32298-043: Project Completion Report€¦ · CURRENCY EQUIVALENTS Currency Unit – Indian rupee/s...

Project Number: 32298 Loan Number: 2346 September 2014

India: Madhya Pradesh Power Sector Investment

Program (Tranche 3)

This document is being disclosed to the public in accordance with ADB’s Public Communications Policy 2011.

Completion Report

CURRENCY EQUIVALENTS

Currency Unit – Indian rupee/s (Re/Rs)

At Appraisal At Project Completion

(12 December 2006) (31 March 2013)

Re1.00 = $0.0223 $0.0184

$1.00 = Rs44.83 Rs54.39

ABBREVIATIONS

ADB – Asian Development Bank

EMMP – environmental management and monitoring plan

ESMC – environmental and social management cell

PMU – project management unit

SRP – short resettlement plan

TRANSCO – Madhya Pradesh Power Transmission Company Limited

XIDAS – Xavier Institute of Development Action and Studies

WEIGHTS AND MEASURES

cct-km – circuit-kilometer kV – kilovolt MVA – megavolt-ampere MW (megawatt) – 1,000 kilowatts

NOTES

(i) The fiscal year (FY) of India and its agencies ends on 31 March. FY before a calendar year denotes the year in which the fiscal year ends, e.g., FY2012 ends on 31 March 2012.

(ii) In this report, “$” refers to US dollars.

In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

Vice President W. Zhang, Operations 1 Director General H. Kim, South Asia Department (SARD) Director

M. Teresa Kho, Country Director, India Resident Mission, SARD

Team leader J. Banerjee, Project Officer (Energy), SARD Team member N. Munjal, Senior Project Assistant, SARD

CONTENTS

Page BASIC DATA i

I PROJECT DESCRIPTION 1

II EVALUATION OF DESIGN AND IMPLEMENTATION A. Relevance of Design and Formulation 2

B. Project Outputs 2

C. Project Costs 3

D. Disbursements 3

E. Project Schedule 3

F. Implementation Arrangements 4 G. Conditions and Covenants 4

H. Consultant Recruitment and Procurement 5

I. Performance of Consultants, Contractors, and Suppliers 5

J. Performance of the Borrower and the Executing Agency 5

K. Performance of the Asian Development Bank 5

III EVALUATION OF PERFORMANCE A. Relevance 6

B. Effectiveness in Achieving Outcome 6 C. Efficiency in Achieving Outcome and Outputs 6

D. Preliminary Assessment of Sustainability 7

E. Impact 7

IV OVERALL ASSESSMENT AND RECOMMENDATIONS

A. Overall Assessment 11

B. Lessons 11

C. Recommendations 13

APPENDIXES

1. Chronology of Main Events in Project Processing and Implementation 14

2. Project Framework 15

3. Cost Breakdown by Project Components 19

4. Summary of Contracts 20

5. Project Financing Plan 27

6. Projected and Actual Disbursement of Loan Proceeds 28

7. Implementation Schedules 29

8. Organization Chart 31

9. Status of Compliance with Major Loan Covenants 32

BASIC DATA

A. Loan Identification 1. Country India 2. Loan Number 2346-IND 3. Project Title India: Madhya Pradesh Power Sector Investment

Program (Tranche 3) 4. Borrower Government of India 5. Executing Agency Madhya Pradesh Power Transmission Company

Ltd. (TRANSCO) 6. Amount of Loan $144 Million 7. Project Completion Report

Number 1473

B. Loan Data 1. Appraisal – Date Started – Date Completed 2. Loan Negotiations – Date Started – Date Completed 3. Date of Board Approval 4. Date of Loan Agreement 5. Date of Loan Effectiveness – In Loan Agreement – Actual 6. Closing Date – In Loan Agreement – Actual – Number of Extensions 7 Terms of Loan – Interest Rate – Maturity – Grace Period

8. Terms of Relending (if any) – Second-Step Borrower

– Maturity – Grace Period

12 December 2006 14 December 2006 16 August 2007 17 August 2007 21 August 2007 23 August 2007 21 November 2007 24 December 2007 31 December 2011 16 September 2013 2 London Interbank Offered Rate-based LIBOR plus 0.6% 20 years 5 years Government of Madhya Pradesh onlending to TRANSCO, with a 1 percentage point spread. 20 years 5 years

