technical assistance consultant’s report · better system to store, ... (09-10) as approved by...

Technical Assistance Consultant’s Report

This consultant’s report does not necessarily reflect the views of ADB or the Government concerned, and ADB and the Government cannot be held liable for its contents.

Project Number: 41614 March 2012

India: Capacity Development of the Assam Power Sector Utilities

For Assam State Electricity Board (ASEB)

Prepared by

Mercados – Energy Markets International

Madrid, Spain

in association with North Delhi Power Limited (NDPL)

New Delhi, India

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TA – 7378 – IND. CAPACITY DEVELOPMENT OF THE ASSAM POWER SECTOR UTILITIES FINAL REPORT PRESENTATION GUWAHATI 1 MARCH 2012

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INDEX

  Introduction

  Objectives for the Project

  Project Management & Progress

  Generation Process Management

  Transmission Process Management

  Distribution Process Management

  Jorhat Pilot Project

  Accounting - Financial Aspects

  Human Resources Management

  IT Management

  Final Conclusions

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Introduction

  Assam State Power Utilities

  At state level, the Government of Assam (GOA) introduced the power sector reform policy, Power Policy Statement 2003 and restructured the Assam State Electricity Board (ASEB) into three entities-

  Assam Power Generation Corporation Limited (APGCL);

  Assam Electricity Grid Corporation Limited (AEGCL);

  Assam Power Distribution Company Limited (APDCL)

 Though ASEB technically is not the legal holding company, it however remains in many ways loosely a holding company mainly due to the constraints in clear separation between human resources and financial management between the entities

  Future power sustenance and energy security still remain a big challenge for them.

  Though the overall financial losses and operational performance is moving towards acceptable levels

  A big concern: commercial losses, creation of adequate capacity, improvement in rural electrification and installation of

renewable energy based distributed generation

  Several improvements necessary:

  Organisational structure needs to be changed to respond to the dynamic market

  Improved streamlined Business Processes to respond to changing environment

  Better system to store, manage and retrieval including strong IT-based structure

  Better Human Resource Management including recruitment process, performance management system

  Adequate training and capacity building of the staffs to respond to changing environment

  Well drafted Communication and Change Management Plan

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Objectives of the project   Provide support towards unbundling of the companies, where the companies must perform as independent sustainable entities

  The relationships between the companies are to be performed based on the market rules by means of

bilateral or trilateral transparent agreements.

For this purpose, this project will provide the recommendations, assistance and capacity building for the companies’ managers to ensure financial, managerial, and operational autonomy for utilities’

sustainability.

Key elements of scope of the project

Provide support for:

  Improved structures, streamlined business processes (e.g. finance, commercial and regulatory, accounting,

O&M, planning, design, construction, HR, IT etc.) to respond to the changing environment and the

requirement thereof.

  Define better systems to record, store and manage the data including IT-based systems that support

various organizational initiatives and other business processes;

  Better human resource management including recruitment plans, performance management system;

  Adequate training and capacity building of the staff to respond to the change agenda, and

  Communication and change management plan.

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As-Is Assessment Gaps

Analysis Benchmarking

Action Plan (5years)

Field Assistance

Project Management

  As-Is Assessment: Analysis of existing situation of aspects related to operations, finance,

HR, and IT.

  Benchmarking: Benchmarking of relevant parameters in order to determine the targets/

objectives of different processes within the company.

  Gaps Analysis: Identification of gaps

 Development of detailed recommendations for reducing the above mentioned gaps.

  Action Plan (5 years): Development of 5 years action plan, including capacity building needs

definition (in collaboration with companies’ managers).

  Field Assistance: Implementation of specific activities for the capacity building needs

detected.

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Inception Report Interim Report 1 Interim Report 2 Interim Report 3 Interim Report 4 Draft Final Report Final Report

As-Is Assessment Gap Analysis

& Draft Action Plan

Detailed Action Plan

1. Detailing the overall work plan,

activities, assignment

methodologyapproach, and data

requirement

1. BPR Report

2. Financial Management

Report

3. HR

Strategy Report

4. IT Report

1. BPR Report 2

2. Financial

Report 2

3. HR Strategy Report 2

1. BPR Report

2. Financial Report

3. Capacity Building

Report -Training - 1

1. Assistance and Workshops

2. HR Strategy Report 3

3. Capacity Building Report 2

4. Final

Management Report

5. JPP

1. Draft Report including results of capacity building

activities & all materials in the

project

2. Final Report

including final versions of all the

materials in the project.

