.75 5,925.97 26 2033 6,644.72 163.70 555.05 718.75 5,925.97 27 2034 6,644.72 163.70 555.05 718.75 5,925.97 28 2035 6,644.72 163.70 555.05 718.75 5,925.97 29 2036 6,644.72 163.70 555.05 718.75 5,925.97 30 2037 6,644.72 163.70 555.05 718.75 5,925.97 31 2038 6,644.72 163.70 555.05 718.75 5,925.97 32 2039 6,644.72 163.70 555.05 718.75 5,925.97 33 2040 6,644.72 163.70 555.05 718.75 5,925.97 34 2041 6,644.72 163.70 555.05 718.75 5,925.97 35 2042 6,644.72 163.70 555.05 718.75 5,925.97 36 2043 6,644.72 163.70 555.05 718.75 5,925.97 37 2044 6,644.72 163.70 555.05 718.75 5,925.97 38 2045 6,644.72 163.70 555.05 718.75 5,925.97 39 2046 6,644.72 163.70 555.05 718.75 5,925.97 40 2047 6,644.72 163.70 555.05 718.75 5,925.97 41 2048 6,644.72 163.70 555.05 718.75 5,925.97 Rate Of Return 15.51% Note : Year 2012 means Financial Year 2011-12 and so on. 69 Eastern Region System Strengthening II (R s. Million) Costs Associated With the Scheme INFLOW OUTFLOW Sl. No. Year Net Benefit * Revenue due to reduction Interest on Capital Cost O&M Cost Total Outflow in losses in the system W.C. 0 2007 - 0.00 - - - - 1 2008 - 0.00 - - - - 2 2009 - 2282.53 - - 2,282.53 (2,282.53) 3 2010 - 2425.90 - - 2,425.90 (2,425.90) 4 2011 - 1146.11 - - 1,146.11 (1,146.11) 5 2012 - 1033.40 - - 1,033.40 (1,033.40) 6 2013 - 1156.00 - - 1,156.00 (1,156.00) 7 2014 - 36.96 - - 36.96 (36.96) 8 2015 1,557.99 124.89 117.34 242.23 1,315.76 9 2016 1,557.99 129.07 117.34 246.41 1,311.58 10 2017 1,557.99 133.34 117.34 250.68 1,307.31 11 2018 1,557.99 137.77 117.34 255.10 1,302.89 12 2019 1,557.99 142.34 117.34 259.68 1,298.31 13 2020 1,557.99 142.34 117.34 259.68 1,298.31 14 2021 1,557.99 142.34 117.34 259.68 1,298.31 15 2022 1,557.99 142.34 117.34 259.68 1,298.31 16 2023 1,557.99 142.34 117.34 259.68 1,298.31 17 2024 1,557.99 142.34 117.34 259.68 1,298.31 18 2025 1,557.99 142.34 117.34 259.68 1,298.31 19 2026 1,557.99 142.34 117.34 259.68 1,298.31 20 2027 1,557.99 142.34 117.34 259.68 1,298.31 21 2028 1,557.99 142.34 117.34 259.68 1,298.31 22 2029 1,557.99 142.34 117.34 259.68 1,298.31 23 2030 1,557.99 142.34 117.34 259.68 1,298.31 24 2031 1,557.99 142.34 117.34 259.68 1,298.31 25 2032 1,557.99 142.34 117.34 259.68 1,298.31 26 2033 1,557.99 142.34 117.34 259.68 1,298.31 27 2034 1,557.99 142.34 117.34 259.68 1,298.31 28 2035 1,557.99 142.34 117.34 259.68 1,298.31 29 2036 1,557.99 142.34 117.34 259.68 1,298.31 30 2037 1,557.99 142.34 117.34 259.68 1,298.31 31 2038 1,557.99 142.34 117.34 259.68 1,298.31 32 2039 1,557.99 142.34 117.34 259.68 1,298.31 33 2040 1,557.99 142.34 117.34 259.68 1,298.31 34 2041 1,557.99 142.34 117.34 259.68 1,298.31 35 2042 1,557.99 142.34 117.34 259.68 1,298.31 36 2043 1,557.99 142.34 117.34 259.68 1,298.31 37 2044 1,557.99 142.34 117.34 259.68 1,298.31 38 2045 1,557.99 142.34 117.34 259.68 1,298.31 39 2046 1,557.99 142.34 117.34 259.68 1,298.31 40 2047 1,557.99 142.34 117.34 259.68 1,298.31 41 2048 1,557.99 142.34 117.34 259.68 1,298.31 Rate Of Return 10.86% Note : Year 2012 means Financial Year 2011-12 and so on. 70 System Strengthening in Western Region for Sasan UMPP (R s. Million) Costs Associated With the Scheme INFLOW OUTFLOW Sl. No. Year Net Benefit * Revenue due to reduction Interest on Capital Cost O&M Cost Total Outflow in losses in the system W.C. 0 2007 - 0.00 - - - - 1 2008 - 0.00 - - - - 2 2009 - 0.00 - - - - 3 2010 - 0.00 - - - - 4 2011 - 114.55 - - 114.55 (114.55) 5 2012 - 649.96 - - 649.96 (649.96) 6 2013 - 2685.56 - - 2,685.56 (2,685.56) 7 2014 - 2161.41 - - 2,161.41 (2,161.41) 8 2015 586.30 79.60 65.29 144.89 441.41 9 2016 1,172.60 164.47 130.58 295.05 877.54 10 2017 1,172.60 169.94 130.58 300.52 872.08 11 2018 1,172.60 175.58 130.58 306.16 866.43 12 2019 1,172.60 181.40 130.58 311.98 860.61 13 2020 1,172.60 181.40 130.58 311.98 860.61 14 2021 1,172.60 181.40 130.58 311.98 860.61 15 2022 1,172.60 181.40 130.58 311.98 860.61 16 2023 1,172.60 181.40 130.58 311.98 860.61 17 2024 1,172.60 181.40 130.58 311.98 860.61 18 2025 1,172.60 181.40 130.58 311.98 860.61 19 2026 1,172.60 181.40 130.58 311.98 860.61 20 2027 1,172.60 181.40 130.58 311.98 860.61 21 2028 1,172.60 181.40 130.58 311.98 860.61 22 2029 1,172.60 181.40 130.58 311.98 860.61 23 2030 1,172.60 181.40 130.58 311.98 860.61 24 2031 1,172.60 181.40 130.58 311.98 860.61 25 2032 1,172.60 181.40 130.58 311.98 860.61 26 2033 1,172.60 181.40 130.58 311.98 860.61 27 2034 1,172.60 181.40 130.58 311.98 860.61 28 2035 1,172.60 181.40 130.58 311.98 860.61 29 2036 1,172.60 181.40 130.58 311.98 860.61 30 2037 1,172.60 181.40 130.58 311.98 860.61 31 2038 1,172.60 181.40 130.58 311.98 860.61 32 2039 1,172.60 181.40 130.58 311.98 860.61 33 2040 1,172.60 181.40 130.58 311.98 860.61 34 2041 1,172.60 181.40 130.58 311.98 860.61 35 2042 1,172.60 181.40 130.58 311.98 860.61 36 2043 1,172.60 181.40 130.58 311.98 860.61 37 2044 1,172.60 181.40 130.58 311.98 860.61 38 2045 1,172.60 181.40 130.58 311.98 860.61 39 2046 1,172.60 181.40 130.58 311.98 860.61 40 2047 1,172.60 181.40 130.58 311.98 860.61 41 2048 1,172.60 181.40 130.58 311.98 860.61 Rate Of Return 12.96% Note : Year 2012 means Financial Year 2011-12 and so on. Financial Analysis of Schemes 16. The financial analysis is presented for all the schemes except for SRSS 13. The rate of RoE was considered as a proxy for financial analysis of the schemes. The same proxy was used during the appraisal as well. The RoE of the schemes has been calculated using the same methodology as during the appraisal. The scheme-wise RoE at the time of appraisal is compared with that at completion across two cases: (a) base case and (b) extreme case where cost escalation by 20 percent, delay in project commissioning by two years, RoE is lower by 1 percent, and foreign exchange rate is lower by 10 percent. 71 Table 3.3: Financial Analysis of Schemes Name of the Scheme RoE as in RoE as in PAD/PIP RoE at ICR Remarks PAD/PIP (Cost Escalation by (Base Case) 20%, Delay of 2 years, RoE Lower by 1%) Bali-Bhiwadi 12.37% 10.19% 16.27% Outperformed NWTC 13.70% 11.25% 29.08% in all the cases EWTC 13.31% 10.80% 24.84% as these funded WRSS II 13.19% 10.76% 15.38% some important ERSS I 13.90% 11.78% 14.02% interregional System strengthening in 20.80% 16.70% 16.65% links. WR for Sasan UMPP 17. In all the cases, the RoE was much higher than the base case. Among others, the main reason for this is the revision in CERC tariff norms, as mentioned in the section above. Under the revised tariff norms, RoE has been increased from 14 percent (at appraisal) to 15.5 percent (current tariff regulations). All the schemes have an RoE that is higher than 15.5 percent. Thus, the schemes are financially robust. 18. Detailed calculations for the various schemes are provided in Table 3.4: 72 Table 3.4: Detailed RoE Analysis of the Schemes Balia Bhiwadi HVDC Bipole System (R s. Million) Costs Associated With the Scheme INFLOW OUTFLOW Sl. No. Year Revenue (Yearly Interest on Interest Debt Transmission Equity O&M Cost Total Outflow Net Benefit W.C. Charges Repayment Charges) 0 2007 - 225.66 - - - - 225.66 (225.66) 1 2008 - 1142.03 - - - - 1,142.03 (1,142.03) 2 2009 - 2684.35 - - - - 2,684.35 (2,684.35) 3 2010 - 2628.05 - - - - 2,628.05 (2,628.05) 4 2011 - 288.70 - - - - 288.70 (288.70) 5 2012 - 693.37 - - - - 693.37 (693.37) 6 2013 1,982.35 457.62 43.90 180.15 - - 681.67 1,300.68 7 2014 3,412.07 117.98 61.86 240.20 - - 420.03 2,992.03 8 2015 3,533.39 201.57 240.20 364.93 716.31 1,523.00 2,010.39 9 2016 3,532.75 216.13 240.20 349.72 716.31 1,522.36 2,010.39 10 2017 3,533.02 231.61 240.20 334.52 716.31 1,522.63 2,010.39 11 2018 3,534.56 248.35 240.20 319.31 716.31 1,524.16 2,010.39 12 2019 3,537.49 266.49 240.20 304.10 716.31 1,527.10 2,010.39 13 2020 3,522.28 266.49 240.20 288.90 716.31 1,511.89 2,010.39 14 2021 3,507.08 266.49 240.20 273.69 716.31 1,496.69 2,010.39 15 2022 3,491.87 266.49 240.20 258.49 716.31 1,481.48 2,010.39 16 2023 3,476.67 266.49 240.20 243.28 716.31 1,466.28 2,010.39 17 2024 3,461.46 266.49 240.20 228.08 716.31 1,451.07 2,010.39 18 2025 2,314.46 266.49 240.20 212.87 716.31 1,435.87 878.59 19 2026 2,299.25 266.49 240.20 197.67 716.31 1,420.66 878.59 20 2027 2,284.05 266.49 240.20 182.46 716.31 1,405.46 878.59 21 2028 2,268.84 266.49 240.20 167.26 716.31 1,390.25 878.59 22 2029 2,253.64 266.49 240.20 152.05 716.31 1,375.04 878.59 23 2030 2,238.43 266.49 240.20 136.85 716.31 1,359.84 878.59 24 2031 2,223.23 266.49 240.20 121.64 716.31 1,344.63 878.59 25 2032 2,208.02 266.49 240.20 106.44 716.31 1,329.43 878.59 26 2033 2,192.82 266.49 240.20 91.23 716.31 1,314.22 878.59 27 2034 2,177.61 266.49 240.20 76.03 716.31 1,299.02 878.59 28 2035 2,162.41 266.49 240.20 60.82 716.31 1,283.81 878.59 29 2036 2,147.20 266.49 240.20 45.62 716.31 1,268.61 878.59 30 2037 2,132.00 266.49 240.20 30.41 716.31 1,253.40 878.59 31 2038 2,116.79 266.49 240.20 15.21 716.31 1,238.20 878.59 32 2039 2,101.59 266.49 240.20 (0.00) 716.31 1,222.99 878.59 33 2040 2,101.59 266.49 240.20 (0.00) - 506.68 1,594.90 34 2041 2,101.59 266.49 240.20 (0.00) - 506.68 1,594.90 35 2042 2,101.59 266.49 240.20 (0.00) - 506.68 1,594.90 36 2043 2,101.59 266.49 240.20 (0.00) - 506.68 1,594.90 37 2044 2,101.59 266.49 240.20 (0.00) - 506.68 1,594.90 38 2045 2,101.59 266.49 240.20 (0.00) - 506.68 1,594.90 39 2046 2,101.59 266.49 240.20 (0.00) - 506.68 1,594.90 40 2047 2,101.59 266.49 240.20 (0.00) - 506.68 1,594.90 41 2048 2,101.59 266.49 240.20 (0.00) - 506.68 1,594.90 7662.16 Rate Of Return 16.27% Note : Year 2012 means Financial Year 2011-12 and so on. 73 North West Transmission Corridor (R s. Million) Costs Associated With the Scheme INFLOW OUTFLOW Sl. No. Year Revenue (Yearly Interest on Interest Debt Transmission Equity O&M Cost Total Outflow Net Benefit W.C. Charges Repayment Charges) 0 2007 - 62.33 - - - - 62.33 (62.33) 1 2008 - 788.95 - - - - 788.95 (788.95) 2 2009 - 268.78 - - - - 268.78 (268.78) 3 2010 683.70 136.33 74.01 73.10 - - 283.44 400.27 4 2011 698.24 195.13 78.25 73.10 - - 346.47 351.77 5 2012 709.00 24.48 82.72 73.10 - - 180.30 528.69 6 2013 739.82 0.00 87.46 73.10 90.71 - 251.27 488.56 7 2014 744.81 0.00 92.45 73.10 90.71 - 256.26 488.56 8 2015 733.41 84.67 73.10 87.08 130.25 375.10 358.31 9 2016 732.61 87.50 73.10 83.45 130.25 374.30 358.31 10 2017 731.87 90.39 73.10 79.82 130.25 373.56 358.31 11 2018 731.25 93.40 73.10 76.19 130.25 372.94 358.31 12 2019 730.72 96.50 73.10 72.57 130.25 372.41 358.31 13 2020 727.09 96.50 73.10 68.94 130.25 368.78 358.31 14 2021 723.46 96.50 73.10 65.31 130.25 365.15 358.31 15 2022 517.04 96.50 73.10 61.68 130.25 361.52 155.52 16 2023 513.41 96.50 73.10 58.05 130.25 357.90 155.52 17 2024 509.79 96.50 73.10 54.42 130.25 354.27 155.52 18 2025 506.16 96.50 73.10 50.80 130.25 350.64 155.52 19 2026 502.53 96.50 73.10 47.17 130.25 347.01 155.52 20 2027 498.90 96.50 73.10 43.54 130.25 343.38 155.52 21 2028 495.27 96.50 73.10 39.91 130.25 339.75 155.52 22 2029 491.64 96.50 73.10 36.28 130.25 336.13 155.52 23 2030 488.02 96.50 73.10 32.65 130.25 332.50 155.52 24 2031 484.39 96.50 73.10 29.03 130.25 328.87 155.52 25 2032 480.76 96.50 73.10 25.40 130.25 325.24 155.52 26 2033 477.13 96.50 73.10 21.77 130.25 321.61 155.52 27 2034 473.50 96.50 73.10 18.14 130.25 317.98 155.52 28 2035 469.87 96.50 73.10 14.51 130.25 314.36 155.52 29 2036 466.25 96.50 73.10 10.88 130.25 310.73 155.52 30 2037 462.62 96.50 73.10 7.26 130.25 307.10 155.52 31 2038 458.99 96.50 73.10 3.63 130.25 303.47 155.52 32 2039 455.36 96.50 73.10 0.00 130.25 299.84 155.52 33 2040 455.36 96.50 73.10 0.00 - 169.59 285.77 34 2041 455.36 96.50 73.10 0.00 - 169.59 285.77 35 2042 455.36 96.50 73.10 0.00 - 169.59 285.77 36 2043 455.36 96.50 73.10 0.00 - 169.59 285.77 37 2044 455.36 96.50 73.10 0.00 - 169.59 285.77 38 2045 398.37 96.50 73.10 0.00 - 169.59 228.78 39 2046 398.37 96.50 73.10 0.00 - 169.59 228.78 40 2047 398.37 96.50 73.10 0.00 - 169.59 228.78 41 2048 398.37 96.50 73.10 0.00 - 169.59 228.78 1476.00 Rate Of Return 29.08% Note : Year 2012 means Financial Year 2011-12 and so on. 74 East West Transmission Corridor (R s. Million) Costs Associated With the Scheme INFLOW OUTFLOW Sl. No. Year Revenue (Yearly Interest on Interest Debt Transmission Equity O&M Cost Total Outflow Net Benefit W.C. Charges Repayment Charges) 0 2007 - 0.00 - - - - - - 1 2008 - 0.00 - - - - - - 2 2009 - 665.60 - - - - 665.60 (665.60) 3 2010 - 837.14 - - - - 837.14 (837.14) 4 2011 - 291.11 - - - - 291.11 (291.11) 5 2012 722.09 140.80 91.73 83.09 - - 315.63 406.46 6 2013 1,211.38 106.35 129.30 110.79 - - 346.44 864.94 7 2014 1,221.63 91.40 136.67 110.79 - - 338.85 882.77 8 2015 1,155.06 125.07 110.79 213.37 164.33 613.57 541.49 9 2016 1,150.35 129.25 110.79 204.48 164.33 608.86 541.49 10 2017 1,145.74 133.53 110.79 195.59 164.33 604.25 541.49 11 2018 1,141.28 137.96 110.79 186.70 164.33 599.79 541.49 12 2019 1,136.96 142.54 110.79 177.81 164.33 595.47 541.49 13 2020 1,128.07 142.54 110.79 168.92 164.33 586.58 541.49 14 2021 1,119.18 142.54 110.79 160.03 164.33 577.69 541.49 15 2022 1,110.29 142.54 110.79 151.14 164.33 568.80 541.49 16 2023 1,101.40 142.54 110.79 142.25 164.33 559.91 541.49 17 2024 799.54 142.54 110.79 133.36 164.33 551.02 248.52 18 2025 790.65 142.54 110.79 124.47 164.33 542.13 248.52 19 2026 781.76 142.54 110.79 115.58 164.33 533.24 248.52 20 2027 772.87 142.54 110.79 106.69 164.33 524.35 248.52 21 2028 763.98 142.54 110.79 97.80 164.33 515.46 248.52 22 2029 755.09 142.54 110.79 88.90 164.33 506.57 248.52 23 2030 746.19 142.54 110.79 80.01 164.33 497.68 248.52 24 2031 737.30 142.54 110.79 71.12 164.33 488.79 248.52 25 2032 728.41 142.54 110.79 62.23 164.33 479.90 248.52 26 2033 719.52 142.54 110.79 53.34 164.33 471.01 248.52 27 2034 710.63 142.54 110.79 44.45 164.33 462.12 248.52 28 2035 701.74 142.54 110.79 35.56 164.33 453.23 248.52 29 2036 692.85 142.54 110.79 26.67 164.33 444.34 248.52 30 2037 683.96 142.54 110.79 17.78 164.33 435.45 248.52 31 2038 675.07 142.54 110.79 8.89 164.33 426.55 248.52 32 2039 666.18 142.54 110.79 0.00 164.33 417.66 248.52 33 2040 666.18 142.54 110.79 0.00 - 253.33 412.85 34 2041 666.18 142.54 110.79 0.00 - 253.33 412.85 35 2042 666.18 142.54 110.79 0.00 - 253.33 412.85 36 2043 666.18 142.54 110.79 0.00 - 253.33 412.85 37 2044 666.18 142.54 110.79 0.00 - 253.33 412.85 38 2045 666.18 142.54 110.79 0.00 - 253.33 412.85 39 2046 666.18 142.54 110.79 0.00 - 253.33 412.85 40 2047 666.18 142.54 110.79 0.00 - 253.33 412.85 41 2048 595.35 142.54 110.79 0.00 - 253.33 342.02 1934.65 Rate Of Return 24.84% Note : Year 2012 means Financial Year 2011-12 and so on. 75 Western Region System Strengthening II (R s. Million) Costs Associated With the Scheme INFLOW OUTFLOW Sl. No. Year Revenue (Yearly Interest on Interest Debt Transmission Equity O&M Cost Total Outflow Net Benefit W.C. Charges Repayment Charges) 0 2007 - 0.00 - - - - - - 1 2008 - 116.02 - - - - 116.02 (116.02) 2 2009 - 1616.08 - - - - 1,616.08 (1,616.08) 3 2010 - 4463.83 - - - - 4,463.83 (4,463.83) 4 2011 - 1949.15 - - - - 1,949.15 (1,949.15) 5 2012 - 431.89 - - - - 431.89 (431.89) 6 2013 349.25 256.61 176.32 138.76 - - 571.70 (222.45) 7 2014 4,594.79 134.20 745.55 555.05 - - 1,434.80 3,159.99 8 2015 3,962.85 143.59 555.05 319.49 794.35 1,812.48 2,150.37 9 2016 3,954.41 148.47 555.05 306.18 794.35 1,804.04 2,150.37 10 2017 3,945.97 153.34 555.05 292.86 794.35 1,795.61 2,150.37 11 2018 3,937.74 158.42 555.05 279.55 794.35 1,787.37 2,150.37 12 2019 3,929.71 163.70 555.05 266.24 794.35 1,779.34 2,150.37 13 2020 3,916.39 163.70 555.05 252.93 794.35 1,766.03 2,150.37 14 2021 3,903.08 163.70 555.05 239.62 794.35 1,752.72 2,150.37 15 2022 3,889.77 163.70 555.05 226.30 794.35 1,739.40 2,150.37 16 2023 3,876.46 163.70 555.05 212.99 794.35 1,726.09 2,150.37 17 2024 3,863.15 163.70 555.05 199.68 794.35 1,712.78 2,150.37 18 2025 2,636.18 163.70 555.05 186.37 794.35 1,699.47 936.71 19 2026 2,622.86 163.70 555.05 173.06 794.35 1,686.16 936.71 20 2027 2,609.55 163.70 555.05 159.74 794.35 1,672.84 936.71 21 2028 2,596.24 163.70 555.05 146.43 794.35 1,659.53 936.71 22 2029 2,582.93 163.70 555.05 133.12 794.35 1,646.22 936.71 23 2030 2,569.62 163.70 555.05 119.81 794.35 1,632.91 936.71 24 2031 2,556.30 163.70 555.05 106.50 794.35 1,619.60 936.71 25 2032 2,542.99 163.70 555.05 93.18 794.35 1,606.28 936.71 26 2033 2,529.68 163.70 555.05 79.87 794.35 1,592.97 936.71 27 2034 2,516.37 163.70 555.05 66.56 794.35 1,579.66 936.71 28 2035 2,503.06 163.70 555.05 53.25 794.35 1,566.35 936.71 29 2036 2,489.74 163.70 555.05 39.94 794.35 1,553.04 936.71 30 2037 2,476.43 163.70 555.05 26.62 794.35 1,539.72 936.71 31 2038 2,463.12 163.70 555.05 13.31 794.35 1,526.41 936.71 32 2039 2,449.81 163.70 555.05 - 794.35 1,513.10 936.71 33 2040 2,449.81 163.70 555.05 - - 718.75 1,731.06 34 2041 2,449.81 163.70 555.05 - - 718.75 1,731.06 35 2042 2,449.81 163.70 555.05 - - 718.75 1,731.06 36 2043 2,449.81 163.70 555.05 - - 718.75 1,731.06 37 2044 2,449.81 163.70 555.05 - - 718.75 1,731.06 38 2045 2,449.81 163.70 555.05 - - 718.75 1,731.06 39 2046 2,449.81 163.70 555.05 - - 718.75 1,731.06 40 2047 2,449.81 163.70 555.05 - - 718.75 1,731.06 41 2048 2,449.81 163.70 555.05 - - 718.75 1,731.06 8576.96 Rate Of Return 15.38% Note : Year 2012 means Financial Year 2011-12 and so on. 76 Eastern Region System Strengthening I (R s. Million) Costs Associated With the Scheme INFLOW OUTFLOW Sl. No. Year Revenue (Yearly Interest on Interest Debt Transmission Equity O&M Cost Total Outflow Net Benefit W.C. Charges Repayment Charges) 0 2007 - 0.00 - - - - - - 1 2008 - 0.00 - - - - - - 2 2009 - 771.44 - - - - 771.44 (771.44) 3 2010 - 841.10 - - - - 841.10 (841.10) 4 2011 - 431.10 - - - - 431.10 (431.10) 5 2012 - 403.65 - - - - 403.65 (403.65) 6 2013 - 454.69 - - - - 454.69 (454.69) 7 2014 - 87.22 - - - - 87.22 (87.22) 8 2015 1,448.12 124.89 117.34 216.46 251.41 710.10 738.02 9 2016 1,443.28 129.07 117.34 207.44 251.41 705.26 738.02 10 2017 1,438.53 133.34 117.34 198.42 251.41 700.51 738.02 11 2018 1,433.93 137.77 117.34 189.40 251.41 695.91 738.02 12 2019 1,429.49 142.34 117.34 180.39 251.41 691.47 738.02 13 2020 1,420.47 142.34 117.34 171.37 251.41 682.45 738.02 14 2021 1,411.45 142.34 117.34 162.35 251.41 673.43 738.02 15 2022 1,402.43 142.34 117.34 153.33 251.41 664.41 738.02 16 2023 1,393.41 142.34 117.34 144.31 251.41 655.39 738.02 17 2024 1,384.39 142.34 117.34 135.29 251.41 646.37 738.02 18 2025 1,375.37 142.34 117.34 126.27 251.41 637.35 738.02 19 2026 1,366.35 142.34 117.34 117.25 251.41 628.33 738.02 20 2027 946.64 142.34 117.34 108.23 251.41 619.31 327.33 21 2028 937.62 142.34 117.34 99.21 251.41 610.29 327.33 22 2029 928.60 142.34 117.34 90.19 251.41 601.27 327.33 23 2030 919.59 142.34 117.34 81.17 251.41 592.26 327.33 24 2031 910.57 142.34 117.34 72.15 251.41 583.24 327.33 25 2032 901.55 142.34 117.34 63.13 251.41 574.22 327.33 26 2033 892.53 142.34 117.34 54.12 251.41 565.20 327.33 27 2034 883.51 142.34 117.34 45.10 251.41 556.18 327.33 28 2035 874.49 142.34 117.34 36.08 251.41 547.16 327.33 29 2036 865.47 142.34 117.34 27.06 251.41 538.14 327.33 30 2037 856.45 142.34 117.34 18.04 251.41 529.12 327.33 31 2038 847.43 142.34 117.34 9.02 251.41 520.10 327.33 32 2039 838.41 142.34 117.34 (0.00) 251.41 511.08 327.33 33 2040 838.41 142.34 117.34 (0.00) - 259.68 578.74 34 2041 838.41 142.34 117.34 (0.00) - 259.68 578.74 35 2042 838.41 142.34 117.34 (0.00) - 259.68 578.74 36 2043 838.41 142.34 117.34 (0.00) - 259.68 578.74 37 2044 838.41 142.34 117.34 (0.00) - 259.68 578.74 38 2045 838.41 142.34 117.34 (0.00) - 259.68 578.74 39 2046 838.41 142.34 117.34 (0.00) - 259.68 578.74 40 2047 838.41 142.34 117.34 (0.00) - 259.68 578.74 41 2048 838.41 142.34 117.34 (0.00) - 259.68 578.74 2447.30 Rate Of Return 14.02% Note : Year 2012 means Financial Year 2011-12 and so on. 77 System Strengthening in Western Region for Sasan UMPP (R s. Million) Costs Associated With the Scheme INFLOW OUTFLOW Sl. No. Year Revenue (Yearly Interest on Interest Debt Transmission Equity O&M Cost Total Outflow Net Benefit W.C. Charges Repayment Charges) 0 2007 - 0.00 - - - - - - 1 2008 - 0.00 - - - - - - 2 2009 - 0.00 - - - - - - 3 2010 - 0.00 - - - - - - 4 2011 - 38.47 - - - - 38.47 (38.47) 5 2012 - 218.89 - - - - 218.89 (218.89) 6 2013 - 905.93 - - - - 905.93 (905.93) 7 2014 - 743.57 - - - - 743.57 (743.57) 8 2015 303.19 268.74 79.60 65.29 - 196.82 610.44 (307.26) 9 2016 1,111.04 0.00 164.47 130.58 95.87 196.82 587.74 523.30 10 2017 1,112.34 169.94 130.58 91.70 196.82 589.04 523.30 11 2018 1,113.82 175.58 130.58 87.53 196.82 590.51 523.30 12 2019 1,115.47 181.40 130.58 83.36 196.82 592.17 523.30 13 2020 1,111.30 181.40 130.58 79.19 196.82 588.00 523.30 14 2021 1,107.13 181.40 130.58 75.02 196.82 583.83 523.30 15 2022 1,102.96 181.40 130.58 70.86 196.82 579.66 523.30 16 2023 1,098.80 181.40 130.58 66.69 196.82 575.49 523.30 17 2024 1,094.63 181.40 130.58 62.52 196.82 571.33 523.30 18 2025 1,090.46 181.40 130.58 58.35 196.82 567.16 523.30 19 2026 1,086.29 181.40 130.58 54.18 196.82 562.99 523.30 20 2027 783.22 181.40 130.58 50.02 196.82 558.82 224.39 21 2028 779.05 181.40 130.58 45.85 196.82 554.65 224.39 22 2029 774.88 181.40 130.58 41.68 196.82 550.49 224.39 23 2030 770.71 181.40 130.58 37.51 196.82 546.32 224.39 24 2031 766.54 181.40 130.58 33.34 196.82 542.15 224.39 25 2032 762.37 181.40 130.58 29.18 196.82 537.98 224.39 26 2033 758.21 181.40 130.58 25.01 196.82 533.81 224.39 27 2034 754.04 181.40 130.58 20.84 196.82 529.65 224.39 28 2035 749.87 181.40 130.58 16.67 196.82 525.48 224.39 29 2036 745.70 181.40 130.58 12.50 196.82 521.31 224.39 30 2037 741.53 181.40 130.58 8.34 196.82 517.14 224.39 31 2038 737.37 181.40 130.58 4.17 196.82 512.97 224.39 32 2039 733.20 181.40 130.58 - 196.82 508.80 224.39 33 2040 733.20 181.40 130.58 - - 311.98 421.22 34 2041 733.20 181.40 130.58 - - 311.98 421.22 35 2042 733.20 181.40 130.58 - - 311.98 421.22 36 2043 733.20 181.40 130.58 - - 311.98 421.22 37 2044 733.20 181.40 130.58 - - 311.98 421.22 38 2045 733.20 181.40 130.58 - - 311.98 421.22 39 2046 733.20 181.40 130.58 - - 311.98 421.22 40 2047 733.20 181.40 130.58 - - 311.98 421.22 41 2048 733.20 181.40 130.58 - - 311.98 421.22 257.37 Rate Of Return 16.65% Note : Year 2012 means Financial Year 2011-12 and so on. 78 Financial Analysis of Entity 19. The financial analysis at the entity level was carried out at the appraisal and completion stages using the same principles. Table 3.5 lays out the actual financial details at the entity level. POWERGRID has been a profit-making entity since its inception and the legacy carried over during the PSDP IV and PSDP IV AF II implementation period as well. Net profit increased from US$202 million in 2007 by more than 3.5 times to US$737 million in 2014. The main financial risk to POWERGRID is the risk of nonpayment by off-taking utilities. The risk of recovering past debts has been mitigated through the signing of tripartite agreements between the Reserve Bank of India (RBI), state governments, and the GoI. Under this securitization scheme, past debts were securitized against the tax free bonds valid up to 2016. In addition, POWERGRID has adopted the Letter of Credit mechanism to ensure payment of current monthly bills by the off-taking utilities. 20. Even though the regulated RoE has increased from 14 to 15.5 percent, the RoE at entity level was at 13 percent in 2014. This is mainly due to the huge capital expenditure that stood at US$4,324 million in 2014 in response to an increasing demand and need for supporting the transmission network to transfer power between power surplus and power deficit regions. Table 3.5: Financial Summary POWER SYSTEMS DEVELOPMENT PROJECT IV and ITS ADDITIONAL FINANCING Financial Summary (Figures in million USD) Description <-------Actual-----------> Year 2007 2008 2009 2010 2011 2012 2013 2014 PROFIT AND LOSSES Operating Revenues 672 833 1,006 1,230 1,492 1,768 2,185 2,577 Operating Expenses 242 330 372 547 581 677 831 1,012 Profit before Tax 243 284 365 431 627 754 925 1,027 Net profit 202 237 277 335 442 534 694 737 CASH FLOW Operating Cash flow post tax 712 490 1,089 1,085 912 1,050 1,850 2,502 Capital Expenditure 1,104 876 1,501 1,584 2,152 2,596 3,598 4,324 Pre-financing cash flow (392) (386) (412) (499) (1,240) (1,546) (1,748) (1,823) Financing 919 997 1,097 1,205 2,167 2,355 2,958 3,810 Cash Available for Debt Service 527 612 684 706 927 808 1,210 1,987 debt service 366 413 495 470 737 848 1,063 1,307 dividend paid 62 89 97 97 125 181 257 228 Increase in cash balances 100 110 92 139 66 (220) (111) 452 Cash C/F 196 306 398 537 603 383 272 724 BALANCE SHEET ITEMS Net Block 3,576 4,484 5,103 5,256 6,102 7,813 10,066 11,992 WIP 1,548 1,436 2,178 3,348 4,365 5,455 6,582 8,743 Total Fixed Assets 5,124 5,920 7,281 8,604 10,467 13,268 16,648 20,735 Investments 322 285 261 238 229 211 188 164 Total Current asset 575 881 1,363 1,578 1,719 1,309 1,382 1,985 Total Assets 6,022 7,086 8,905 10,420 12,415 14,788 18,219 22,883 Total Equity 1,795 2,254 2,433 2,645 3,530 3,873 4,321 5,665 Borrowings 3,168 3,650 4,666 5,437 6,464 8,484 10,850 13,192 Current Liabilities 990 1,102 1,717 2,222 2,232 2,169 2,726 3,626 Total Debt 4,158 4,752 6,383 7,660 8,696 10,653 13,577 16,818 Total Equity and Liability 6,022 7,086 8,905 10,420 12,415 14,788 18,219 22,883 FINANCIAL RATIOS Operating Ratio 36% 40% 37% 44% 39% 38% 38% 39% Net income as % of Revenue 30% 29% 28% 27% 30% 30% 32% 29% Return on Equity 11% 11% 11% 13% 13% 14% 16% 13% 79 21. POWERGRID’s financial performance has been satisfactory as it has exceeded the targeted financial covenants under the loans. Table 3.6. Financial Covenants Covenants as per Loan 2008 2009 2010 2011 2012 2013 2014 Agreement Internal cash generation equivalent to not less than 20% of its capital expenditures 43.11% 35.34% 25.27% 29.93% 36.78% 22.50% 26.92% (three-year moving average) The ratio of debt to equity shall be greater than 4 to 1 (80:20) 65:35 68:32 71:29 68:32 68:32 71:29 70:30 Accounts receivable should not exceed an amount equivalent to its billing for transmission and 0.19 0.15 0.13 0.15 0.91 0.67 0.27 other regulated services for the preceding three months 80 Annex 4. Bank Lending and Implementation Support/Supervision Processes (a) Task Team Members Names Title Unit Lending Pedro E. Sanchez Senior Energy Specialist ECSSD Sushil Kumar Bahl Senior Procurement Specialist SARPS Mikul Bhatia Senior Energy Specialist SASDE Minerva S. Espinosa-Apurada Program Assistant SASDO Julia M. Fraser Senior Financial Analyst EASTS Surbhi Goyal Energy Specialist SASDE Mohammed Hasan Senior Social Development Specialist SASDS Fowzia Hassan Operations Analyst MNSEG Manoj Jain Senior Financial Management Specialist SARFM Gaurav D. Joshi Environmental Specialist SASDI Neelima Kapur Temporary SASDA Sanjay Srivastava Regional Safeguards Adviser SARDE Gennady Pilch Sr. Counsel LEGES Supervision/ICR Kwawu Mensan Gaba Lead Energy Specialist GEEDR Surbhi Goyal Energy Specialist GEEDR Kavita Saraswat Senior Power Engineer SASDE Manoj Jain Senior Financial Management Specialist GGODR Savinay Grover Financial Management Specialist GGODR Sushil Kumar Bahl Senior Procurement Specialist SARPS Debabrata Chakraborti Senior Procurement Specialist GGODR Arun Kumar Kolsur Procurement Specialist GGODR Yash Gupta Procurement Specialist GGODR Mohammed Hasan Senior Social Development Specialist GURDR Surbhi Dhingra Singh Social Development Specialist GURDR Parthapriya Ghosh Senior Social Development Specialist GURDR Gaurav D. Joshi Environmental Specialist GURDR Sanjay Srivastava Regional Safeguards Adviser SARDE Francis V. Fragano Regional Safeguards Adviser OPSOR Sameena Dost Senior Counsel LEGES Christopher L. Rytel Power Engineer (Consultant) SASDE Nitika Surie Program Assistant GEEDR Boonsri Prasartwaree Kim Program Assistant GEEDR Minerva S. Espinosa-Apurada Program Assistant GEEDR Vinod Ghosh Program Assistant SASDE Julia M. Fraser Senior Financial Analyst EASTS Raghuveer Y. Sharma Chief Investment Officer CN1S5 G. Ayse Cansiz Senior Power Engineer (Consultant) AFTEG 81 Names Title Unit Pedro E. Sanchez Senior Energy Specialist ECSSD (b) Staff Time and Cost Fiscal Staff Labor Travel Total Cost Object Year Weeks (US$) (US$) (US$) PSDP IV Lending 2008 22.26 75,795.49 28,435.13 104,339.93 Supervision/ICR 2008 6.28 15,526.54 – 15,526.54 2009 19.14 49,762.07 15,848.92 68,524.29 2010 10.85 22,411.80 4,081.55 26,859.28 2011 13.78 15,546.46 5,528.62 24,161.57 2012 17.23 44,341.67 9,869.87 66,342.73 2013 13.28 36,829.83 4,837.50 41,831.36 2014 16.37 62,746.07 14,396.73 78,983.42 2015 1.15 1,133.62 2,922.47 18,482.34 PSDP IV AF Lending 2009 8.27 41,812.77 5,650.90 48,400.72 Supervision/ICR 2009 – – – – Grand Total 128.61 365,906.32 91,571.69 493,452.18 82 Annex 5. Beneficiary Survey Results Not Applicable 83 Annex 6. Stakeholder Workshop Report and Results Not Applicable 84 Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR Introduction 1. POWERGRID, the CTU of India and a ‘Navratna’ Public Sector Enterprise (PSE) operating under MoP, plays a strategic role in the Indian power sector. POWERGRID continues to contribute directly to economic development of the country by strengthening and establishing the National Grid comprising interstate and interregional transmission network for reliable and secure transfer of power from the generating stations to the load centers. 2. POWERGRID has been a profit-making company since its inception. In FY2014, POWERGRID achieved a turnover of about INR 157.21 billion (US$2.6 billion), net profit of INR 44.97 billion (US$737 million) and fixed assets of INR 965.04 billion (US$15.8 billion)47. POWERGRID is a listed company, with institutional investors and public holding of 42.10 percent and the balance 57.90 percent by the GoI. 3. POWERGRID has planned a capital investment of more than INR 1,000 billion for development of interstate transmission system during XII Plan (2012–17). The company has an excellent credit rating with financial institutions and is thereby placed in a comfortable position in terms of resource mobilization. As at the end of March 2014, POWERGRID had established a transmission network of about 106,804 ckm of transmission lines along with 184 EHV AC and DC substations with transformation capacity of 205,923 MVA spread across the country. The company has been consistently maintaining the availability of this huge transmission network at over 99 percent and wheels about 50 percent of total power generated in the country on its network. 