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9. Disbursements a. Dates

Initial Disbursement

17 October 2007

Final Disbursement

14 August 2013

Time Interval

69.94 months

Effective Date

24 September 2007

Original Closing Date

31 December 2011

Time Interval

51.2 months

b. Amount ($ Million)

Category Category or Original Partial Last Revised Amount Undisbursed

No. Subloan Allocation Cancellations Allocation Disbursed Balancea

(1) (2) (3) (4 = 3 − 5) (5) (6) (7 = 5 − 6)

1. Works 4.2 4.2 0.0 0.00 0.00

2. Equipment 112.0 (27.0) 139.0 136.91 2.09

3. Interest and Commitment charges 10.4 5.4 5.0 5.00 0.00

4. Unallocated 17.4 17.4 0.0 0.00 0.00

Total (loan currency) 144.0 0.0 144.0 141.91 2.09

Total (US$ equivalent) 144.0 0.0 144.0 141.91 2.09

Notes: Reallocation among various categories was undertaken on 12 October 2010. a For final cancellation. Amounts are $ equivalent as of date of cancellation’s approval (16 September 2013).

10. Local Costs (Financed) - Amount ($) 34.19 - Percent of Local Cost 100% - Percent of Total Cost 19.41%

C. Project Data

1. Project Cost ($ million)

Cost Appraisal Estimate Actual

Foreign Currency Cost 144.0 141.91

Local Currency Cost 53.8 34.19

Total 197.8 176.10

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2. Financing Plan ($ million)

Cost Appraisal Estimate Actual

Implementation Costs

Borrower-Financed 18.9 24.19

ADB-Financed 133.6 136.91

Other External Financing 34.9 10.00

Total 187.4 171.10

Interest during Construction

Borrower-Financed 0.0 0.00

ADB-Financed 10.4 5.00

Total 197.8 176.10

ADB = Asian Development Bank.

3. Cost Breakdown by Project Component ($ million)

Appraisal Estimate Actual

Component Foreign Local Total Foreign Local Total

Equipment cost 112.0 0.0 112.0 136.91 0.00 136.91 Related service 0.0 0.0 0.0 0.00

a 0.00

a 0.00

a

Erection and civil works 4.2 27.9 32.1 0.00 0.00 0.00 Others 0.0 18.9 18.9 0.00 34.19 34.19 Subtotal 116.2 46.8 163.0 136.91 34.19 171.10

Contingency Physical 5.8 2.3 8.1 0.00

a 0.00

a 0.00

a

Price 11.6 4.7 16.3 0.00a 0.00

a 0.00

a

IDC and construction charges 9.2 0.0 9.2 5.00 0.00 5.00 IDC commitment charges 1.2 0.0 1.2 0.00 0.00 0.00

Total 144.0 53.8 197.8 141.91 34.19 176.10

IDC = interest during construction. a Included in equipment cost.

4. Project Schedule

i. Original Project

Item Appraisal Estimate Actual

Start End Start End

Transmission lines

Route finalization and pre-tendering Sep 2006 Aug 2007 Jul 2006 April 2008

Tendering and contract awards May 2007 May 2008 Mar 2007 Sep 2008

Manufacturing and delivery of equipment Feb 2008 Nov 2009 Dec 2007 Dec 2011

Construction and commissioning May 2008 Feb 2010 Mar 2008 Dec 2012

400 kV and 220 kV substations

Land acquisition and pre-tendering Sep 2006 Aug 2007 Jul 2006 Sep 2007

Tendering and contract awards May 2007 May 2008 Mar 2007 Mar 2008

Manufacturing and delivery of equipment Feb 2008 Nov 2009 Dec 2007 Feb 2010

Construction and commissioning May 2008 Feb 2010 Nov 2007 Aug 2011

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ii. Saving Scheme 1 (2010)