Project Management

Project Workflow Chart

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1

9

8

7

6

5

4

3

2

10

11

12

Inception Mission

25 Oct to 3 Nov 2010

Draft Inception Report submitted

January Mission

Draft Interim Report 1 submitted

Final Inception Report submitted

Tripartite Meeting

Stakeholders Meeting:

15 Jan to 25 Jan 2011

Information Collection

2 Nov to 20 Dec 2010

Field Visit by Dist Expert :

Dibrugarh, Morigaon, Rangia and Nalbari

February Mission

15 Feb to 28 Feb 2011

Plant Visit by Gen. Expert: NTPS and KLHP

Finance Team: Stakeholders Meeting

Quarterly Progress Report

April Mission

Interim Report 2 Departmental Workshop

28 Mar to 9 Apr 2011

High Level Meeting with APDCL CGMs

Executive Summary with The Chairman, MDs

(ASEB) and ADB Experts

Field Visit by Dist Expert to Jorhat Circle


May Mission

Workshop on Capital Investment

and Business Plan

5 May to 15 May 2011

Final Interim Report 1 submitted

August 2011



22 Sept to 30 Sept 2011

September Mission

Training Program on IT

Workshop on HRSC

Visit by HR and IT Expert for Jorhat

Pilot Project

Project Progress Snapshot

November Mission

07 Nov to 26 Nov 2011 Visit by Team Leader and Dist. Expert to

Jorhat Pilot Project to review the progress

Training Program by Fin. Expert, Trans.

Expert and HR Expert



December Mission

05 Dec to 30 Dec 2011

Training Program by Acc. Expert, Gen. Expert

and External Dist. Expert January Mission

02 Jan to 25 Jan 2012

Training Program by

Gen. Expert and

External Dist. Expert

Study Tour to NDPL

By APDCL

Major Milestones achieved

July Mission

11 Jul to 23 Jul 2011

Jorhat Pilot Project Kick-off

Workshop on Business Plans of utilities

Training Program on Generation Process

Training Program on Transmission Process

Training Module on Change Management

13 February Mission

07 Feb to 17 Feb 2012

Visit by Fin Expert for completion of APDCL Business Plan

Visit by AEGCL for Training Program in NPTI, Guwahati

Visit to Jorhat Pilot Project by Dist. Expert

Draft Final Report submitted

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  Analysis of Current Performance:

8

Generation Process Management

  Major Challenges:

  Lack of monitoring for enhancing the efficiency of

power plants:

  Introduction of comprehensive Daily,

Weekly and Monthly report.

  Adopt a procedure of effective monitoring by

review and follow up of above reports.

  Detailing out the responsibility and accountability

of employers towards plant performance.

  Introduction of detailed periodic and preventive

maintenance schedule.

  Introduction of effective procurement procedure

and Inventory management system.

  Enhance basic IT infrastructure towards effective

communication system.

  Planning and progress monitoring needs more attention. Monthly progress report is being prepared but essential detail not regularly filled up.

  There is lack of a defined detailed benchmark maintenance plan.

  An officer/department exclusively responsible for

efficiency, planning and progress monitoring not found.

  Monitoring tools such as Primevera, MIS, Customized software, DBM, ERP are not available.

  Communication system at plant level presents weaknesses that may become it to some extent unreliable.

  Fuel supplies are not fully adequate. There is no online measurement of gas at plant end.

  An efficient Inventory and spares management system was not found.

  Environment, Health and Safety issues are not taken as serious as necessary at plant level.

  Procurement procedures are longer than other peers. This results in delays beyond normal standards.

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S.No Parameter Unit Approved by CERC

As Presented by APGCL in its latest

tariff Petition

(09-10)

As approved by AERC in its latest

tariff order

(09-10) Open Cycle

Combined Cycle

LTPS

1 Gross Heat Rate Kcal / KWh 3125 2030 3585 3435

2 Availability % 80% 80% 74 50%

3 A u x i l i a r y P o w e r Consumption

% 1 3 8.05 5.59%

4 PLF % 80% 80% 69 50%

NTPS

1 Gross Heat Rate Kcal / KWh 3125 2030 3495 3266

2 Availability % 80% 80% 55 50

3 A u x i l i a r y P o w e r Consumption

% 1 3 5.17 3.0

4 PLF % 80% 80% 53 50

S.No

Parameter Unit A p p r o v e d by CERC

As Presented by APGCL in its latest tariff petition

(09-10)

As approved by AERC in its latest tariff order

(09-10)

Hydro Power Plant

1 Availability % 55-80%* Not available Not available

2 PLF % 55-80%* Not available Not available

3 Aux. Power Consumption % 1 0.5 0.5

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Short Term Activities Implementation

Status

• Daily, Weekly, Monthly, EHS report, Outage report, Review

and analysis report

The reports have been forwarded to Plant sites

but implementation status

not known

•  Operation, Maintenance, Procurement, Corporate and

Financial planning

Maintenance Planning have been implemented

•  Enhancement in the quantum of gas, negotiate supply agreement,

insure the stability and supply of

gas Status not known

Summary of Action Plan:

Medium/Long Term Activities

•  Effec t ive procurement manual / Procedure, Detailing of spares (with

critical and lead time), Centralized

inventory/store

• Effective communication, Basic IT infrastructure, Internet, email to all users,