4. The company has established a strong and reliable National Grid in phased manner to facilitate optimum utilization of generating resources, conservation of eco-sensitive ‘right of way’, and for having flexibility to accommodate uncertainty of generation plans. On December 31, 2013, POWERGRID achieved a landmark by interconnecting the Southern grid synchronously with rest of the National Grid making ‘One Nation-One Grid-One Frequency’ a reality. 5. POWERGRID has been instrumental in providing efficient, reliable, and smooth grid operation and management in the country. Since 2009, the grid management and operation has been entrusted to POSOCO, a fully owned subsidiary of POWERGRID. POSOCO with its state- of-the-art ULDC facilities carries out proficient, consistent, and transparent grid operation and management in the country. During FY2014, to meet the demands in the country, about 78.38 BU of interregional energy transfer was facilitated, across the nation using pan-India interregional transmission links and modernized RLDCs. Association with the World Bank 6. Since its inception, POWERGRID has been associating with the Bank and undertaken many critical transmission projects in its association, which have become the major backbone for the Indian power sector. With the Bank’s support, POWERGRID successfully established the National Grid, open access in transmission, modernization of Load Despatch and Communication facilities, and establishment of the NLDC. An important landmark—synchronous interconnection 47 At an exchange rate of US$1 = INR 61. 85 of the National Grid—has been achieved by commissioning of the Bank-funded (PSDP V) Raichur (Karnataka)-Sholapur (Maharashtra) 765 kV S/C line in December 2013, thereby achieving the mission of ‘One Nation-One Grid-One Frequency’. 7. During the company’s formative years, the Bank was the first multilateral lending agency to support it with funding of transmission projects. Since then, POWERGRID has availed the following loans from the Bank: a. Northern Region Transmission Project (NRTP): US$475 million, closed in September 2000; b. First Power Sector Development Project (PSDP I): US$350 million, closed in December 2000; c. Second Power Sector Development Project (PSDP II): US$450 million, closed in June 2006; d. Third Power Sector Development Project (PSDP III): US$400 million, closed in July 2011; e. Fourth Power Sector Development Project (PSDP IV): US$600 million, closed in July 2014; f. Additional Financing for PSDP IV (PSDP IV AF): US$400 million, closed in July 2014; and g. Fifth Power Sector Development Project (PSDP-V): US$1,000 million, loan closing scheduled in May 2017. 8. Association with the Bank has led to marked improvement in the business process of POWERGRID, especially in the field of environment sustainability, institutional development, procurement, and financial management. 9. The PSDP IV and PSDP IV AF loans closed in July 2014 and the following sections cover various details about the loans. PSDP IV and PSDP IV AF Loans – An Introduction 10. A loan of US$1.4 billion from the Bank was availed by POWERGRID in three tranches for funding its various transmission system projects. The first tranche of US$400 million was availed under the PSDP III loan which closed in July 2011. ICR Report (No. ICR1862) was finalized and disclosed on January 30, 2012. The second and third tranches of US$600 million and US$400 million have been availed under the PSDP IV and PSDP IV AF loans, both of which closed on July 31, 2014. 11. All the schemes funded under PSDP IV and PSDP IV AF are complete except the SRSS 13 scheme, whose implementation has been adversely affected due to severe RoW problems. Project Development Objective 12. The objective of the loans was to strengthen India’s electricity transmission system in order to increase reliable power exchanges between the regions and the states. ‘Growth in Power Exchanges between Regions’ was agreed as the key indicator for measuring performance against the PDO. Further, growth in transmission capacity (in ckm) and growth in transformation capacity (in MVA) were also agreed to be monitored to achieve the objective. The progress of the funded elements was continuously monitored through POWERGRID’s own internal mechanism 86 and also through periodic reviews by the Bank missions. The Performance Monitoring Indicators together with their achievement are as listed in the table: Table 7.1: Status of Outcome Indicators Outcome Baseline FY08 FY09 FY10 FY11 FY12 FY13 FY14 Indicator FY07 Growth in Actual 42,932 46,027 52,000 56747 58,999 65,860 78,384 power exchange Values 37,750 across regions Target (MU) 42,000 46,000 50,000 52000 54,000 56,000 68,000** Values Actual Growth in Values 66,809 71,440 75,291 82355 92,950 100,200 106,804 transmission 59,400 capacity (ckm) Target 65,000 71,000 80,000 80000* 85,000* 90,000* 107,000* Values * Actual 73,122 79,522 83,402 93050 124,525 164,763 205,923 Transformation Values 59,400 capacity (MVA) Target 185,000* 68,000 75,000 82,000 85,000 88000 90,000 Values * Note: FY07 means April 2006–March 2007. * Revised during the MTR mission in April 2010 in view of the FRA notification in August 2009 under which no- objection was to be taken from every gram sabha (at the village level) for all the proposals involving diversion of forest land under the Forest (Conservation) Act, which resulted in delay in obtaining forest clearance. ** As all the indicators have outperformed their original targets (as per the PAD), the targets were revised upward for FY2014 after restructuring of the loans through Amendments dated May 23, 2014, to Loan Agreements. Growth in Power Exchanges between the Regions (Outcome Indicator) Figure 7. 1: Growth in Power Exchange 13. During FY2014, POWERGRID’s strong transmission network and modernized RLDCs have facilitated about 78,384 MU of power exchange across regions. A growth of about 40,634 MU (107.64 percent) in power exchange across regions has been observed in comparison to baseline FY2006/07 of 37,750 MU. 14. Under the PSDP IV loan, an interregional line, the 400 kV Rourkela-Raigarh-Raipur D/C line has been implemented. This line has contributed an addition of about 1,400 MW to the interregional power transmission capacity of the National Grid. Development of National Grid Leading to Formation of an All-India Grid 15. The process of setting up the National Grid was initiated with the formation of POWERGRID. Development of the National Grid started with the establishment of limited capacity asynchronous links (through HVDC systems) between the regions for transfer of operational surplus power from one region to other. With the establishment of large capacity pit head power plants having beneficiaries in other regions, AC and HVDC bipole links were implemented between regions. 87 Figure 7. 2: Inter-Regional Power Transmission Capacity 16. In March 2003, the NER and (MW) ER grids were synchronously connected with the WR grid through commissioning of the 400 kV Raipur- Rourkela transmission line, with cumulative capacity of 50,000 MW. In August 2006, these three regional grids were interconnected with the NR grid with the commissioning of the 400 kV Muzaffarpur-Gorakhpur line under ‘Transmission System associated with Tala HEP and East-North Interconnector’, the first transmission project implemented under PPP. The Muzaffarpur-Gorakhpur 400 kV D/C quad line with fixed series capacitor and TCSC has added 2,000 MW to the ER-NR interregional transmission capacity. By the end of the 10th Plan, with the commissioning of one circuit of the Patna-Balia 400 kV D/C line between ER and NR and commissioning of the Agra-Gwalior 765 kV S/C line (initially charged at 400 kV) between NR and WR, the interregional capacity was enhanced by about 2,200 MW. Another 765 kV S/C line between Agra-Gwalior (initially charged at 400 kV) and the 400 kV Kankroli-Zerda D/C line, funded under PSPD III, were commissioned during March to April 2009. Commissioning of these links resulted in a direct high-capacity synchronous interconnection between NR and WR while providing parallel paths interconnecting two regional grids. The interregional power transmission capacity of the National Grid was augmented to 27,750 MW by the end of the 11th Plan (March 31, 2012). 17. Before December 31, 2013, four regional grids were operating in synchronous mode as a single system whereas the SR grid was interconnected asynchronously through HVDC links. On December 31, 2013, the SR grid was also synchronously connected with the rest of the National Grid through commissioning of the 765 kV Raichur-Solapur S/C line by POWERGRID, funded under PSDP V. 18. With the setting up of IPP plants in resource rich areas, the focus of planning the generation and the transmission system in the country has shifted from regional self-sufficiency toward optimization of utilization of resources on a nationwide basis. Thus a number of 765 kV D/C and ±800 kV HVDC interregional links are being implemented as a part of high-capacity transmission corridors associated with IPPs in the country. 19. As on September 30, 2014, the cumulative interregional power transmission capacity of the National Grid stands at about Figure 7. 3: Growth in Transmission Capacity 44,250 MW, which is planned to be further augmented to more than 76,000 MW by end of the 12th Plan period. 20. Growth in transmission capacity. As on March 31, 2014, POWERGRID owns and operates about 106,804 ckm of EHV transmission lines. An addition of 88 about 47,404 ckm (79.80 percent) has been achieved in transmission capacity with respect to baseline FY2007 of 59,400 ckm. Transmission lines covered under these loans have contributed about 6,23048 ckm of 400 kV lines toward transmission capacity Figure 7. 4: Growth in Transformation Capacity addition. 21. Growth in transformation capacity. As on March 31, 2014, transformation capacity of POWERGRID’s network is about 205,923 MVA. An addition of about 146,523 MVA (246.67 percent) has been achieved in transformation capacity with respect to baseline FY2007 of 59,400 MVA. Under these loans, about 8,000 MVA transformation capacity has been added. 22. It should be noted that the PDO has been achieved successfully, and all indicators exceeded their targets as agreed in the PAD. All the transmission elements covered , the loans except the elements covered under SRSS 13 have been completed progressively well before the loan closing date of July 31, 2014. Implementation of SRSS 13 has been adversely affected due to RoW issues along the transmission lines, which is beyond the control of the executing agency, namely, POWERGRID. Further, POWERGRID has already achieved disbursement of 96.10 percent under PSDP IV and has fully used the PSDP IV AF loan. Financial Covenants under the Loans 23. POWERGRID has comfortably met all the financial covenants under the loans; the year- wise details are given in the table: Table 7.2: Status of Financial Covenants Covenant FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 POWERGRID shall take all necessary measures to produce, each year, funds from internal cash generation equivalent to not less 43.11% 35.34% 25.27% 29.93% 36.78% 22.50% 26.92% than 20 percent of its capital expenditures (three-year moving average). POWERGRID shall not incur any debt, if after the incurrence of such 65:35 68:32 71:29 68:32 68:32 71:29 70:30 debt, the ratio of debt to equity shall be greater than 4 to 1. POWERGRID shall take all 0.19 0.15 0.13 0.15 0.91 0.67 0.27 necessary steps to maintain its 48 Excludes about 549 ckm being implemented under the SRSS 13 scheme. 89 Covenant FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 accounts receivable at a level not exceeding an amount equivalent to its billing for transmission and other regulated services for the preceding three months. 24. Thus, POWERGRID has satisfactorily completed these loans by successfully achieving the PDO, meeting all the financial covenants, and adequately addressing social and environment aspects while implementing the projects under the loans. Project Design 25. The project design was well-aligned with the underlying objectives and focused on addressing capacity building for increased exchange of power across the regions. To achieve this, the +500 kV, 2,500 MW Balia-Bhiwadi HVDC Bipole link, 765/400 kV level high-capacity transmission systems, and interregional/intraregional grid strengthening schemes were planned under the loans. 26. To achieve the required objectives under the loan, various pre-implementation activities, such as site selection, survey and soil investigation, initiation for forest clearance, procurement process, and funding tie-up, were initiated concurrently so that sufficient time would be available for executing the project. Procurement being one of the vital parts of project design, the entire scope of various project(s) was broken down into suitable contract packages keeping in mind the sources, competitiveness, and ultimate dovetailing of all the contract packages for their proper integration to achieve the project objectives. Procurement Summary 27. Procurement for the packages (number as in table 7.3) under these loans were carried out in accordance with Bank guidelines and provisions stipulated in the Loan Agreements. Further, bidding documents for all type of packages were standardized, resulting in a smoother procurement process and leading to streamlined implementation of the project. In fact, POWERGRID has harmonized its bidding documents across packages, irrespective of the source of funding. Table 7.3: Details of Packages Awarded Loan Prior Review Post Review Total PSDP IV 16 23 39 PSDP IV AF 24 10 34 Total 40 33 73 Project Implementation 28. The schemes under the loans were designed, engineered, and implemented by POWERGRID. All the schemes covered under the loans have been completed except the SRSS 13 scheme, implementation of which has been adversely affected due to RoW problems in Madhugiri and Yelahanka areas (Karnataka State) along the transmission lines, which is beyond the control of POWERGRID. The detailed status of implementation of projects is given at the end of this annex. 