Item Appraisal Estimate Actual

Start End Start End

Tendering and contract awards Nov 2010 Jan 2011 Jan 2011 Jul 2011

Manufacturing and delivery of equipment Mar 2011 Oct 2011 Oct 2011 May 2012

Construction and commissioning Jun 2011 Dec 2011 Mar 2012 Aug 2012

iii. Saving Scheme 2 (2012) Item Appraisal Estimate Actual

Start End Start End

Tendering and contract awards Mar 2012 May 2012 Apr 2012 Nov 2012

Manufacturing and delivery of equipment May 2012 Oct 2012 Jan 2013 Apr 2013

Construction and commissioning Sep 2012 Dec 2012 Mar 2013 Jun 2013

5. Project Performance Report Ratings

Implementation Period

Ratings

Development Objectives

Implementation Progress

From 25 September 2007 to 31 December 2007 Satisfactory Satisfactory

From 1 January 2008 to 31 December 2008 Satisfactory Satisfactory


From 1 January 2010 to 31 December 2010 Partially Satisfactory Satisfactory



From 1 January 2013 to 31 March 2013 Satisfactory Satisfactory

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D. Data on Asian Development Bank Missions

Name of Mission Date No. of

Persons No. of

Person-Days Specialization of Members

Fact-finding 16–24 Oct 2006 5 45 a,c,k,d Appraisal 12–14 Dec 2006 5 15 a,b,c,d Inception 20–25 May 2007 5 30 a,b,c,d,e Loan review 7–17 Jan 2008 3 33 c,f,d Loan review 1–3 Sep 2008 3 9 c,f,d Loan review 15–17 Apr 2009 1 3 l Loan review 15–20 Jun 2009 2 12 b,e Special loan administration 24–27 Nov 2009 2 8 b,e Special loan administration 6–16 Apr 2010 2 22 g.h Loan review 27–30 Oct 2010 2 8 g.h Loan review 29 Nov–1 Dec 2010 2 6 b,e Loan review 11–14 Oct 2011 2 8 f,i Loan review 14–16 Feb 2012 2 6 f,j Project completion review 18–24 Apr 2014 1 6 f a = senior finance specialist (energy), b = senior project implementation specialist, c = energy specialist, d = project implementation specialist, e = assistant project analyst, f = project officer (energy), g = resettlement and social development officer, h = environment officer, i = team leader (energy), j = senior project assistant (energy), k = social development specialist, l = senior control officer.

I. PROJECT DESCRIPTION

1. India has faced formidable challenges in achieving balanced infrastructure development, wherein the provision of adequate energy plays an essential role in reducing poverty through sustainable economic growth.1 Cognizant of the sector’s vast impact on the global environment and energy security, the government developed its Integrated Energy Policy.2 That policy encapsulates a vision reliably to meet the energy services demand for all sectors with safe, clean, and convenient energy in a technically efficient, economically viable, and environmentally sustainable manner. The Integrated Energy Policy provides for specific measures, including (i) optimizing the power supply mix through greater use of indigenous hydropower resources and renewable energy; (ii) pursuing technologies that maximize energy efficiency, demand-side management, and conservation; and (iii) continuing power sector reforms to control technical and commercial losses of the state transmission and distribution utilities through a restructured Accelerated Power Development and Reform Program. 2. To facilitate economic growth in the State of Madhya Pradesh, a diagnostic assessment was conducted by the Government of Madhya Pradesh. It revealed that significant investments were needed to enhance transmission capacity. This also would facilitate evaluation of upcoming generation projects constructed by central and state sector generation projects. A multitranche financing facility was particularly well suited to the investment program because (i) the aim of that program is to support the Government of Madhya Pradesh’s long-term objectives, as stated in the sector road map; and (ii) the multitranche financing facility offered the flexibility required for the investment program to support the participation of four companies with different levels of readiness. 3. The Madhya Pradesh Power Sector Investment Program (Tranche 3) is the third assistance under the investment facility, and the project’s outputs were intended to construct transmission lines for power evacuation and strengthen transmission systems to meet growing demand in Madhya Pradesh. The project’s main objectives were to (i) improve operational efficiency, voltage profile, and power delivery capacity of Madhya Pradesh’s power transmission system; (ii) meet various parameters as defined in the Grid Code issued by Madhya Pradesh Electricity Regulatory Commission after implementation of this scheme; and (iii) create new 132 kV substations and associated transmission lines to reduce overloading on the existing 132 kV and 33 kV systems. The program financed key components of Madhya Pradesh transmission investments from 2007 to 2012 directed to building sufficient capacity for evacuating power from existing and planned power stations and substations as well as reliably and efficiently delivering power to consumers. The construction of new transmission lines aimed to remove constraints upon power flow and provide additional operational flexibility to Madhya Pradesh Power Transmission Company Ltd (TRANSCO) in its role as the state’s system operator. 4. At appraisal, the project consisted of (i) 1,451.5 circuit kilometers (cct-km) of 132 kV transmission lines, (ii) 10 new 132/33 kV substations, each having 40 megavolt-ampere [MVA] transformer capacity, (iii) 10 132/33 kV additional transformers of 20 MVA each and 3 additional transformers each of 40 MVA at existing substations, (iv) augmentation of 6 132/33 kV transformers from 20 to 40 MVA and 14 from 40 to 63 MVA at existing substations, and (v) procurement of testing instruments and maintenance equipment. Subsequently, minor changes,