LAN, WAN, ERP, SAP and customized

software

•  Conduct Energy Audit, RLA/LE studies for all the units. Prepare R&M plans for

all units based on studies. Implement

R&M in phased manner. Prepare plan for

retirement of units

• Establish a comprehensive training program for workers, operators,

supervisors senior engineer and

management enunciate transparent

policy for rewarding performance and for

useful innovation ideas


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  Training/Assistance Sessions

Delivered:

  Planning

  Progress Review and Monitoring

  Responsibility and Accountability

  Communication

  Information Management

  Procurement

  Inventory

  Vendor/ Supplier Development

  Environment, Health & Safety

  Appreciation & Reward

  Training and Motivation

  Tariff and Regulatory

11

  Company response:

  Though at the beginning there was some misunderstandings among local

staff and experts, the reality is that the

company has much appreciated and

participated in all workshops and

activities proposed.

  T h e w o r k s h o p s w e r e h i g h l y

appreciated especially the workshop

on Tariff.

  The Genera t ion exper ts have

forwarded various performance report

template which has been forwarded to

the Plant site.

  Training sessions at the plant site

requested by APGCL in future


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  Way Forward:

  Organization should be strengthened to meet the requirements of new thermal and hydroelectric

projects monitoring cost control and dispute resolution. Financing arrangements should be formalized

for meeting the needs of new projects, expansion projects and R&M projects. Details of financing are

provided in the section in Financial Management.

  A strong Planning and Monitoring Cell reporting directly to the Managing Director should be set up.

It should be provided with latest monitoring tools. MIS should be fully computerized.

  Employee costs and administration costs should be reduced through rationalization and

relocation of surplus staff to new projects.

  Rigorous energy audit should be done to reduce auxiliary consumption.

  Internal audit should be performed on a continuous basis to reduce costs.

  Agreements with gas suppliers should have two way sharing mechanism with penalty to both buyer

and seller for not meeting minimum guaranteed levels. State Government and Government of India

should be requested to accord greater priority to the power sector in gas allocation.

  Gas turbines at both LTPS and NTPS are very old. More attention may be given to R&M measures

investigating different options.

  Prepare plan for retirement of old units

  In-house training and training of operating personnel and officers at better maintained power stations

is advisable.


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Lack of:

  Updated Load Forecasting &

S y s t e m s t r e n g t h e n i n g

implementation

  Standardization of designs

  Scheduled Maintenance and

control (SCADA) of transmission

system

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Transmission Process Management


  There is a weakness in the long term grid

planning due to the lack of updated LFC studies

  Design of new assets may require some

technological upgrade and standardization.-

Transmission lines

  The schedule maintenance works in transmission

system including Condition monitoring ,RLA in

subs ta t ions and rou t ine inspect ion o f Transmission line insulators requires special

attention to in order to maintain the availability of

transmission system to maximum extent

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Lack of:

  IT Implementation in various

areas

  Elaboration of manuals

  Development of quality plans



  Improvement required for the monitoring of

the works and quality for the

construction of new assets

  Lack of MIS for the management of

the grid, including GIS, mapping of Transmission

lines ,substations, extension of existing

SCADA. Eventually, installation of own optic

fibre cable

  Training in several aspects of the operation is

needed

  Providing Manuals for various

departments in AEGCL

14

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Short Term Activities Implementation Status

  Expediting the process of SCADA work.

Currently only Data Acquisition is available and

the project of laying of

OPGW hasn’t started yet as

it’s in the 2nd phase.

  Procurement:

•  E-tendering Software Under consideration

•  Project Management Software

ADVERTISEMENT EOI for ERP published by AEGCL

  Defining a Metering Architecture

ABT meters in inter-phase levels with APDCL and for

inter-state too.



Reduction of Transmission system losses

Standardization of Transmission line Tower designs

  Preparation of Manuals   Construction Practices

  IT implementat ion and

software requirement

Transmission loss reduction

SCADA implementation in all Sub stations

Transmission system maintenance-Hot Line equipments

Imparting continuous Training to the Staff

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Delivered:

16



  AEGCL highly appreciated the workshop especially on the topics

r e g a r d i n g t h e A n a l y s i s o n

Transmission Losses.

  Practical Workshop on Hot

Line Maintenance would be really

helpful

  Requested workshop on the following

topics were requested by AEGCL:

  E-Tendering

  SAS (Sub-s ta t ion Automat ion

System)

  Maintenance, Erection, Construction

and Operation of 400 KV sub-station,

  Energy Audit in Transmission system.