90 Loan Utilization 29. As a result of rigorous monitoring of the project implementation, expeditious resolution of various issues, timely submission of disbursement claims, and continuous guidance and support from the Bank, POWERGRID has fully use PSDP IV AF and about 96.10 percent utilization under PSDP IV has been achieved till date. Project-wise details are given in the table 7.4 below: Table 7.4: Loan Utilization Details (Figures in US$, millions) PSDP-IV PSDP-IV AF Total Envisaged Envisaged Project Sl. Bank Committ Disburs Bank Committ Disbur Project Cost No. Funding ed Value ement Funding as ed Value sement As per as per PAD per PAD PAD 1. EWTC 198 56 52.91 52.91 7 6.24 6.24 2. WRSS II 884 174 152.73 152.73 336 258.98 258.98 3. ERSS I 241 65 59.83 59.83 57 51.08 51.08 4. Balia-Bhiwadi HVDC Bipole 683 295 265.00 265.00 – – – System 5. NWTC 119 10 8.45 8.45 – – – 6. SRSS 13@ @ @ 48.0 37.96 – – – 7. System Strengthening in @ @ – – @ 89 83.70 Western Region for Sasan UMPP@ Total 600 586.92 576.86 400 405.30 400 Note: @ These additional projects were included under the respective loans through a Letter of Amendment to the Loan Agreement(s) dated May 23, 2014. As per the PIP, funding envisaged under SRSS 13 and System Strengthening in Western Region for Sasan UMPP were about US$47 million and US$134 million, respectively. Benefits of Projects under PSDP IV and PSDP IV AF 30. Implementation of the +500 kV HVDC Bipole and other 765 kV and 400 kV transmission elements under these loans have facilitated strengthening of the National Grid through enhancement of interregional and intraregional power transmission capacity. The benefits show that significant transmission capacity has been installed, that is, about 6,23049 ckm at 400 kV level and about 8,000 MVA transformation capacity along with new 400/220 kV substations at Pune, Solapur, and Parli and the 765/400 kV substation at Indore apart from extensions of numerous substations. The interregional transmission line, namely, the 400 kV D/C Rourkela- Raigarh-Raipur, under the EWTC Strengthening Scheme (under PSDP IV) has resulted in enhancement of interregional power transfer capacity by about 1,400 MW. Operational Experience 31. All major investments financed by these loans have resulted in further strengthening of the National Grid and enhanced its reliability, safety, and security. Transmission assets of the 49 Excludes about 549 ckm under SRSS 13. 91 company are being successfully operated and maintained with availability of more than 99 percent. Best Practices under the Loans 32. Procurement. Under this loan and in line with the Bank’s procedures, procurement for transmission system projects was carried out, which were either uniquely positioned or pertained to emerging transmission technologies in India. For example, the Balia-Bhiwadi Transmission System, a long distance (approximately 800 km) bipole HVDC Transmission System for transfer of 2,500 MW power at ±500 kV voltage level, was a unique project, considering the complexity of procurement of HVDC Terminal Package. Similarly, procurement for certain packages in other transmission projects involved procurement of plant and equipment and goods for 765 kV voltage level, which was an emerging voltage level in transmission systems in India at that time.  Initiative for increased conductor and insulator vendor participation. To increase participation of vendors for conductors and insulators, POWERGRID, in association with the Bank, organized vendor conferences in April 2009 and September 2010. Such conferences have resulted in more participation and competitive prices.  Conference with prospective bidders on common mistakes/discrepancies during bidding. In September 2010, POWERGRID, in association with the Bank, also organized a vendor conference regarding common mistakes or discrepancies during bidding. This conference has resulted in significant improvement in the bids being submitted and helped in reducing delays in bid evaluation on account of common errors or inconsistencies in the bids. 33. Retroactive financing. Under the loans, the provision for retroactive financing for up to 20 percent of the loan amount—Section IV (B) (1) of the Loan Agreements—resulted in immediate disbursement of about US$57 million under PSDP IV and about US$26 million under PSDP IV AF. 34. Restructuring of loans to optimize utilization. During the implementation stage, there have been significant savings in the PSPD IV, PSDP IV AF, and PSDP V loans due to (a) ICB process, (b) modification/deletion of some schemes according to system requirements, and (c) depreciation of the Indian rupee against the U.S. dollar. The restructuring of the loans was carried out with support from the Bank and the Department of Economic Affairs, MoF. This has helped achieve optimal utilization of these loans. The restructuring of loans included new schemes and swapping of some schemes between PSDP IV AF and PSDP V keeping in view their commissioning schedule vis-à-vis loan closing dates and including an additional expenditure category - Works, Installation, and Erection. The restructuring concerned the following components: a. PSDP IV (Loan No. 4890-IN) • Inclusion of the new scheme, SRSS 13; • Revision in the Performance Monitoring Indicators; and • Inclusion of Works, Installation, and Erection under categories eligible for funding, in addition to Goods. b. PSDP IV AF (Loan No. 7593-IN) • Shifting of one scheme, namely, System Strengthening in WR for Sasan UMPP, from PSDP V to PSDP IV AF. At the time of restructuring of the loan, major scope under the scheme was completed and about 88 percent of committed loan amount under this project 92 (about US$78 million) was disbursed. Thus, the shifting of project helped full utilization of the PSDP IV AF loan. • Shifting of two schemes, namely, Northern Region System Strengthening Scheme XXIV and Southern Region System Strengthening XVII, from the PSDP IV AF to PSDP V loan, keeping in view their expected commissioning beyond the PSDP IV AF loan closing date of July 31, 2014. • Revision in the Performance Monitoring Indicators. • Inclusion of Works, Installation, and Erection under categories eligible for funding, in addition to Goods. 35. Environmental and social. POWERGRID is committed to the goal of sustainable development and conservation of nature and natural resources. While continually improving its management systems, accessing specialist knowledge and introducing state-of-the-art and internationally proven technologies, POWERGRID strictly follows the basic principle of avoidance, minimization, and mitigation in dealing with environmental and social issues; where necessary, restoration and enhancement is also undertaken. Based on these principles, POWERGRID, in association with the Bank, took a proactive approach and developed a comprehensive ESPP in April 1998 to address the environment and socioeconomic issues arising from activities for its projects, after a wide consultation involving stakeholders, the general public, representatives from MoP, MoEF, CEA, State Electricity Boards, allied organizations, academia, NGOs, multilateral funding agencies, and PAP from its projects through a process of National Consultation. Since then, POWERGRID has been successfully implementing the provisions of ESPP in all its projects irrespective of the type of funding, which clearly demonstrated that it is achieving the highest standard with respect to environment and social safeguards comparable to any utilities in India and at the international level. Moreover, several good environmental practices have been institutionalized, including technical innovations to minimize environmental impact. The project exhibited good rehabilitation and resettlement practices and community development programs. Some of them are listed:  POWERGRID has developed its corporate ESPP. Transmission line routes were selected on the above-mentioned principles and routes involving less forest/wildlife area were selected for detailed survey. Due to implementation of the ESPP, forest area involvement has reduced drastically from 6 percent in 1998 to less than 2 percent in 2013.  POWERGRID has reduced wildlife area involvement by renovating its existing lines into multicircuit lines. In the case of the Durgapur-Jamshedpur line (funding under PSDP IV), POWERGRID accommodated 1.25 km of line passing through the Dalma Wildlife Sanctuary on multicircuit towers in the existing RoW of the Maithan-Jamshedpur line by replacing the existing towers with multicircuit towers to accommodate both lines and thereby avoiding fresh impact on flora and fauna in the sanctuary area. Likewise, for the Baripada-Mendhasal line of ERSS-I (funding under PSDP IV), POWERGRID selected the route involving minimum area (about 0.552 ha only) traversing through the Chandaka Wildlife sanctuary. POWERGRID was able to pass the Chandaka Wildlife Sanctuary overhead using tall/extended towers without any tree felling or building towers inside the sanctuary area. The lines under which forest area was reduced by following the principle of avoidance are as listed in the table: 93 Table 7.5: Reduction in Forest Area under the Loan Forest Area Forest Transmission Initially Area Sl. Scheme Line under the Envisaged Actually Remarks No. Loan (in ha, as Involved per IEAR) (in ha) PSDP IV Forest area initially envisaged was based on desk review/walk 400 kV D/C 34.42 18.52 over survey. However, the actual 1 EWTC Ranchi- forest area decreased after Rourkela detailed survey/joint inspection and optimization of line route. 400 kV D/C 2 WRSS II 89.3 88.71 Almost the same Damoh-Bhopal Forest area decreased 400 kV D/C significantly following the 3 ERSS I Baripada- 125.58 21.363 principle of avoidance and Mendhasal minimization through optimization of line route. PSDP IV AF Actual forest area decreased 400 kV D/C following the principle of 1. WRSS II Bhadrawati- 13.11 3.58 avoidance and minimization Parli through optimization of line route.  For optimization of land requirement for substations, land management practices were followed in consultation with engineering and site representatives, to reduce the area of requirement. Typically, 20 to 60 ha of land is required for constructing a substation, depending upon the type and voltage level. Considering the limited availability of land, POWERGRID has constantly upgraded and improvised by investing in new technologies like GIS, which requires less land in comparison to the traditional AIS. Following the principle of minimization to conserve the precious land resources, POWERGID has taken a policy decision to have a GIS substation in city area and to install multicircuit towers around 1-km radius of all new substations.  Active participation of stakeholders, including PAP, is ensured during project implementation. Public consultation/information has been made an integral part of the project cycle and the public is informed about the project at every stage of execution and their grievances, if any, are resolved as soon as possible. Moreover, public consultation/meetings are undertaken at every stage of execution, ranging from survey and construction to commissioning of the transmission line and during preparation and finalization of the RAP for substations.  Participation of women in finalizing RAP has been ensured at every stage of the process. They have participated in various informal meetings, focused group discussions, and public consultations. Their opinions and the priorities set by them have been considered. In public consultations, PAP along with villagers/GP members participated and gave their consent/priority for primarily taking up Community Development (CD) works. Hence, the activities taken up for village development are priority based and are useful for all. Details in respect of women’s participation during the public consultation held on the draft RAP at various substations is given in the table: 94 Table 7.6: Women Participation Public Consultation Held on Draft RAP Sl. No. Substation No. of Women Participants 1 Balia 53 2 Bhiwadi 11 3 Parli 16 4 Solapur 6 5 Indore 8 6 Madhugiri 18  Awareness and training programs on protection of worker's health and safety is conducted regularly at sites. Safety regulations/manuals are included in bidding documents and guides provisions for workers’ health and safety.  POWERGRID has a dedicated unit to oversee all health and safety aspects of its project and has framed guidelines and checklists for workers’ safety as its personnel are exposed to live EHV apparatus and transmission lines.  POWERGRID has taken proactive measures to reduce or arrest leakage of SF6 gas used in circuit breakers (though SF6 gas leakage is not a major issue) through implementation of a greenhouse gas reduction plan. This includes measures like installation of halogen gas leak detectors and gas pressure monitors in all circuit breakers, connected to the control room to raise an alarm in case of any leakage and pressure drop and strict checking at the store level for issuing SF6 gas.  To develop surrounding and community resources in the affected villages, POWERGRID has been taking up CD works in consultation with villagers.  Sustainability of RAP and CD works. CD works are finalized through public consultation with PAP and villagers. Amenities or assets established under CD works are on the land provided by GP and handed over to them with an agreement that maintenance of the created amenities will be taken care of by the GP.  Self-help Groups (SHGs): CD works at the Parli substation had the provision of INR 10 million for each SHG formed by women from project affected families (PAFs), facilitating these women to take loans and use the offered grant money as depository asset. The money was used by the group as a guarantee against taking the loan for the group members. Most of the group members have reported taking loans and investing the money for procurement of goats, cows, and buffalos, which became an additional income source for the family and for expansion of their business for regular monthly income.  Hygiene and sanitation are often considered women’s tasks. Hence, the gender-based issue regarding sanitation was addressed during the consultation/focus group meetings and community toilets have been constructed for women in village at Solapur.  Rehabilitation Assistance (RA) to those in the vulnerable category, widows, handicapped, minors, and the elderly, are provided in the form of monthly income scheme/fixed deposits that ensured regular monthly income. The regular income for such vulnerable members of the family not only provides a better life but also provides additional security and respect in society.  