1 Asian Development Bank. 2007. Report and Recommendation of the President to the Board of Directors: Proposed Multitranche Financing Facility. India: Madhya Pradesh Power Sector Investment Program. Manila.

2 Government of India Planning Commission. 2006. Integrated Energy Policy: Report of the Expert Committee. New Delhi.

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arising due to cost savings, were effected in the originally contemplated project scope. In the end, the scope consisted of (i) constructing 128.33 cct-km of 220 kV and 1,293.39 cct-km of 132 kV transmission lines; (ii) constructing 10 new 132/33 kV substations with 40 MVA transformer capacity; (iii) installing (a) 4 220/132 kV 160 MVA additional transformers, (b) 15 132/33 kV 63 MVA transformers, (c) 15 132/33 kV 40 MVA transformers, and (d) 14 132/33 kV 20 MVA transformers at existing substations; (iv) augmenting (a) 8 132/33 kV transformers from 20 MVA to 40 MVA, (b) 1 132/33 kV transformer from 16 MVA to 40 MVA, (c) 5 132/33 kV transformers from 40 MVA to 63 MVA, and (d) 7 132/33 kV transformers from 20 MVA to 63 MVA; and (v) procuring (a) testing instrument and maintenance equipment, and (b) protection equipment.

II. EVALUATION OF DESIGN AND IMPLEMENTATION

5. The main events in project processing and implementation are presented chronologically in Appendix1. A. Relevance of Design and Formulation 6. As determined at appraisal, the installed generation capacity of Madhya Pradesh State as of March 2007, including the share from central sector and joint-venture power stations, was 6,822 megawatt (MW). This capacity permitted meeting only restricted peak demand of 6109 MW during 2006–2007 when the unrestricted peak demand was 7,114 MW. Thus, there existed a peak power shortage of 1,005 MW. The project was therefore relevant and consistent with the government’s overall development objectives and the Asian Development Bank (ADB) strategy for India on supporting infrastructure-led poverty reduction.3 7. With progressive commissioning of the originally envisaged project components and subsequent project scope, the transmission capacity increased to 10,200 MW. The peak demand of 9,484 MW could thus be met during FY2013. Further, the system availability was enhanced to 99.44% in 2013 from 97.5% and technical losses were reduced to 3.3% in 2013 from 5.2% in 2005–2006. 8. The project’s execution thus addressed the transmission capacity constraints in a significant way with the added benefits of enhancing system availability and reducing technical losses. Project components were implemented with minor changes in scope from the designs contemplated at appraisal, further demonstrating the relevance of design and formulation. 9. The project framework is presented along with results in Appendix 2.

B. Project Outputs 10. The three outputs of the DMF (i) institutional, (ii) human resources and (iii) physical were achieved in totality. Institutional outputs of the DMF were met progressively within the deadlines culminating to a result that TRANSCO team could address complex engineering issues quickly. With the strengthening of human resources output of the DMF, the TRANSCO team worked cohesively for timely execution. These aspects resulted to cohesive team which aided 100 % achievement of physical infrastructure construction of the DMF.