  Transmission system loss Reduction

  Emerging Technologies in

Transmission system

  Gas Insulated substations

  DPR & Budget proposal preparation

  Sub-Station Integration & Automation (SCADA)

  Training in NPTI, Guwahati on following topics:   Substation Automation System

  Erection & construction of 400 KV Sub-

Station

  Operation & maintenance of 400 KV Sub-

station

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  Way Forward:

  To achieve the objective of bringing AEGCL on par with national & international standards

  Conducting yearly LFC studies and modify the long term system development programmes suitably to achieve the energy loss Target levels of 4 % initially & 2% finally

  Optimisation of procurement process to reduce the planned project implementation period & quality

improvement in new assets created

  Standardization of Transmission line tower & foundation designs

  Asset mapping of Transmission lines & Substations

  Adhering to schedule maintenance works of Transmission lines & Substations and procurement of all the required testing & maintenance equipments like hot line, thermo vision cameras, C.B testing kits

  SCADA implementation & making all the substations unmanned in phased manner

  Capacity building on Hot Line Maintenance

  Preparation & providing of manuals for all the activities of AEGCL

  Imparting regular training in all departments of AEGCL

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  Monitoring mechanism seems to be weak. Lack of result-oriented procedures in commercial and operational areas

  As on date there is no specific plan or timeline decided to replace all defective and electromechanical

meters of APDCL.

  Analysis of Bulk Consumers (IRCA) billing is done manually. There is no analysis of meter data.

  Energy Accounting is carried out through manual input of data. Feeders’ Meters have serious problems.

  APDCL relies on the Load Dispatch Centre report for future demand projection. No evident own

procedure.

  There is no monitoring from a central location. Commercial processes are not standardised and no

standard process document (like ISO document) exist.

  Imprecise and manual usage of De-centralised database for commercial function. Low support on

systems.

  Proper monitoring of meter reading performance cycle time and efficiency was not found

  Meter replacement for consumer owned meters is done only after consumer pays the charges. This contributes to loss in billing efficiency

18

Distribution Process Management

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Major Challenges:

  APDCL requires restructuring to have focussed group for loss reduction measures and efficient operational processes like Network Planning and

Preventive Maintenance Management. An authorized loss reduction leader shall be a positive reference.

  Development and Implementation of systems and results-oriented procedures with effective review mechanism is seen as the key aspects for success.

  The organization must be optimized in terms of quantity and skills. Results-

oriented mind-set is mandatory. Reorganization of roles and positions is also necessary.

  Increase Pressure level for monitoring activities and large customers’ control


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Medium/Long Term Activities Expected Benefits

Creation of Centralized Commercial database Ease of monitoring from a centralized location Uniform business processes across the utility

Building exception logics into the IT system which throw out exceptional cases such as High

Consumption, Low Consumption etc

Accurate Billing leading to loss reduction

Increased Revenue Generation

Automatic meter reading through modems for the HT consumers

Accurate Billing leading to loss Reduction

Increased Revenue Generation

GIS based consumer indexing

Central repository for the assets Reduction in cycle time for field activities

Easy reference for Network Load

flow studies

Utility wide rollout of ERP Project life cycle tracking Project Monitoring

Zonal Headquarters to be shifted to respective zone Effective monitoring of functions

Centralized Consumer Call Centre for urban consumers

Centralized Consumer Complaint Registration, Tracking and Monitoring

Enhanced Consumer Satisfaction


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JORHAT PILOT PROJECT


Data Analysis – IRCA consumers

•  To ascertain correct billing •  To ascertain tampering/meter defective cases

Sporadic analysis of certain cases by MTI

•  Complaint Data Analysis Data being captured, analysis are yet to be done.

Field Activity – IRCA consumers

•  Data Downloading for Private Consumers Data downloading of some consumers are being done (including consumers with load >500 KW)

•  Metering Rectification Action taken against cases analyzed

•  Action against theft Cases reported sporadically

•  Verification of dues against disconnected cases Action reported from one sub-division

Data Analysis – Small consumers

•  Exceptional cases with zero/Low consumption Activity started after November Mission, resulted into replacement of around 1900 meters.

•  Complaint Data Analysis Data being captured, analysis are yet to be done. This will give benefit in next summer for proper monitoring.


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Field Activity– Small consumers

•  Verification of zero/low consumption cases Result reported

•  Replacement of stopped cases

Special Activities

•  Follow up of dues against high outstanding cases

Result reported

•  Follow up against consumers with average consumption more than connected load

Result reported


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Replacement of Stopped Meters

Present Posi4on Poten4al Benefit

Number of stopped

meters replaced

Increase in monthly

consump6on (in

KWh)

Increase in Monthly

Revenue (in USD)

Number of

defec6ve meters as

on 31.01.2012

Poten6al Increase

in monthly

consump6on (in

KWh)

Poten6al Increase

in Monthly

Revenue (in USD)

1521 156244 15625 6766 695034 69506

Meter Data Analysis of IRCA Consumers

Present Posi4on Poten4al Benefit

Number of Cases

Inspected

Assessment

Amount (in USD)

Increase in monthly

revenue (in USD)

Number of Cases to

be inspected

Poten6al

Assessment

Amount (in USD)

Poten6al Increase

in monthly revenue

(in USD)

228 41520 5716 540 98336 13537

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Number of

cases with Load

enhanced

Total load

increased (in

KW)

Increase in Fixed

Charges per

month (in USD)

Number of

cases observed

Total load to be

increased (in

KW)

Potential

Increase in Fixed

Charges per

month (in USD)

1060 2890 2525 1546 4215 3682

Load Enhancement through Consumption Analysis

Present Position Potential Benefit

Cumulative impact of potential increase in monthly revenue and collection will result in

increase of billing efficiency by 4% (from 63% to 67%) and collection efficiency by

1% (from 93% to 94%). The AT&C Loss in Pilot Project Area can be reduced to 36%

from present level of 41%.