Several employment avenues were opened up to the local residents with contractors of POWERGRID even when POWERGRID’s projects did not envisage significant job opportunities to the local residents directly. Contractors engaged by POWERGRID are bound by the general conditions of the contract (General Condition No. 13), which stipulates that local labor has to be given preference for unskilled and semiskilled jobs and will be informed about the same by the project authorities and would be asked to hire unskilled labor from the eligible PAP. 95  The establishment of POWERGRID’s substations is marked by huge investment in the area, the impact of which spills over in both the local economy and backward linkages. This has led to creation of many indirect job opportunities in terms of small businesses and other services. Growth of small businesses and private services, which has come to the fore in impact assessment of Bhiwadi, is one such example. 36. Sustainability reporting. POWERGRID has also taken a lead role by becoming the first PSE in the Indian power sector to issue a separate environment and social sustainability report in March 2010 for FY2008/09, based on internationally acclaimed/accepted Global Reporting Initiative-G3 Guidelines/Index (GRI-www.globalreporting.org), for measuring, disclosing, and being accountable to internal and external stakeholders for organizational performance toward sustainable development. Since the reporting cycle is biennial, the second such report was released in March 2013 for the period 2009–11. Lessons Learned 37. Forest clearance. As per guidelines issued by the MoEF, processing time of a proposal for forest clearance at the state level has been prescribed as 210 days. However, the time taken normally is very high, which results in delay in implementation of the projects. Similarly, for transmission lines that pass through wildlife sanctuaries, national parks, and notified eco-sensitive zones, permission of the Supreme Court is essential but is a very cumbersome process. It may be mentioned here that the forest proposals for such areas are processed only after the approval of the Supreme Court and the whole process takes more than 2 to 3 years or even more. POWERGRID has very limited influence on the state forest hierarchy in processing of forest proposal due to the involvement of many officials. However, POWERGRID’s experiences indicate that constant persuasion expedites the process. Therefore, POWERGRID has deputed one officer exclusively for each region for regular follow-up and monitoring of forest proposals at the state level and the concerned RMoEF to expedite forest clearance. 38. Forest Right Act. Forest clearance under the Forest (Conservation) Act, 1980, has always been a lengthy process due to the involvement of different levels starting from the range officer to the Forest Secretary at the state level and from the Assistant Inspector General (AIG) of Forests to the minister of Environment and Forests, GoI. The MoEF, vide the circular dated August 3, 2009, mandated the requirement of settlement of FRA in the forest areas to be diverted for non- forest purposes. The process also includes the written consent of the concerned gram sabha, which was made compulsory under the Scheduled Tribes and Other Traditional Forest Dwellers (Recognition of Forest Rights) Act 2006 (FRA 2006) for the entire proposal involving diversion of forest land under the Forest (Conservation) Act, 1980. This further complicated the process of forest clearance, which has resulted in enormous delays. 39. As per the MoEF’s letter dated February 5, 2013, consent of the gram sabha was not required but recommendation of the committees under FRA 2006 was mandatory for issuance of District Collector’s certificate under FRA 2006. However, the Ministry of Tribal Affairs issued a circular on March 7, 2014, that FRA 2006 does not exempt any category of projects from consent of the gram sabha and compliance of the FRA was mandatory before forest land can be diverted. Failure to do so would be a violation of the law and consent of the gram sabha was required. POWERGRID again took this up with the MoP to be discussed with the MoEF for delinking of transmission lines from FRA 2006. 40. Land acquisition. Availability or acquisition of land for substations is a critical factor for ensuring timely completion of given project. To expedite the land acquisition process, 96 POWERGRID has taken the initiative to acquire land on negotiated settlement or consent award basis. Recently, a policy decision has also been taken for direct purchase of land through a committee on willing buyer willing seller on market/negotiated rates to avoid public resistance and court intervention faced during land acquisition. 41. Typically, 20 to 60 ha of land were required for constructing a substation, depending upon the type and voltage level. However, keeping in mind availability of land for its projects which has now become a scarce resource, POWERGRID, apart from adopting new technologies like GIS which requires less land area (about 25 percent) as against conventional AIS substations, is also following the practice of land management to minimize the land requirement to the barest minimum. Following the principle of minimization to conserve precious land resources, POWERGID has taken a policy decision to have GIS substations in the city area and install multi circuit towers around 1-km radius of all new substations. A comparison of land area requirement with the newly adopted technology for conventional AIS and GIS substations is given in this table: Table 7.7: Comparison of Land Requirement for AIS and GIS Sl. Substation Detail Land Requirement Land requirement No for AIS for GIS 1 765/400 kV substation (typical with 8 diameters in 115 acres 50 acres 765 kV and 12 diameters in 400 kV) 2 400/220 kV substation (typical with 8 diameters in 35 acres 16 acres 400 kV and 28 feeders in 220 kV) 42. Wherever possible, POWERGRID tries to locate substations on government land, waste land, or non-fertile land to reduce the impacts of land acquisition on PAP. In the absence of government land, private land, which involves fewer PAP, is acquired. 43. Right of Way. RoW is one of the major concerns being faced in construction of transmission lines. Various factors such as high population density, other ongoing infrastructural developments, and POWERGRID’s duty toward environmental preservation, limit the freedom to select the most optimum route devoid of RoW issues. To address such issues to the extent possible, POWERGRID has adopted innovative tower design to reduce the width of the RoW and has also taken a policy decision to install D/C or multi circuit towers in forests and other ecologically sensitive areas. This has resulted in huge saving of trees. To address the RoW issues and to cater to the need of bulk power transfer to distantly located load centers, POWERGRID is deploying various technologies such as multi circuits, compact and tall towers, High Surge Impedance Loading Lines, Fixed and Thyristor Controlled Series Compensation, and HTLS Conductors. POWERGRID is gradually adopting higher voltage levels such as 765 kV/800 kV and increasing the power carrying capacity of transmission lines (up to 6,000 MW on D/C lines) for optimizing the RoW without much effect on transmission losses. 44. Initiatives have been taken for re-conductoring of some of the existing lines such as the Siliguri-Purnea D/C lines (under PSDP IV AF) with HTLS conductors to enhance their power carrying capacity. A comparison of RoW requirements for 400 kV and 765 kV transmission lines is given in the table 7.8: 97 Table 7.8: RoW under the Transmission Lines Sl. No. Voltage Level of Transmission Line ROW Requirement (in meters) 1 400 kV S/C 46 2 400 kV D/C 46 3 765 kV S/C 64 4 765 kV D/C 67 45. Increasing operational and maintenance efficiency. The company’s assets have grown exponentially with the increased number of 765 kV transmission lines in the system. Geographical spread of assets all over the country, open electricity market, wide variation in power flow in terms of quantum and direction, increased penetration of renewable generation, and the need for effective utilization of existing assets have made it a challenging task to maintain such large power systems with high reliability, safety, and security in real time. Recognizing the need for effective control on a real-time basis and to improve planning and operations of the power system as a whole, POWERGRID has adopted various measures:  Remote operations of substations and creation of maintenance service hub facilities where a group of experts of all areas, such as control and protection, switchyard equipment, transformer, and reactor, shall be available to for major maintenance of equipment as and when required. As of March 2014, there are 51 substations under remote operation and 12 unmanned substations.  Adoption of state-of-the-art monitoring techniques for transmission equipment for detection of defects at their incipient stage.  Introduction of aerial patrolling of lines using helicopters for the first time in India in selected areas such as deep forests, hilly terrain, and snowbound areas where ground patrolling is difficult and very time consuming.  POWERGRID has undertaken full-scale implementation of WAMS on pan-India basis under the Unified Real Time Dynamic State Measurement System (URTDSM) project integrating state and central grids with the aim of enhancing efficiency in overall grid management in the open electricity market regime.  With a view to optimize the operation and maintenance manpower and efficiently deploy them, POWERGRID is in the process of establishing the National Transmission Asset Management Center (NTAMC) at Haryana for centralized remote monitoring, operation, and control of substations. 46. The result of consistent efforts and round-the-clock monitoring is demonstrated through the company’s high operational performance during the year in terms of transmission system availability (99.92 percent) and the number of trippings per line (0.56). Institutional Strengthening 47. POWERGRID has started an organization-wide ERM framework and ERP toward improving corporate governance and financial accountability. 48. ERM framework implementation. POWERGRID has implemented the ERM framework with the approval of its Board in February 8, 2011. POWERGRID had constituted a Risk Management Committee (comprising five members: ED-Finance, ED-Corporate Planning, ED- Human Resource, ED-Western Region, and ED-Commercial). A Chief Risk Officer has been designated who reports to the Risk Management Committee, which in turn will report to the Board’s Audit Committee. The ERM framework identifies 24 major risks. 98 49. ERP implementation. ERP is being implemented in POWERGRID under the project name ‘Roopantar’. The ERP implementation work is being carried out in partnership with M/s TCS, who is deploying an SAP system. The ERP system includes Plant Maintenance (Operation and Maintenance); Project System (Project Execution); Material Management (Project and Operations); Finance and Control; Human Capital Management (HCM); e-procurement; and Sales and Distribution (Commercial) for all the business verticals of POWERGRID, that is, Transmission, Telecommunication, and Consultancy. ERP’s pilot deployment at the corporate office and in one of the regions (Southern Region-II) has gone live in August 2014. The expected benefit from the system is as listed:  Integrated processes  Elimination of duplication in work  Visibility of construction and operations inventory  Traceability of capital and operations expenditure  Better controls  Better reports for faster management decision Performance of the World Bank 50. POWERGRID acknowledges the active support provided by the Bank during administration of the loans and other issues pertaining to procurement, disbursement, and safeguards. In view of the huge funding assistance to POWERGRID and also for future engagements, POWERGRID would like to provide some suggestions for further improving various processes: a. Suggestions pertaining to procurement aspects  Threshold limit. The present limit for ‘prior’ review packages under the Bank’s loan is US$25 million. Considering POWERGRID’s exposure to Bank loans and procedures, it is suggested that the limit for ‘prior’ review packages be enhanced. b. Suggestions pertaining to contracts management on the Bank’s Client Connection site  The changes in the contract value on account of price variation and amendments to the contracts do not getting updated in Client Connection. POWERGRID maintains a database of updated contract price and disbursement details and reports this information on a periodic basis in the FMRs to the Bank. It is proposed that this information be updated regularly in Client Connection by the Bank and permission may be given to the borrower to view the information so that both the Bank and POWERGRID can verify it and the information can be updated in a timely manner, in case of any discrepancy.  It will also help in reconciling if there is a proper history of applications under which disbursements are made by Bank under each contract. This system will help both the lender and the borrower in monitoring the availability of funds for disbursement against each contract and facilitate optimal utilization of the fund. It is worth mentioning that a similar system is already available on the ADB website and proved to be very effective both for POWERGRID and ADB in reconciliation of contracts. Scheme-wise Implementation Details a. ±500 kV, 2,500 MW Balia and Bhiwadi HVDC Bipole System 99 Project Cost i. Total completion cost. About INR 27.46 billion (or US$450 million)50 ii. Bank funding under PSDP IV. About INR 16.17 billion (or US$265 million) Commissioning Poles I and II were commissioned in September 2010 and July 2012, respectively.51 Pole II of the scheme was originally scheduled for completion in December 2009 but could only be commissioned in July 2012 for reasons beyond the control of POWERGRID, as explained below. As per the contract, eight converter transformers were to be manufactured and supplied by M/s BHEL in technical collaboration with M/s Siemens AG, Germany, which was the Joint Venture (JV) partners for the package, from July 2008 to March 2009. However, the transformers could only be supplied from October 2011 to March 2012. The reasons for the delay are as listed: i. Development of manufacturing and testing facilities at BHEL, Bhopal works was delayed by two years from February 2008 to March 2010 due to delay in construction of the new facility before beginning the manufacturing of these converter transformers. ii. Procurement and delivery of major raw material from the source approved by M/s Siemens was delayed. iii. As BHEL was manufacturing converter transformers based on Siemens technology for the first time, the technology absorption process took longer than expected. iv. There were some test bed failures at BHEL works. The root cause analysis process jointly by Siemens and BHEL, resourcing of the raw material for repair, and so on took substantial time, which delayed delivery of the transformer. v. For transportation of converter transformers from BHEL, Bhopal works to Balia, both road and water transport was used. During transportation, collapse of bridges and variation of water level in the river considerably delayed the supply. For example, the first converter transformer unit was ready for dispatch in the first week of October 2011 but due to collapse of a bridge in Madhya Pradesh, movement of all heavy equipment was totally stopped by the government of Madhya Pradesh for almost two months. Substations Sl. Scope of Original Actual Resettlement and Rehabilitation No. Works Commissioni Commis ng Schedule sioning Funding: PSDP IV 1. ±500 kV September July RAP involved 168 acres of private land in Uttar HVDC 2009 2012 Pradesh. RAP was completed in October 2011 with: substation at  RA (INR 12.112 million) distributed to all 386 Balia along eligible PAP. with  Full land compensation (INR 57.38 million) associated disbursed to all PAP. works  Following CD works (INR 9.82 million) completed at: o Bhind Lakhansingha village - Construction 50 Exchange rate considered US$1 = INR 61. The cost includes HVDC Transmission Line funded under PSDP III. 51 The HVDC bipole line was covered under the PSDP III loan and completed in March 2010. Pole I of the HVDC line along with terminal stations was originally planned to be completed by September 2009 but was completed in August 2010 due to the reasons explained above. 