3 ADB. 2003. Country Strategy and Program: India, 2003–2006. Manila.

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11. At appraisal, it had been envisaged that the works indicated in Appendix 2, Part A would be completed. The scheme as originally conceived was completed ahead of the 31 December 2011 loan closure date. Expeditious implementation of the original scope along with economy and efficiency in procurement led to savings and proposal of additional schemes. 12. Saving scheme 1 was contemplated for improving the transmission system’s operational efficiency, voltage profile, and delivery capacity by, among other things, meeting various parameters in line with the Grid Code. A twin objective was to reduce overloading of the existing 132 kV and 33 kV systems. The scheme’s scope is shown as Part B of Appendix 2 and was fully commissioned by August 2012. Saving scheme 2 aimed to improve operational reliability of the state’s transmission system to be consistent with international benchmarks for system efficiency while reducing operational risk. Its scope is in Part C of Appendix 2 and was fully completed by March 2013. C. Project Costs 13. The total cost of the project envisioned at appraisal was $197.8 million, comprising $144 million in foreign currency and $53.8 million in local currency. The project was completed at total cost of $176.10 million, comprising $141.91 million in foreign currency and $34.19 million in local currency. Most contracts were turnkey in nature and additional equipment was procured from cost savings. Savings from the originally estimated $197.8 million are attributed primarily to (i) costs lower than estimated for equipment procurement due to competitive bidding, (ii) depreciation of the Indian rupee against the US dollar, and (iii) efficient project monitoring and administration which reduced interest during construction. Appendix 3 compares costs at completion with the appraisal estimates. The contracts and dates are summarized by project implementation stages in Appendix 4, while Appendix 5 shows the project financing plan.

D. Disbursements 14. ADB disbursements totaled $141.91 million from ordinary capital resources out of the original loan amount of $144 million. The difference of $2.09 million was cancelled due to cost savings. Efficiency and economy in procurement combined with efficient project implementation to bring savings which subsequently were utilized to procure additional equipment (e.g., transformers, testing and protection equipment). During the project’s inception stage, actual disbursements exceeded the annual projections primarily due to advance procurement action adopted by TRANSCO and strong implementation methodology. The projected and actual disbursement of loan proceeds is shown in Appendix 6. 15. An imprest account was made available to TRANSCO. Though its experience in utilizing new products was limited, TRANSCO greatly benefitted from this second-generation imprest account and the statement of expenditure procedure of disbursement. Although minor shortcomings were noted in the early days, TRANSCO is of the view that a second-generation imprest account facility should be considered in every loan of Madhya Pradesh Power Sector Investment Program, as this could be beneficial to the executing agency from the viewpoint of project implementation. E. Project Schedule

16. Appendix 7 compares the project implementation dates of various subprojects with the actual situation. At appraisal, all physical subprojects were estimated to be completed

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by June 2011. TRANSCO completed the originally envisaged scheme before the loan closing date. It included (i) constructing new transmission lines, and (ii) establishing new substations. Good project management and resolution of technically complex issues led to the project’s expeditious completion.

17. At TRANSCO’s request, the loan closing date was extended twice: (i) first from 31 December 2011 to 30 June 2012 (by 6 months) to facilitate utilization of savings for completing the first saving scheme, and (ii) finally from 30 June 2012 to 31 March 2013 (by 9 months) to facilitate utilizing savings to complete another saving scheme. Both these requests were endorsed by the governments of Madhya Pradesh and of India. F. Implementation Arrangements 18. Implementation arrangements were as envisaged at appraisal. Overall responsibility for project implementation was with a project management unit (PMU) established within TRANSCO. With guidance from the chief executing officer and the active involvement of other directors, the PMU and the TRANSCO project team could address complex engineering issues rather quickly. This contributed to the project’s timely execution. Adequate technical, financial, and procurement staff was allocated to the PMU. The group head of the PMU was in charge of the project’s overall coordination. To ensure consistent compliance with ADB procurement guidelines, as well as economy and efficiency, procurement of all packages was facilitated from headquarters at Jabalpur, India. Officers at the rank of chief engineer were in charge of civil works, erection, and commissioning of transmission works. Due diligence in respect of financial matters was effected by the chief financial officer. Regular quarterly progress reports detailed the project’s progress.