Potential benefits to the APDCL is approximately 21 million USD annually for

reduction of AT&C Loss by 5%

Number of

cases resolved

Amount realized

(in USD)

Number of

Disconnected

Cases as on

February'12

Amount to be

realized (in USD)

2333 284721 3883 385455

Present Position Potential Benefit

Disconnected cases with Outstanding Dues

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Delivered:

  Programme on AT&C Loss Reduction Best

Practices

  Review and Monitoring Mechanism

  Training Module on Change Management

  Practical demonstration on Meter Data Analysis

  Workshop on Best Practices of IT in Power Sector

  Workshop on Employee Motivation and Morale

  Workshop on Network Planning in GIS

Environment

25



  Useful information

  Prioritisation in AT&C Loss reduction

initiatives carried out considering best

practices in TPDDL.

  Response in the Pilot has been poorer

and slower than expected according to

real conditions in the company.

  Personnel management is considered

to be major hindrance for performance

improvement.

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Synopsis and Way Forward

  Initiatives undertaken has measurable impact on Billing and Revenue Realisation.

Initiatives and experience in Pilot Project should be replicated across the organisation

for effective reduction in Losses.

  Initiatives have been identified and planned in July’11. However, these have been taken up effectively in November’11

Allocation of dedicated resources is crucial for continuous improvement in performance.

  The initiatives undertaken in Pilot Project, have been reviewed through Weekly MIS till date. This has resulted in measurable benefits.

Regular review at appropriate levels are crucial for success.

  New areas like revenue realization against SPPS consumers have been introduced in Pilot Project area.

The initiatives for Loss Reduction requires to be continuously reviewed and improved

further.

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Analysis of Current Performance

(All Companies):

Accounting System

  Reconciliation and Classification of Opening

Balances

  Weak Internal Control and Audit Process

  No Audit Committees (required under Sec 292 A

of Companies Act

  Accounting manuals and handbooks not available and not updated since 1985

  Accounting system not capable to detect and

prevent fraud and errors

  Manual System with limited Automation

  AERC requirements not complied with (asset registers, capex justifications etc) including

delay in providing information on a timely basis

  Un-satisfactory record keeping

27

Accounting/Financial Management Systems

Major Challenges:

  Development of an effective accounting

system that facilitates identification of gaps

and its timely redressal

  Critical to ensure corporate discipline

  Prov ide gu idance, ins t ruc t ions and

handholding at all levels

  Creating systems, structures and incentive

mechanism for the publicly-owned and

monopoly companies such as APDCL,

AEGCL and APGCL to aim towards financial

independence, focus on profitability and delivery of quality public service.

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(All Companies):

Financial Management System

  Financial autonomy w.r.t. projects funded from

external sources

  Strengthening of Finance Department – by

upgrading the current position of Finance Heads

  Weak Risk Management Practices (Fuel risk cover, insurance of employees, cash in transit etc)

  Budget Management - No expenditure audit since

APDCL inception – Variance analysis is weak

  Working Capital Management- deficiencies in

billing, un-cleared cheques, no ageing analysis of receivables, ad hoc bill clearance etc

  Inventory Management Policy/Practices need

upgradation - no stores manual, stocks of 8-10 yrs

in inventory, differences in physical verification,

accumulation of obsolete material etc

28


Major Challenges:

  Development of an effective financial

system that facilitates identification of gaps

and its timely redressal

  Essential for complete financial bundling

and independency

  Critical to manage risks imposed by changing environment and understand its

implications

  Creating systems, structures and incentive

mechanism for the publicly-owned and

monopoly companies such as APDCL,

AEGCL and APGCL to aim towards f inanc ia l independence, focus on

profitability and delivery of quality public

service

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(Common to all Companies):

Business Plan and Capital Investment Plan

  Absence of long-term business plans

except in case of APGCL (though not

comprehensive)

  Lack of capacity for long-term business

and capital investment planning as

indicated by:

  Failure to complete & update the BP

templates (did not have action plans,

measurable targets and financial

plans prepared by previous external

experts)

  Undertake economic evaluation on a

pe r p ro jec t bases o f Cap i ta l

Investment Plans

29


Major Challenges:

  Appreciation of having long-term

business plans separately for each

company

  Capacity building around tools for

business and investment planning;

and ensuring that the same occurs on

an ongoing basis

AF-Mercados EMI 30

Short-Term Activities Implementation

Status

ACCOUNTING SYSTEM

Completion of break up of opening balance among 3 companies Constitution of Audit Committee

Complied

  Maintenance of Subsidiary Books – Identification and monitoring;

  Audit Observation by Internal Audit & CAG –

Compliance  

In Progress

  Appointment of regular Director (F)   Appointment of Cost Auditor by all the three

companies and installation of cost accounting

system

No action on appointment of Finance Director. APDCL

appointed external accountants as cost

auditor for 2011-2012.