100 Sl. Scope of Original Actual Resettlement and Rehabilitation No. Works Commissioni Commis ng Schedule sioning of road, 2 new rooms in higher secondary school, 2 toilets in school premises (one each for girls and boys), providing furniture for students in school, and installation of 5 hand pumps o Chakhabaspur village - Construction of road, 2 rooms for primary school, toilets in school premises (one each for girls and boys), bus shelter at main road passing through the village, providing furniture for students in the school, and installation of 5 hand pumps o Ibrahim Patti village - Construction of toilet in school, boundary wall in school, installation of 2 hand pumps, providing furniture in school, and renovation of pond 2. ±500 kV September July RAP (completed in April 2010) involved 10.53 acres HVDC 2009 2012 of private land in Rajasthan and included: substation at  RA (INR 5.032 million) distributed to all eligible Bhiwadi 97 PAP along with  Full land compensation (INR 20.67 million) associated amount disbursed to all 97 PAP works  Completed CD works (INR 6 million) includes construction of 1 room with baramada for dispensary; construction of road; and provision of drinking water supply Other Features of the Scheme i. Procurement. Under the project, the 2 packages that were covered under PSDP IV were awarded in March 2007and December 2007, respectively. Package Type Prior Review Post Review Total Insulator – 1 1 Substation 1 – 1 Total 1 1 2 ii. Environmental assessment reports. As only HVDC terminal stations were covered under PSDP IV, there was no forest involved. Since the HVDC bipole line was funded under PSDP III, the necessary documents (IEAR and FEAR) were submitted as part of PSDP III. Major Benefits of the Scheme i. The HVDC link is operating successfully and enables a maximum power flow of 2,000 MW. ii. The HVDC link is facilitating bulk power exchange between the Northern, Western, and Eastern Regions. The link has become an important component in strengthening the Northern Region grid as the HVDC system comes with benefits such as controlled power flow, control features that help in damping the system oscillation after any disturbance, no contribution to any additional short circuit current to Balia (while AC systems does contribute), and flexibility of operations. 101 b. North-West Transmission Corridor Strengthening Scheme Project Cost i. Total completion cost. About INR 4.92 billion (or US$81 million)52 ii. Bank funding under PSDP IV. About INR 0.52 billion (or US$8.45 million) Commissioning The scheme was originally planned to be completed by January 2009 but was later revised to be completed by March 2009 along with the commissioning of the associated transmission lines, which were funded under PSDP III and commissioned in April 2009. These were the reasons for this marginal delay in commissioning of the associated transmission lines: i. There was a delay in receipt of forest clearance for the Zerda-Kankroli 400 kV D/C line. The forest proposals were submitted in 2006–07 for clearance in five divisions of Rajasthan and Gujarat States. The process took longer due to delay in processing at various stages within the state forest departments. ii. In addition, there was a stay order at three of the locations by the Nathdwara court, Rajasthan. The sites were vacated in February 2009. Thereafter, the line was commissioned in April 2009. Substations Sl. Scope of Works Original Actual Resettlement & No Commissioning Commissioning Rehabilitation Schedule Funding: PSDP IV 1. 400/220 kV Agra January 2009 March 2009 RAP was not required (POWERGRID) substation as the project involved extension extension of existing 2. 400/220 kV Gwalior January 2009 March 2009 substations only. (POWERGRID) substation extension 3. 400/220 kV Kankroli January 2009 April 2009 (POWERGRID) substation extension 4. 400/220 kV Zerda (GEB) January 2009 April 2009 substation extension Other Features of the Scheme i. Procurement. Under the project, the 2 packages that were covered under PSDP IV were awarded in April and July 2007, respectively. Package Type Prior Review Post Review Total Insulator – 1 1 Substation – 1 1 Total – 2 2 52 The cost includes HVDC Transmission Line funded under PSDP III. 102 ii. Environmental assessment reports. As only substations are covered under PSDP IV, there was no forest involved. The associated transmission lines were funded under PSDP III. The necessary documents (IEAR and FEAR) were submitted as part of PSDP III. Major Benefits of the Project i. These two interregional transmission lines along with the extension of the associated bays have enhanced the interregional power transfer capacity by 2,100 MW. ii. These two separate interconnections have also enhanced system stability as well as security of the Northern and Western grids. c. Western Region System Strengthening Scheme II Project Cost i. Total completion cost. About INR 29.90 billion (or US$490 million) ii. Bank funding under PSDP IV and PSDP IV AF. About INR 25.11 billion (or US$411.71 million, of which US$152.73 million under PSDP IV and US$258.98 million under PSDP IV AF). Commissioning The project was scheduled for commissioning in July 2010 but could be progressively commissioned only till December 2012 due to delays in obtaining forest clearance for various lines under the project, especially Raipur-Wardha and Korba-Birsinghpur (varied between 22 and 62 months). The details are as listed: Raipur-Wardha 400 kV D/C line For the state of Chhattisgarh: i. Proposal for forest clearance for the Chhattisgarh portion was submitted in October 2007. ii. The stage-I approval was accorded on May 31, 2010, by the RMoEF, Bhopal stipulating various conditions. iii. After complying with all the conditions in stage-I approval, the stage-II (final) approval was issued on March 9, 2011, by the RMoEF, Bhopal. iv. On stage-II approval, the cost of tree cutting was deposited and approval was given in May 2011 for tree cutting. For the state of Maharashtra: i. Proposal for forest clearance for the Maharashtra portion was submitted in October 2007. ii. The proposal involved forest area in the Gondia division and under Forest Development Corporation of Maharashtra (FDCM). The NOC from the FDCM was obtained in November 2010. iii. The proposal was forwarded by the state government to the MoEF at New Delhi in May 2011, which directed the RMoEF, Bhopal for site inspection in June 2011 followed by submission of report to the MoEF in July 2011. The proposal was then discussed in the meeting of the FAC (August 2011). Since the line passes through the wildlife corridor (Tiger Corridor), comments were solicited from the National Tiger Conservation Authority (NTCA). NTCA/Wildlife Institute of India (WII) submitted its recommendations to the MoEF in December 2011 and the proposal was again 103 discussed in the FAC held in December 2011 and cleared for approval. Accordingly the stage-I approval was issued on April 30, 2012, stipulating various conditions. iv. After complying with all the conditions in the stage-I approval, the approval was obtained on September 17, 2012, for the second and final stage. v. Further, since the line passes through a protected area/eco-sensitive zone and the proposed land is within 10 km of the boundary of the protected reserve, tree felling permission had also to be taken from the High Court, Maharashtra. Hence, along with the forest department, an application was filed in the High Court in September 2011, seeking permission for tree felling in the forest area for establishment of the 400 kV D/C transmission line. However, pending MoEF approval, the High Court directed that the request be filed again after obtaining MoEF consent. On stage-II approval in September 2012, a fresh appeal was filed before the High Court subsequent to which the permission for tree felling in the forest area was granted on November 30, 2012. After permission of the High Court, construction activities started in forest areas and the work was completed and the line successfully charged on December 31, 2012. Korba STPP-Birsinghpur 400 kV D/C line The transmission line was passing through the forest area in the states of Madhya Pradesh and Chhattisgarh. The proposal for forest clearance was submitted on May 17, 2006. However, it took considerable time for the MoEF to grant the final approval (stage-II) in spite of continuous follow-up by POWERGRID at different levels. Stage-I and stage-II approvals for the Madhya Pradesh portion was granted on March 2, 2009, and November 9, 2009, respectively and for the Chhattisgarh portion on July 28, 2010, and June 14, 2011, respectively. Transmission Lines Sl. Scope of Works Original Actual State Forest Approval Status (and No. Commissio Commissio Area Time Taken since ning ning (ha) Submission of Forest Schedule Proposal to DFO) Funding: PSDP IV 1. 400 kV D/C Korba- July 2010 February Chhattis 157.48 Final approval in June Birsinghpur line - 2012 garh 2011 (62 months) 454 ckm Final approval in Madhya 96.84 November 2009 (41 Pradesh months) 2. 400 kV D/C July 2010 February Madhya 84.51 Final approval in May Birsinghpur-Damoh 2011 Pradesh 2009 (38 months) line – 508 ckm 3. 400 kV D/C July 2010 March 2010 Madhya 88.71 Final approval in May Damoh-Bhopal line Pradesh 2009 (40 months) - 432 ckm Funding: PSDP IV AF 4. 400 kV D/C July 2010 July 2011 Mahara 24.27 Final approval in May Wardha-Parli quad shtra 2011 (22 months) line - 674 ckm 5. 400 kV D/C July 2010 March 2011 Mahara 3.58 Final approval in July Bhadrawati-Parli shtra 2010 (44 months) line - 776 ckm 104 Sl. Scope of Works Original Actual State Forest Approval Status (and No. Commissio Commissio Area Time Taken since ning ning (ha) Submission of Forest Schedule Proposal to DFO) 6. 400 kV D/C Parli July 2010 February Mahara – No forest was involved (MSETCL)-Parli 2011 shtra (POWERGRID) line - 10 ckm 7. 400 kV D/C Raipur- July 2010 December Chhattis 15.37 Final approval in March Wardha line - 741 2012 garh 2011 (42 months) ckm Mahara 100.91 Final approval in shtra September 2012 (60 months) Substations Sl. Scope of Works Original Actual Resettlement & Rehabilitation No. Commissioni Commissioni ng schedule ng Funding: PSDP IV 1. New 400/220 kV July 2010 October  42 acres of encroachment free government Pune substation 2010 land in Maharashtra was acquired. No PAP involved; hence, no RAP.  Under CD work (INR 2.93 million), reinforced concrete road in the adjoining village (Nav Lakh Umbre) (about 800 meters) has been constructed. 2. New 400/220 kV July 2010 March 2010 RAP (completed) involved 39.79 acres private Solapur substation land in Maharashtra and includes:  RA (INR 6.66 million) distributed to all 22 eligible PAP.  Completed CD works (INR 8.991 million): Construction of community hall (2,000 sq. ft.) comprising 1 hall, stage with rooms on both sides, and 1 kitchen; community toilets with septic tank, 10 units each at 3 locations for women, around the village; library building; distribution of 5 personal computers for the high school; construction of approach road connecting the community hall to the main road (Solapur-Akkalkot) with 1 culvert; construction of approach road connecting the main road to the SC and ST colony; construction of road in minority colony with 1 side drain; and approach roads on already laid metal roads inside new village developed adjacent to old village, with 2 culverts and 1 side drain providing 110 mm diameter Hume pipe crossings. 3. Extension of July 2010 February RAP was not required as the project involved Gwalior and Bina 2010 extension of existing substations only. substations 105 Sl. Scope of Works Original Actual Resettlement & Rehabilitation No. Commissioni Commissioni ng schedule ng 4. Extension of July 2010 February Damoh and Bhopal 2011 and substations March 2011, respectively 5. Extension of July 2010 February Kolhapur 2011 substation 6. Extension of July 2010 August 2011 Aurangabad, Parli, and February and Korba 2012, substations respectively Funding: PSDP IV AF 7. 400 kV Parli (New) July 2010 March 2011 RAP (completed) involved 36.5 acres of substation private land in Maharashtra and include:  RA (INR 1.524 million) distributed to all 40 eligible PAP.  Completed CD works (INR 57.09 million): Construction of water-bound macadam road along the east side of the substation boundary wall; construction of reinforced concrete road inside the village; extension of school building; extension of community hall and financial assistance of INR 0.3 million to three Mahila Bachat Gut (SHG) under rural self-employment scheme at INR 0.1 million to each Gut. 8. Extension of 400 July 2010 Progressively RAP was not required as the project involved kV Bhadrawati, from extension of existing substations only. Parli (MSETCL), February Wardha, Seoni, and 2011 to Raipur substations September 9. Extension of 400 July 2010 2011 kV Rajgarh, Karamsad, Limbdi, Zerda, Ranchodpura, and Birsinghpur substations 10. FSC at Rajgarh July 2010 substation for 400 kV Rajgarh- Karamsad D/C line 11. FSC at Wardha July 2010 substation for 400 kV Wardha-Raipur D/C line Other Features of the Scheme i. Procurement. Under the project, 16 packages were covered under PSDP IV and 25 packages were covered under PSDP IV AF. These packages were awarded from May 2007 to March 2009. 