19. The organization chart of TRANSCO is in Appendix 8. G. Conditions and Covenants

20. Covenants according to the Loan Agreement were generally met as required. No covenants were modified, suspended, or waived during implementation. All the loan covenants were complied with, except there was delayed compliance with (i) cash management responsibilities, (ii) appointment of an external expert/agency for monitoring of resettlement plan implementation, and (iii) establishment of a grievance redress committee. A systematic approach in developing awareness and building capacity regarding ADB’s safeguards requirements in the project staff could have addressed compliance delays. The compliances in respect of the self-financing ratio could not be met as (i) the revenue is decided by the state electricity regulator, and (ii) TRANSCO could provide balance funding from its own resources. A process is underway regarding the covenant on establishing pension funds, and this should be in compliance in future. Noncompliance with these covenants did not impact project progress, as TRANSCO could provide resources in time to match the project’s requirements. Covenants in the Loan Agreement and Project Agreement (i) relating to audited accounts; (ii) covenants in the Loan Agreement relating to the transfer/onlending of funds; and (iii) Sections 12, 18, 19, 23 and 27 of Schedule 5 to the Loan Agreement were met on time. Further, compliance in respect of (i) corporate governance, (ii) recruitment, and (iii) the project performance monitoring system were met progressively within the deadlines and no delayed compliance was noted. The status of compliance with covenants is given in Appendix 9.

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H. Consultant Recruitment and Procurement

1. Consultant 21. It was assessed at appraisal that TRANSCO has the requisite institutional capability to implement the project and hence consultant services were not provided. Accordingly, ADB engaged no consultant for this project. However, TRANSCO appointed separate consultants for preparing environmental and social safeguard reports and formulating a resettlement plan. Xavier Institute of Development Action and Studies, Jabalpur was appointed as the environment specialist and another team was appointed as the social and resettlement specialist. Reports were prepared on implementing the resettlement plan and the environmental management plan, and the initial environmental examination reports and resettlement plans were updated. Due diligence reports on social issues and environmental matters were prepared, as was a short resettlement plan (SRP) on social issues. These reports were further submitted to ADB. 2. Procurement 22. TRANSCO made use of advance procurement action as agreed by ADB. About $85 million worth of contracts could be awarded by October 2007 (i.e., within one month after the loan’s effectiveness. By providing approvals expeditiously, ADB showed its full cooperation toward achieving important milestones in project implementation. I. Performance of Consultants, Contractors, and Suppliers

23. The contractors and suppliers performed their assigned tasks in accordance with the contracts entered into with TRANSCO. The performance of all contractors was generally found to be satisfactory. All goods and services procured for the project complied with specifications and other operational performance standards. No consultant for project implementation was recruited as the requisite capacity for the project’s implementation resided within Transco.

J. Performance of the Borrower and the Executing Agency 24. The overall performance of the borrower and executing agency was satisfactory. The borrower was the Government of India and the executing agency was TRANSCO. All project components were constructed and commissioned successfully and generally within budget and on time. 25. Overall, TRANSCO demonstrated its capacity and capability to formulate and appraise, arrange counterpart finance, and carry out engineering, procurement, and construction of a variety of technically complex projects across different parts of the vast State of Madhya Pradesh while conforming to approved specifications and standards to the satisfaction of ADB. K. Performance of the Asian Development Bank 26. ADB closely and regularly monitored the project’s progress through review measures and quarterly progress reports. It provided useful advice in several areas, including procurement and project management. ADB provided timely approvals that enabled project milestones to be achieved, and this contributed to smooth project execution. ADB, TRANSCO, and officials of the Government of India from the Ministry of Power and Department of Economic Affairs conducted

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tripartite meetings which also facilitated project execution by taking corrective actions. Thus, ADB’s overall performance was satisfactory.