  Issuance of guidelines for Classification of Expenditure of an Capital Maintenance as Capital, Revenue Or Deferred Revenue Expenditure

  Formation of Accounting Application Committee / Cell Separately for each Company)

  Outsourcing of the work to prepare Internal Control System

  Development of Standard format for the Statement

of Non Adherence / Part Adherence of Accounting Polices

No Progress

Summary of Action Plans


ACCOUNTING SYSTEM

  Revision of Service Rules for Accounting E x e c u t i v e s a n d s t a f f i n c l u d i n g qualification criteria and performance

based promotion system. A step towards this direction was made with the recent

appointment of additional finance and accounting staff with computer skills

  Computerization; Prepare Accounts

Hand Book, Manuals & Standard Formats

  Formation of Accounting Application

Committee

  Creation of Fixed Asset Register and Capitalization of completed works that

are still classified of CWIP. Fixed asset register of APDCL as of 31.03.2011 was prepared and under review by AERC.

  Updating Stores Manual

  Constitute Internal Audit team in APGCL,

strengthen teams at APDCL and AEGCL

  Set up a proper Accounting Record Room at Corporate Offices of the Companies

  IFRS Convergence


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Short-Term Activities Implementation

Status

FINANCIAL MANAGEMENT SYSTEM

Mandate for financial Autonomy of Utilities from ASEB

No Action Taken

Restructuring of GOA and other loans outstanding

Proposal to convert

outstanding GOA

loans to equity

submitted by

APDCL on 31.03.2010

Dismantling of centralized cash mechanism No Action Taken

Timely deposit of collection at APDCL to reduce banking float time, policy for

payment through cheque above a specified

bill amount; recovery of dues from

employees and other utilities undertaking.

No Action Taken

Up gradation of billing software to give age wise defaulter list for further actions.

No Action Taken (done on annual

bas i s f o r P i l o t

Area)

Summary of Action Plans


FINANCIAL MANAGEMENT SYSTEMS

  Deployment of Risk management framework for analysis of various risk associated and developing strategies to

mitigate the same with in all utilities.

  Adoption of systematic process for Budget control like implementation of ERP module.

  Formulation of working capital management policy

  Fully computerized of billing like temporary connections

  Adoption of computerized inventory management system

  Adoption of rate contract mechanism for decentralized procurements.


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Capacity Building, Training Sessions Delivered:

ACCOUNTING SYSTEMS

Phase – I (5 main topics)

  Accounting Documents

  Works & Accounting Classification (Control of Capital Works

in Process and Distribution Between Capital & Revenue & Deferred Revenue Expenditure)

  Basic Accounting Policies and Costing

  Costing (Costing Records & Structure and Cost Audit)

  Inventory Control

32

Company response:

ACCOUNTING SYSTEMS

  Attendants enthusiastic and responsive

  Low participation in certain cases however with facilitation of PMU this was addressed

  Attendants indicated need for such trainings and workshops on a continued basis

Phase - II (12 main topics)   Legal Compliances-Compliance with Schedule VI of the

Companies Act 1956   Compliances – Accounting Standards & IFRS-Compliance

with Accounting Standards

  GAAP & IFRS   Control & Monitoring System-Internal Audit, Internal Control

and Audit Committee   Accounting Documents-Development of Accounting

Manual, Chart of Account, Monthly Reporting System &

maintenance of Subsidiary & Control Books Fixed Assets Registers, Contract Registers, Work Register & Register of Abandoned & Decommissioned Assets

  Work & Accounting Classifications-Control of Capital Work in progress and Distribution between Capital & Revenue &

Deferred Revenue Expenditure   Costing-Costing Records & Structure and Cost Audit;

Inventory Control-Inventory Control & Accounting including

physical Verification & write - off.


AF-Mercados EMI

Capacity Building, Training Sessions Delivered:

FINANCIAL MANAGEMENT

SYSTEMS

Workshop on Risk Management

framework

BUSINESS AND CAPITAL

INVESTMENT PLANNING

Series of Workshops on Capital

Investment and Applied Business

Planning

33

Way Forward:

  Strong commitment from top management on strategic issues particularly related to financial independence, filling key positions, and initiating new systems

  Focus on action plans – Short-term (pending actions); Medium and Long-term

  Training arrangements for regular training and upgradation


Company Response:

FINANCIAL MANAGEMENT SYSTEMS – Risk Management

Participants were keen to understand the framework and how the same can be

implemented in their companies.