106 Package Type Prior Review Post Review Total PSDP IV Tower 3 – 3 Conductor 3 1 4 Insulator 2 2 4 Substation 3 1 4 Reactor 1 – 1 Total 12 4 16 PSDP IV AF Tower 7 – 7 Conductor 4 3 7 Insulator 2 2 4 Substation 1 2 3 Reactor 1 1 2 FSC 1 1 2 Total 16 9 25 ii. Environment assessment reports Report Target Date for Actual Date of Submission Submission (as per PIP) Set-A IEAR – December 2006 FEAR May 2008 November 2009* Set-D IEAR March 2007 March 2007 FEAR December 2008 September 2009* Note: *Forest clearance is an important input for the FEAR, which is basically a compliance report of the IEAR listing all measures taken for management of environment and social issues. During the one-year period starting from October 2006 to October 2007, no forest clearance was granted by the MoEF due to intervention of the Supreme Court. Accordingly, there were delays in obtaining forest clearance and as agreed with the Bank, POWERGRID submitted the FEAR. Major Benefits of the Project These elements have augmented intraregional transmission system in the Western Region to facilitate import of power from neighboring regions as well as further dispersal towards various load centers in various parts of the region to meet the long-term power transfer requirement. d. East-West Transmission Corridor Strengthening Scheme Project Cost i. Total completion cost. About INR 7.11 billion (or US$117 million) ii. Bank funding under PSDP IV and PSDP IV AF. About INR 3.61 billion (or US$59.15 million, of which US$52.91 million under PSDP IV and US$6.24 million under PSDP IV AF) Commissioning The scheme was originally targeted to be completed by June 2009 but could only be completed by June 2011 due to delays in obtaining forest clearance for various lines under the project, especially Ranchi-Rourkela and Rourkela-Raigarh (varied between 30 and 55 months). The details are as listed: i. Ranchi-Rourkela line. The proposal for forest clearance was submitted on January 3, 107 2006. However, forest clearance was received on August 4, 2010, as the realigned route proposed by the concerned forest officials passed through the extremist influenced area, creating a lot of resistance to complete the realignment survey and plot identification, including tree enumeration. Chronological details of obtaining the forest clearance are provided in annex 2. ii. Rourkela-Raigarh line. The proposal for forest clearance was submitted on February 7, 2008, whereas the permission for construction work in forest area was obtained from the MoEF on July 26, 2010, as a special case, in view of the importance of the transmission line for the Commonwealth Games 2010. Transmission Lines Sl. Scope of Original Actual State Forest Approval Status (and Time No. Works Commissio Commissi Area (ha) Taken since Submission of ning oning Forest Proposal to DFO) schedule Funding: PSDP IV 1. 400 kV D/C June 2009 Novembe Jharkh 18.52 Final approval obtained in Ranchi- r 2010 and August 2010 (55 months). Rourkela Line – 290 ckm 2. 400 kV D/C June 2009 June 2011 Orissa 111.39 Special permission obtained Rourkela- on July 26, 2010, in view of Raigarh Line the importance of – 420 ckm transmission line for Commonwealth Games 2010 (30 months). 3. 400 kV D/C June 2009 September Chhatti Nil No forest area involved. Raigarh- 2010 sgarh Raipur Line – 440 ckm Substations Sl. Funding Scope of Works Original Actual Resettlement & No. Commissionin Commissionin Rehabilitation g Schedule g 1. PSDP Extension of 400 kV June 2009 Progressively RAP was not required IV Ranchi, Rourkela, from Sep as the project involved Raipur & Raigarh S/S 2010 to Nov extension of existing 2010 substations only. 2. PSDP FSC at Raipur June 2009 March 2011 RAP was not required IV AF substation for 400 kV as the project involved D/C Rajgarh – Raipur extension of existing line substations only. Other Features of the Scheme i. Procurement: Under the project, 5 packages were covered under PSDP IV and 1 package was covered under PSDP IV AF, these packages were awarded from July 2007 to March 2009. 108 Package Type Prior Review Post Review Total PSDP IV Tower – 3 3 Insulator – 1 1 Substation – 1 1 Total – 5 5 PSDP IV AF FSC – 1 1 Total – 1 1 ii. Environment Assessment Report Report Target Date for Submission (as per PIP) Actual Date of Submission IEAR January 2007 February 2007 FEAR January 2008 June 2009 Major Benefits of the Project The scheme has strengthened the existing Rourkela-Raipur interregional transmission corridor facilitating more reliable and secure power transfer from the Eastern to Western Region. The interregional link along with installation of the FSC has augmented the interregional transmission capacity of the National Grid by 1,400 MW. e. Eastern Region System Strengthening Scheme I Project Cost i. Total completion cost. About INR 9.96 billion (or US$163 million) ii. Bank funding under PSDP IV and PSDP IV AF. about INR 6.76 billion (or US$110.91 million, of which US$59.83 million under PSDP IV and US$51.08 million under PSDP IV AF) Commissioning The scheme was originally scheduled to be completed by October 2009 but most of the elements were complete by May 2013 except for the second circuit of re-conductoring of the Purnea-Siliguri line, which could only be completed by March 2014. The delay in completion of the projects was mainly due to the following reasons: i. Delays in obtaining forest clearance for various lines under the project that were available from April 2009 to April 2011 (varied from 22 to 42 months). The longest was taken by the Baripada-Mendhasal line, for which the proposal for forest clearance was submitted on February 28, 2008. However, the final clearance was received almost after 3.5 years (on August 25, 2011). ii. Completion of the Durgapur-Jamshedpur Line got delayed as Eastern Coalfields Limited did not allow construction works through their area near Durgapur. This was compounded by severe RoW problems for some part of the line. POWERGRID short- terminated and commissioned the line at Durgapur STPS Switchyard (at Andal) to gainfully use the line. iii. Completion of the Jamshedpur-Baripada line was also affected due to severe RoW problem. iv. Re-conductoring of the Purnea-Siliguri line was initially affected on account of the delay in conductor supply due to the devastating earthquake and tsunami in Japan in 109 March 2011. This calamity affected the factory of M/s J-Power Systems Corporation Ltd (JV partner of the contract supplier) at Toyoura, leading to delay in conductor supplies. Further, supply of hardware material also got affected due to floods in Thailand. v. Shutdown of the existing line for re-conductoring works on the Purnea-Siliguri line was difficult, especially during the monsoon and hence, could only be achieved in phases. Transmission Lines Sl. Scope of Original Actual State Forest Approval Status (and Time No. Works Commissio Commissi Area Taken since Submission of ning oning (ha) Forest Proposal to DFO) Schedule Funding: PSDP IV 1. 400 kV October April West 30.55 Final approval obtained on D/C 2009 2012 Bengal March 24, 2010 (22 months). Durgapur- Jamshedpu Final approval obtained on r line – 314 Jharkhand 11.38 July 3, 2009 (30 months). ckm Final approval obtained on Wild Life February 10, 2010. Jharkhand 2.70 2. 400 kV October May 2013 Jharkhand 54.40 Final approval obtained on D/C 2009 October 12, 2009 (39 Jamshedpu months). r-Baripada Orissa line – 282 3.38 Final approval obtained on ckm April 17, 2009 (31 months). 3. 400 kV October August Orissa 20.81 Final approval obtained on D/C 2009 2011 August 25, 2011 (45 Baripada- months). Mendhasal line – 544 0.55 Permission of the Supreme ckm (Wildli Court obtained on May 4, fe) 2010. Funding: PSDP IV AF 4. Re- October 1st circuit Nil Nil Since it was re-conductoring, conductori 2009 in May it did not require any new ng of 2013 and approvals. Purnea- 2nd circuit Siliguri 400 in March kV D/C 2014. line – 346 ckm Substations Sl. Funding Scope of Works Original Actual Resettlement & No. Commissio Commissi Rehabilitation ning oning schedule 1. PSDP IV Extension of 400 kV Durgapur, October May 2013 RAP was not Jamshedpur, Baripada, and required as the 110 Sl. Funding Scope of Works Original Actual Resettlement & No. Commissio Commissi Rehabilitation ning oning schedule Mendhasal substations and 2009 project involved renovation of Siliguri and Purnea extension of existing substations substations only. Other Features of the Scheme i. Procurement. Under the project, 6 packages were covered under PSDP IV and 3 packages were covered under PSDP IV AF and were awarded from March 2007 to September 2010. Package Type Prior Review Post Review Total PSDP IV Tower – 4 4 Insulator – 1 1 Substation – 1 1 Total – 6 6 PSDP IV AF Tower 1 – 1 Conductor 2 – 2 Total 3 – 3 ii. Environment assessment reports Target Date for Submission (as per PIP) Actual Date of Submission IEAR May 2007 August 2007 FEAR May 2008 July 2009 Major Benefits of the Project i. This scheme has strengthened the transmission networks and enables transfer of power from the eastern part of the Eastern Region to the central areas of the region and further transmission. ii. Earlier, the Siliguri-Purnea line was evacuating hydel power from the Tala and Teesta projects. Strengthening of this line has resulted in transferring additional power with reliability from the planned generation projects in Sikkim, Bhutan, and the Northeastern Region through the chicken neck area. f. Southern Region System Strengthening – XIII (New Scheme Added Through Restructuring) Project Cost i. Total completion cost. About INR 4.92 billion (US$81 million) ii. Bank funding under PSDP IV. INR 2.30 billion (US$37.65 million, which is the amount disbursed till August 22, 2014) Commissioning The scheme was originally scheduled for completion by June 2014, before the loan closing date but is now expected to be completed not before March 2015 due to severe RoW issues faced in the state of Karnataka since February 2013. The reason for the delays is the intense organized protests by landowners and villagers on both the lines funded under this loan. 111 Even after intervention of the state authorities, the protests are not dying out. POWERGRID is continuously in consultation with the relevant state authorities and has been taking measures as being suggested and agreed but protests have been re-emerging. Chronological details of the status of the works at site are provided in annex 2. Implementation of this line will now be monitored under PSDP V, the ongoing lending engagement with POWERGRID. Transmission Lines Sl. Scope of Original Actual State Forest Approval status No. Works Commissioni Commissio area (and time taken ng schedule ning (ha) since submission of forest proposal to DFO) Funding: PSDP IV 1. 400 kV D/C June 2014 Under Andhra Nil No forest was Gooty – Implementat Pradesh/ involved Madhugiri ion Karnataka line – 417 ckm 2. 400 kV D/C Karnataka Nil No forest was (Quad) involved Madhugiri - Yelahanka line - 132 ckm Substations Sl. Scope of Original Actual Resettlement & Rehabilitation No. Works Commissioning Commissioning Schedule Funding: PSDP IV 1. 400/200 June 2014 Under  Possession for land (total about 113.35 kV Implementation acres) already obtained through Madhugiri Karnataka Industrial Areas (Tumkur) Development Board (KIADB). PAP: Substation 78; RA: INR 8.028 million.  Some portion of land was acquired by KIADB on behalf of POWERGRID for which social impact assessment (SIA) study was undertaken based on which an RAP was prepared in June 2014.  Consultation on draft RAP organized in July 2014 and final RAP after incorporating inputs of public consultations submitted to the Bank in October 2014. CD works after consultation with villagers include providing approach road to village (INR 5 million); providing internal concrete roads in the village (approximately 0.6 km; INR 2 million); construction of draining system in the village (approximately 0.6 km; INR 1. million). These works have already been awarded and are targeted to be 112 Sl. Scope of Original Actual Resettlement & Rehabilitation No. Works Commissioning Commissioning Schedule completed by January 2015. 2. 400 kV RAP was not required as the project Bay involved extension of existing extension substations only. at Gooty Other Features of the Scheme i. Procurement. Under the project, 8 packages were covered under the PSDP IV loan. These packages were awarded from December 2011 to August 2012. The mix of packages was as given in the table: Package Type Prior Review Post Review Total Tower 3 – 3 Conductor – 3 3 Insulator – 1 1 Substation – 1 1 Total 3 5 8 ii. Environment assessment report Report Target Date for Submission (as per PIP) Actual Date of Submission IEAR – February 2011 FEAR – May 2014 Major Benefits of the Project As implementation of the line has been affected due to severe RoW issues in the state of Karnataka, the benefits are yet to accrue. The line is expected to carry about 1,600 MW of power. However, it may be mentioned that no power is being bottlenecked due to delay in implementation of these transmission lines. g. System Strengthening in Western Region for Sasan UMPP (Scheme Shifted from PSDP V Through Restructuring) Project Cost i. Total completion cost. About INR 7.25 billion (or US$119 million) ii. Bank funding under PSDP IV AF. About INR 5.12 billion (or US$84 million) Commissioning The scheme was originally scheduled for completion in December 2012 (as per PAD of PSDP V) but it could only be commissioned by October 2014 due to reasons as explained below: i. Gwalior substation. Marginal delay of about 3 months was mainly on account of the intense fog conditions prevailing in the northern part of India around Agra and Gwalior regions at the time completion, which are not suitable for the transmission system, especially of 765 kV. Work at Gwalior substation also got delayed as upgrade of Bina-Gwalior-Agra line was delayed due to major grid disturbance in July 2012. 113 ii. Indore substation. Acquisition of land got delayed initially due to stiff resistance from the farmers. Once it was resolved, the site levelling work to be done from July 2010 to January 2011 got delayed as the vendor did not perform leading to termination of the contract, which was re-awarded in July 2011. This was then completed within contract period of six months. iii. Shunt reactor package. The package could be awarded in February 2012 after 23 months from initiation of the procurement process (NIT issued in March 2010) after getting necessary approvals from the Bank at various stages of the procurement action. The reason for the delay was formulation of suitable qualification requirement in the contracts for setting up of repairs and maintenance (R&M) facilities for 765 kV transformers and reactors by the vendors, especially foreign bidders. Substations Sl. Scope of Original Actual Resettlement & Rehabilitation No. Works Commissioning Commissioning Schedule Funding: PSDP IV AF 1. 