III. EVALUATION OF PERFORMANCE A. Relevance 27. At appraisal and completion, ADB’s sector and country strategies for the power sector were directed to removing transmission bottlenecks toward better utilization of existing and planned generating stations. The project’s proposed outcome is consistent with the country’s development priorities, as well as with ADB’s country and sector strategies. ADB’s country strategy was to fund infrastructure projects in key sectors contributing to economic growth. Its sector strategy focused on (i) reinforcing and expanding existing transmission and distribution systems relating to existing and new generation, (ii) reforming state power sectors with particular emphasis on state electricity board restructuring and commercialization, (iii) rationalizing power tariffs at bulk and retail levels, (iv) reforming the regulatory framework, and (v) improving energy efficiency. At project completion, ADB’s strategy for the power sector in India is in synergy with the Government’s objectives under the Eleventh Five-Year Plan, 2007–2012 to develop infrastructure for economic growth and poverty reduction, and the financing instrument selected was appropriate to the identified development problem. 28. The project was directed to making the transmission sector more efficient, and it was therefore relevant at appraisal and completion. The project will continue to be relevant in the future, especially due to astute planning of the transmission system within Madhya Pradesh. Therefore, it was relevant to the objectives for the power sector of the governments of Madhya Pradesh and of India. B. Effectiveness in Achieving Outcome 29. The transmission capacity increased to 10,200 MW with the result that the peak demand of 9,484 MW could be met during 2012–2013. Further, the system availability rose to 99.44% in 2013 from 97.5% during 2008–2009 and technical losses diminished to 3.3% in 2013 from 5.2% during 2005–2006. Thus, the objectives were met of (i) strengthening the transmission system and thereby increasing access to electricity in Madhya Pradesh while reducing system losses; (ii) improving the power system’s operation through reliable and economic dispatches; and (iii) facilitating evacuation of power from generation units. The project achieved all physical targets established at appraisal. All the project components are being operated and maintained at high levels of efficiency. The project is rated effective, because the outcome has been achieved as defined in the design and monitoring framework. C. Efficiency in Achieving Outcome and Outputs 30. The project is rated efficient. It was implemented efficiently and all the components have been operating continuously at their rated capacities since the date of commissioning. 31. The financial internal rate of return is reevaluated at 15.75%. That is above TRANSCO’s 3.35% weighted average cost of capital. The economic internal rate of return of all the components has been evaluated at 19.28%, which is higher than the 14.9% calculated at appraisal. This reflects the fact that the target benefits were exceeded due to the

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reduction of transmission losses to 3.3% in FY2013 from 5.23% in FY2006. 32. Originally envisaged scheme was completed without any scale of delays except for two lines which intended at improvement of transmission system operational efficiency and overloading of existing systems. The project was completed without any cost overruns (project completed at a total cost of $ 176.10 million) vis-à-vis appraisal cost (appraisal cost was $197.8 million). Timely scope changes and appropriate implementation arrangements aided execution of the project. D. Preliminary Assessment of Sustainability 33. Technically, the design of all the subprojects and the technology adopted are robust and appropriate given the technical complexities of the Indian power sector.

34. The project’s completion helped to meet demand for evacuating power from existing stations and for wheeling power to ensure utilization of the transmission system established under the project. The technical specifications of the equipment procured and commissioned in this project mean the technology is unlikely to become obsolete over its expected life spans. Because TRANSCO has in-house capacity to operate and maintain the subprojects effectively and efficiently, human, institutional, and financial resources are sufficient to maintain the outcome achieved over the economic lifetime of the project. Moreover, any risks can be managed. All those components commissioned are expected to be operated at full capacity throughout their lives. The project is therefore likely to be sustainable both technically and financially over the long term. E. Impact 35. Based on the preliminary assessment of the project’s impact, the project increased the energy transmission capacity of Madhya Pradesh which contributed in sustaining economic growth, social development and meeting the energy demand growth in Madhya Pradesh. Thus, the impact is considered to be significant (Appendix 2).

1. Environmental Impact 36. Background. The approved environmental category for the project was B.4 An initial environmental examination was prepared during processing of the project.5 The site selection for individual lines and substations was undertaken carefully. Preliminary transmission line route selection was based on topographic sheets and forest maps. In order to select optimal sites for the project components, screening principles were adopted such as to avoid or minimize impacts on the environment, ecology, human settlements (including to cause displacements), and public utilities. Alternative alignments and locations were also considered. It was not expected that the proposed works would pass through or near any environmentally or ecologically sensitive areas, archaeologically important sites, or protected historical monuments. The works generally traversed barren land with minimal vegetative cover and agricultural areas.