BUSINESS AND CAPITAL INVESTMENT PLANNING

APGCL - enthusiastic as manifested by involvement/participation of all DGMs at

the initial and culminating session of the Business Planning exercise; permanent Technical Working Group members supplemented by other technical staff when necessary; constant presence and involvement in workshops

AEGCL – participation was lukewarm with only one Technical Working Group

member consistently attending all workshops; constant replacement of TWG members except for one resulting in incomplete evaluation of capital investment

plan and Business Plan

APDCL – weak participation with no permanent member of the TWG although

staffs assigned evinced interest in the issues BUT were constantly changed. Result: incomplete evaluation of Capital Investment Plan and inability to draw up

Business Plan

AF-Mercados EMI


  Both -HR Organization and staffing, are inadequate. Lack of mid-level executives

  HRM processes relatively out-dated. Not

performance driven, nor supporting

accountability. No integration between the HR

processes, Manpower Planning & Recruitment processes not streamlined

  No comprehensive plan in place to address

large scale retirement in the next 4-5 years

  Unmotivated staff-especially at field level,

stagnation at lower executives levels.

  Formal training of Executives is virtually

nonexistent

  Data base & retrieval , for planning &

implementing HR Policy/processes not available

  Common seniority cadre across the three utilities

for senior executives.

  Functions such as HR, IT, Legal, Commercial

grossly inadequate.

34

Human Resource Management


  Essential if the Utilities are to now operate as

business corporate efficient entities

  Reflected in dual charge of posts at senior levels, and several gaps in the staffing of sanctioned

posts

  Partly leadership and partly lack of performance

based policies (over emphasis on seniority)

  No opportunities to upgrade /new knowledge and

skills & a business Orientation. Training needed to support new structure & processes.

  Level of Impact & Implications of the policy

changes cannot be easily ascertained

  Long term commitment & consolidation of

expertise becomes difficult

  Critical functions for improving operational and commercial performance; working as Business

entity

AF-Mercados EMI


  Absence of a comprehensive communication

Plan and defined processes for communication

with the various internal and external stakeholders

  Various circulars related to employee benefits

and rules are now in a myriad of memorandums,

regulations, rules, revisions etc..

  Lack of mechanisms for receiving operational/

organizational suggestions and feedback from employee

35



  Vital for any reforms-to inform, involve ,

inspire and motivate the various constituents

AF-Mercados EMI 36


Status

1.Enhancing HR Function : road map

i.Hiring of CGM Distribution

(professionally qualified through open

recruitment)

ii. Approve preliminary HR/Training

organization and staffing

iii. Inducting professionals as Executive

trainees

On-Going

Implemented

(through internal

transfer)

Pending

Implemented

2.Develop and establish a Human Resources

Steering Committee (HRSC)

On Going

3.Creation of Legal Section Pending

4. Enhancing the effectiveness of the Performance Appraisal system

Pending



1. Human Resources Information System

2.Manpower Planning System & Recruitment Planning

3.Preparation of plan to address Retirement

4. Automated Attendance Records

5.Motivating Employees: Performance Linked Incentives; incentivize postings

at remote project sites; stagnation in

career growth

6.Development /Updating Promotion system


AF-Mercados EMI 37


Status

5.Develop process for approving & updating organization charts and

monitoring & reporting sanctioned posts Pending

6.Manpower Norms (Distribution) & Outsourcing

On Going

Training

Training Needs Assessment (Training) – Implementing recommendations

On Going

Implementing proposed training policy & norms & road map

Pending

Training systems for making nominations

Pending




1. Training Organization Structure & Staffing for the three utilities

2. Developing training resources for effective implementation

3. Induction Level training for HR professionals recruited

4 . C a r e e r L i n k e d T r a i n i n g Interventions

AF-Mercados EMI


Delivered:

  Management of Change

  Develop ing Execut ives fo r Improved

Performance 1

  HRSC: Road Map for 13 Key HR Areas

  Overview of HR Mgmt

  Employee Motivation & Morale

  Enhancing Capacity of HR Functionaries

  Study Visit for APDCL Team to study NDPL practices

38


  Appreciated the interactive workshops on M a n p o w e r P l a n n i n g , C h a n g e

Management (use of two real live cases)

and requested further training on such

topics

  Workshop on HRSC, Emp loyee

Motivation and Morale was also highly

appreciated and the core team has

started working on the key issues.

  Action areas for application in APDCL,

based on Study Visit to NDPL included.

AMR Data monitoring & analysis as done

by NDPL, IT interventions, processes/

practices related to regular review of

activities at various levels, the role of HR

role in bringing about change in the work

culture


AF-Mercados EMI 39

  Way Forward:

  Strengthening HR Organization & Staffing, without which the recommendations cannot be implemented

  HRSC is a good mechanism to drive change on a continuous basis-but this needs to be sustained and

given due impetus and direction. Chairman/his Secretariat need to get closely involved with approvals

etc and also monitoring.

  Out of a list of 13 HR activities-with road maps provided to HRSC, short term critical tasks have

somewhat been avoided by HRSC and opted for long term activities with no immediate impact! One wonders if this is to postpone immediate responsibility. Short term critical areas to be accorded

priority .