765/400 kV December 2012 June 2013 RAP (completed) involved 6.28 Indore acres government and 90.05 acres substation private land in Madhya Pradesh and included:  RA (INR 8.309 million) distributed to all 90 eligible PAP  Completed CD works (INR 6.45 million) include construction of a community center, library, and school boundary wall, additional class room, 2 toilets at the high school in Hatunia village; distribution of 10 computers; waiting shed, multipurpose shed, and hand pump installation; provision of school furniture in Kadwa village and solar lights in village in place of two buildings that were earlier agreed by the villagers. 2. Extension December 2012 June 2013 RAP was not required as the project of 400 kV involved extension of existing Indore substations only. (MPPTCL) substation 3. Upgrading December 2012 March 2013 RAP was not required as the project Gwalior involved extension of existing substation substations only. to 765 kV and extension of 400 kV 4. Upgrading December 2012 March 2013 RAP was not required as the project Bina involved extension of existing substation substations only. to 765 kV 114 Sl. Scope of Original Actual Resettlement & Rehabilitation No. Works Commissioning Commissioning Schedule by 2x1000 MVA transformer s 5. Single December 2012 October 2014 RAP was not required as the project Phase involved extension of existing Transforme substations only. rs at Gwalior and Indore substation 6. Shunt December 2012 March 2014 RAP was not required as the project reactors at involved extension of existing Bina, substations only. Gwalior, Indore Substation Other Features of the Scheme i. Procurement: Under the project, the 5 packages that were covered were awarded from September 2010 to February 2012. The mix of packages was as listed: Package Type Prior Review Post Review Total Substation 2 – 2 Transformer 2 – 2 Reactor 1 – 1 Total 5 – 5 ii. Environment assessment reports Report Target Date for Submission (as per PIP) Actual Date of Submission IEAR June/July 2009 May 2009 FEAR – Not required Major Benefits of the Project Under the transmission scheme, a total transformation capacity of 8,000 MVA has been added to cater to the load demand of major load centers in Madhya Pradesh. Comments on Draft ICR: Observations from Reference in Draft Bank Team’s POWERGRID or Observations ICR Response GoI Cover page, Loan POWERGRID As per the loan It is system generated numbers agreements the loan and cannot be numbers are 4890-IN changed and 7593-IN 115 Observations from Reference in Draft Bank Team’s POWERGRID or Observations ICR Response GoI Cover Page, Name of POWERGRID Added “…AND ITS Incorporated the Project ADDITIONAL FINANCING” Data sheet, Project POWERGRID Added “…AND ITS It is system generated Name ADDITIONAL and cannot be FINANCING” changed Data sheet, Loan POWERGRID As per the loan It is system generated Numbers agreements the loan and cannot be numbers are 4890-IN changed and 7593-IN Section 1, Heading 1, POWERGRID Added “…(2007-08)” Incorporated Context at Appraisal Section 1, Heading 1, POWERGRID Editorial change Incorporated Para 7, Rationale for World Bank assistance Section 1, Heading 6, POWERGRID These components This is the set Revised Components were added to original template for the ICR. components under PSDP-IV and are not the revised components Footnote 23 POWERGRID Replace distribution Incorporated with transmission Section 3, Heading 1, POWERGRID Correct the resource Incorporated Relevance of mobilization figure Objectives, Design from US$20 billion to and Implementation, US$11 billion. Para 57 Section 3, Heading 5 POWERGRID Editorial change Incorporated (b), Institutional change/ strengthening, para 69 Section 3, Heading 5 POWERGRID Editorial change Incorporated (b), Institutional change/ strengthening, para 74 Section 6, point g POWERGRID Editorial change Incorporated Annex2, Output, Grid POWERGRID To replace ‘CERC’ by Incorporated Disturbance of July ‘Enquiry Committee 2012 constituted by MoP’ Annex2, Output, POWERGRID Added “As per Public Incorporated Other Key Enterprises (PE) Developments at Survey 2013 (by Entity Level Department of Public Enterprises (DPE), GoI), POWERGRID is the fifth largest 116 Observations from Reference in Draft Bank Team’s POWERGRID or Observations ICR Response GoI Central Public Sector Enterprises (CPSE) in terms of Gross Block.” Annex2, Output, POWERGRID Editorial change Incorporated Other Key Developments at Entity Level Annex 7, Table 7.4 POWERGRID Correction in certain Incorporated figures Map POWERGRID Please share the final No map will be MAP with included. POWERGRID before publication of the ICRR 117 Annex 8. Comments of Co-financiers and Other Partners/Stakeholders Not applicable 118 Annex 9. List of Supporting Documents 1. Financial and economic models at completion for the five core and candidate schemes 2. POWERGRID’s Completion Report for the project, December 2014 3. Implementation Completion and Results Report for PSDP III 4. Project Appraisal Document for PSDP IV 5. Project Paper for PSDP IV AF 6. Aide Memoires 7. Implementation Status Reports 8. CPS for 2013–2017 119 Annex 10: Eligibility Criteria for Selection of Candidate Schemes to be financed under PSDP Loans As agreed during appraisal of PSDP III, the schemes to be eligible for financing under the PSDP III loan as well as the follow-on loans will be based on PIPs submitted by POWERGRID to establish the satisfaction of the Bank that an investment scheme for which Bank approval is sought meets the following eligibility criteria: General Criteria 1. The investment scheme is technically and operationally justified and has been formulated after taking into account other alternative investments. 2. The investment scheme is based on least cost options and is included in the overall least cost Investment Program of POWERGRID and is economically and financially justified. 3. The appropriate authorities of the GoI have provided required clearances/approvals for implementing the investment scheme, including environment and forest clearances, as applicable, before initiation of construction of those relevant segments of such an investment scheme for which environmental and forest clearances are required. 4. The investment scheme has adequate financing, procurement, and implementation plans. 5. The investment scheme complies with POWERGRID’s environmental and social policy and procedures and, toward that end, POWERGRID has carried out an environment impact assessment and prepared an environmental mitigation plan, and where applicable, a resettlement and rehabilitation plan or other development plan for adversely affected people, all in a manner satisfactory to the World Bank. 6. The investment scheme shall be for strengthening of the transmission system and interregional power exchange for the National Grid. 7. Such additional criteria as may be specified by the Bank for each additional investment scheme, other than the core schemes. 120 Annex 11. Templates 1. Table of Contents for Quarterly Progress Report (QPR) a. Executive Summary b. Project Description c. Status of Implementation d. Disbursement e. Commercial issues f. Status of Procurement g. Annexures: i. Gantt Chart for each scheme ii. Percentage Progress for each scheme 2. Contracts Monitoring Report for Works/Goods under PSDP IV and PSDP IV AF The following information for each package/contract was submitted by POWERGRID as part of the quarterly FMRs: a. General: i. Package Number ii. Description of Works/Goods b. Bidding Stage: i. Method of procurement ICB/NCB ii. Preparation of Bid Document (Date) iii. Bank's No Objection to Bidding Documents (Date) iv. Bids Invitation (date) v. Bid Opening (date) vi. NOA/Contract Award Decided / BER submitted to Bank (Date/ Value/ Currency) vii. Bank's No Objection to Contract Award (Date) c. Commencement of Works: i. Signing Date ii. Currency iii. Original value (in Million) iv. Name of Contractor/ Nationality v. Type of Contract vi. Contract No. vii. WBR No. viii. Commencement Date ix. Original Completion Date x. Revised Completion Date d. Variations: i. Latest Amended Value ii. Fundable Value iii. Price Variation + Taxes iv. Total Fundable Value e. Disbursements: i. Percent of contract fundable per LOA ii. Expenditure during the current quarter by PGCIL iii. Expenditure incurred by PGCIL till current quarter 121 iv. Total World Bank disbursements till current quarter 3. Physical Progress Monitoring Report for Schemes under PSDP IV and PSDP IV AF The following information for each package within each scheme was submitted by POWERGRID as part of the quarterly FMRs: a. Task Name b. Currency c. LOA Value d. Latest Amended Value e. Fundable Value f. Price Variation g. Total Fundable h. Utilization i. Percent Utilization j. Baseline Start k. Start/Actual Start l. Baseline Finish m. Finish/Actual Finish n. Percent Complete 122 Annex 12. Incorporation of Lessons from DIR Sl. Issue Actions Taken by Task Team and/or Actions Proposed to be No. POWERGRID Taken by the Task Team and/or POWERGRID Project Design 1 Risk of fraud and corruption  F&C has been rated moderate based on: • POWERGRID to upgrade (F&C)  borrower’s previous satisfactory website for easier and performance; and broader access to information  increased accountability as company has been listed and independent directors appointed. • Key information is continuously published on the company’s web site (i.e., bidding documents, IFB, and contract awards) • Board Committees chaired by Independent Directors for (i) Audit and (ii) Shareholder complaints/investor grievance fully operational • Company subject to the surveillance of the independent Central Vigilance Commission of India • No accountability issues in audit reports under PSDP III 2 Critical implementation POWERGRID has implemented several • Standardized processes to failures for proper operation complex power systems based on: fully be implemented in of assets created with Bank • high-quality design and implementation; regional units financing are not properly • capacity building by training staff; and identified and mitigated • standardized processes based on ISO • Implementation of CSR and certifications (9001, 14000 and 18001). CD policy. 3 Conflict of interest in entities • POWERGRID implements its projects Adequacy of internal control delegated to carry out directly. framework will be supervised procurement, • There is an internal control framework by the task team (TT) at implementation, and within POWERGRID, the adequacy of periodic intervals. supervision functions which is verified annually by the statutory auditor while conducting entity audit Supervision 4 Physical implementation is • Financed activities are few and assets are • In addition to physical not verified during large and easily verifiable. monitoring, POWERGRID supervision • POWERGRID has multitiered monitoring will also carry out systems of physical implementation. independent environmental • TT has included site visits as part of the review for selected. supervision. • Disbursements will be based on reports that will capture both financial and physical information of the activities. 123 Sl. Issue Actions Taken by Task Team and/or Actions Proposed to be No. POWERGRID Taken by the Task Team and/or POWERGRID 5 Reports and data provided by • Supervision is carried out directly by TT • Not applicable borrower are not verified by which verifies information provided by Bank when supervision is POWERGRID. delegated to borrower. • POWERGRID also has a multitiered system with independent checks and balances. • Quarterly financial results declared by the company are published. • Financial information is audited by independent private auditors with a supplemental audit by the Comptroller and Auditor General. 6 Aide memoires are opaque • Aide memoires reflect TT’s findings • Action plan in aide and lacked details as they are candidly. memoires systematically negotiated with borrower. monitored through a matrix. 7 Bank’s prior and post review • POWERGRID bidding is competitive with • POWERGRID to move do not detect F&C collusion multiple qualified bidders participating toward e-procurement for price fixation. supply of goods at the • Procurement processes in POWERGRID closing of the project. have checks and balances. • Committee on contract awards includes independent directors. • 100 percent of Bank-funded contracts are procured under ICB. • Due to large value, almost 33 percent of the contracts are subject to prior review by Regional Procurement Manager (RPM) and/or Operational Procurement Review Committee (OPRC). • A sample of contracts not subject to prior review is subject to post review. • Disclosure of procurement process (bidding documents and contract award) in United Nations Development Business (UNDB) and POWERGRID websites. 8 Bank and borrower do not • POWERGRID’s suppliers are mostly large • Not required. sufficiently verify firms with adequate track record. authenticity of bidder’s • New bidders are subject to verification qualification. through a special committee before contract award. • Verification reports are shared with the Bank. 9 Bank FMS lacks contract- • POWERGRID’s financial system is linked • Enhanced monitoring of specific data, making it with contract level data and is able to contract-level expenditure impossible to reconcile provide detailed information about sub- details in supervision mission payments with contracts. projects, contracts/ packages and expenditures there under. 124 Sl. Issue Actions Taken by Task Team and/or Actions Proposed to be No. POWERGRID Taken by the Task Team and/or POWERGRID 10 Response to F&C complaints POWERGRID has a robust complaint Bank TT will improve the is based on borrower’s management system, including: complaint managing and response without further • an independent Vigilance Department recording by: verification and there is no which reports to the chairman; and • seeking additional mechanism to handle • a web-based complaint management information from other complaints. system that allows anybody to post sources; and complaints. • systematically following up on complaint responses. • About 300 complaints have been posted in the last three years and very few are related to procurement. • Bank TT relies mostly on POWERGRID’s information to deal with complaints. 11 Bank TT, borrower, and • POWERGRID procurement systems are • Not applicable other government entities do subject to scrutiny by the Central Vigilance not share key information Commission of India. about procurement (debarred firms). Project Evaluation 12 Inconsistency between POWERGRID has a successful track record • TT will keep similar project implementation in implementation. practices on assessing and success rating and actual • PSDP II was rated Highly Satisfactory on rating implementation of the project implementation as the ICR, which was ratified by IEG’s rating. ongoing projects. Bank relies on borrower information only. Decentralized Procurement 13 Pervasive F&C due to The procurement funded by the Bank is all • Not applicable contracts which are centrally procured. physically dispersed and of low value. 125