  Plan to address imminent retirement of many key management and other staff

  Recruitment of executives at mid levels (selectively) is important. For instance 8 HR professionals

recruited at induction level, but there is no one to provide them leadership and guidance-especially at this

stage.

  Suggest the utilities consider starting with ‘pilots’ in some areas-such as job descriptions; performance

–linked appraisal etc.

  Institutionalize/institute a mechanism, wherein the reports by the consultants are made easily

accessible and deliberated upon, to glean applicable recommendations by the concerned groups

within the Utilities. (For instance, even a high powered committee such as HRSC had formed a task force on Training-without realizing that the assignment was done by the Consultants). Similarly, reports by

earlier consultants on PAS; Draft HR Policy etc.


AF-Mercados EMI 40

  Way Forward:

  To institute Email Messaging system -important for effective communication

  Development of Communication Strategy, including key messages for the various

stakeholders; identifying change champions

  Prepare employee handbook (user-friendly) to clarify and explain in a simple/succinct

format the numerous HR rules; benefits etc.


AF-Mercados EMI


  No AMR in distribution utilities

  No storage and backup system

  No specialized hardware for handling calls at Customer Care Offices

  Inappropriate UPS & Battery system

  No Effective and up-to-date security system

  RMS application developed by CMC under

APDRP is in use

  No Customer Indexing or Asset Management through GIS

  No Mail or messaging system; EMS/NMS

  Proper MIS system is not in place

  All the 5 utilities have different websites

  No ERP/ SCADA/ GIS/ Plant Management/ Mail Messaging System for Generation utility

  No Network connectivity between offices No

Data Centre or Data Recovery Centre

41

IT Infrastructure


  IT Department non-existent

  Standalone Systems

  Lack of Integration

  Lack of implementation

  Manual intervention

  Lack of IT awareness

  Lack of proper IT infrastructure

  L a c k o f p r o p e r s e c u r i t y

mechanism

  Lack of critical IT modules for

HR, Finance, ERP, Procurement

etc

  Diversified Billing Systems

AF-Mercados EMI 42


Status

Basic IT at different offices Absent

Mail Messaging System Envisaged for Jorhat Pilot Project

Identity & Access Mgmt. & System Security Absent

Storage & Data Back Up Absent

Centralized Metering, Billing and Collection Application

Absent

MIS & Asset Management Absent

Knowledge Management System Absent

Employee Help Desk System Absent

ERP Absent



Automatic Meter Reading

GIS

Energy Accounting & Auditing

Centralized Customer Care Center

Data Center

Data Recovery Center

WAN

SCADA for Distribution

IT Infrastructure

AF-Mercados EMI


Delivered:

  Workshop on IT Best Practices in Power

Utilities

  Workshop on expectations from R-APDRP

(Part-A) Scheme

  System Security and BCP Planning

  Program on Enterprise Resource Planning

System

  Analysis processes

43


  A P D C L r e q u e s t e d f u r t h e r benchmarking information on IT

Organisation and same has been

provided

  The company has lately shown an

interest in having modern Mail

systems in the company.

  This represents an important step-up

in the level of involvement for

developing the IT infrastructure in the

company.

  Way Forward:

  For implementing any IT system – Pre-Requisite is to establish IT Organisation within utilities and implement basic IT Infrastructure like Desktops, LAN , connectivity of all

offices (WAN). These Pre-requisite are currently missing and needs to be implemented

IT Infrastructure

AF-Mercados EMI 44

  The Project has been delivered and implemented successfully according to the defined objectives and scope.

  Many constraints for the three companies were found out:

  Generation: Low efficiency and availability;

  Transmission: Current efficiency level may be under risk;

  Distribution: High losses and very low operational efficiency.

  Action and Business plans have been developed in coordination with the staff

where recommendations for improvement of the companies’ operations in particular from a monitoring, accountability and results-oriented perspective have

been provided.

  Assistance, Workshops, and study tour have been very successful and appreciated.

  In particular, the Jorhat Pilot has shown (to the extent possible) that implementation of the short-term actions bring positive results. Implementation of

the action plan must continue and be escalated to the rest of the organization.

Final Conclusions

AF-Mercados EMI 45

  Recommendations for further projects development that support the implementation of the Action Plan:

  Metering Reliability Improvement. Replacement of defective meters (approx 162,000

(8.5%) ).

  AMR implementation for IRCA and Large Commercial Clients and Feeders (6000

approx.).

  Development of new plants facilities to replace existing ones.

  Procurement and Implementation of MIS, in particular:

  Basic IT Infrastructure

  SCADA/EMS/DMS/GIS

  CC&B (Commercial and Billing system) with a centralized database/Central Call Centre

  ERP

  Development of a Training Centre and institutional mechanism for creating linkages

with Institute of Management (IM), and Indian Institute of Technology (IIT).

  Development of a comprehensive communication plan and infrastructure (internal &

external).

Final Conclusions