4 The project is governed by ADB’s Environment Policy (2002).

5 The environmental assessment of the proposed investments was carried out following ADB’s Environment Policy (2002) and Environmental Assessment Guidelines (2003), as well as the Government’s environmental assessment regulations and guidelines. The summary initial environmental examination report was attached as Annex 6 of the multitranche financing facility tranche 3 (Loan 2346) document.

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The initial environmental examination envisaged no irreversible, significant, or adverse environmental impacts. It outlined key aspects of the proposed investments, environmental benefits, and moderate negative impacts. To address the potential, moderate environmental impacts identified during the environmental assessment process, an environmental management and monitoring plan (EMMP) was developed as an integral part of the initial environmental examination. During processing, consultations with affected people and other local communities found them in support of the proposed works, as these were expected to benefit the areas in terms of improved electricity supply and some employment opportunities. An environmental assessment and review framework was agreed to be applied for subprojects that were not fully defined.6 The environmental assessment and review framework outlined the eligibility criteria, environmental assessment approach, approval procedures, institutional requirements, and other specifics for subprojects identified during implementation of the project. TRANSCO was responsible for preparing the required environmental assessment reports and obtaining ADB concurrence before implementation. These approvals were required to be in place before contracts were finalized and works commenced. TRANSCO had set up an environmental and social management cell (ESMC) in May 2002 while implementing an earlier ADB loan. In February 2003, it had assigned a dedicated, full-time officer to the ESMC. The ESMC was responsible for (i) ensuring regulatory compliances, internal monitoring, and quality control; (ii) supervising activities pertaining to safeguards and reporting on their implementation to TRANSCO management and ADB; and (iii) making sure that ADB’s safeguard policies were strictly adhered to. TRANSCO continued the ESMC for this project with seven officers (one full-time and six with part-time responsibilities). No need for additional staff was envisaged. A provision was included in the project budget to hire local consultants, nongovernment organizations, and external agencies for environmental monitoring during implementation. 37. Implementation of Environmental Safeguards. A review of EMMP implementations in April 2010 demonstrated varying levels of compliance with the agreed provisions, and in some cases this was assessed to be less than adequate. Several shortcomings and procedural lapses were noticed in implementing environmental safeguards. These were assessed to be mainly due to (i) TRANSCO and its contractors not deploying appropriately trained or experienced personnel to supervise environmental safeguards; and (ii) TRANSCO’s not considering the implementation of safeguards to be a priority area, thereby rendering the ESMC’s overall functioning less than effective. TRANSCO’s engaging an environmental consultant (even on an intermittent basis) could have improved management of environmental safeguards. During initial implementation stages, therefore, the overall institutional arrangements put in place to supervise and monitor implementation of tasks related to environmental safeguards were assessed to be less than adequate. In reaction to this nonresponsiveness, ADB developed a time-bound corrective action plan and provided follow-up to monitor its implementation. The major corrective actions were (i) ensuring statutory environmental compliances, (ii) developing fresh environmental assessment reports for ADB concurrence in line with the environmental assessment and review framework (for ongoing works of substations and transmission lines where the locations or the routes were newly added, revised, or realigned), (iii) suitably amending the contract documents for ongoing works to include provisions as per the agreed EMMP, (iv) undertaking an environmental due diligence audit through an external agency (to evaluate environmental implications for subprojects where the works had been completed without following agreed EMMPs), (v) monitoring environmental parameters at construction sites, (vi) public disclosure of environmental documents in local languages and holding consultations with local communities and affected people during

6 The environmental assessment and review framework is provided as Supplementary Appendix I to the Report and Recommendation of the President for the program (footnote 1).

9

implementation, (vii) establishing a grievance redress committee, (viii) strengthening environmental diligence during execution and streamlining records management, (ix) periodic review meetings of the ESMC with the project staff for raising awareness of environmental safeguards and briefing TRANSCO management, and (x) submitting to ADB reports on implementation of environmental safeguards as per the agreed frequency. ADB also conducted focused orientation workshops and site-specific briefings on environmental safeguards for the ESMC and project staff. TRANSCO in July 2010 recruited the Jabalpur-based academic institution Xavier Institute of Development Action and Studies (XIDAS) as an external environmental monitoring agency for the project. XIDAS conducted an environmental due diligence audit for the completed works. Its audit indicated that completed works had caused no adverse environmental impacts, but it also identified certain areas that required remedial measures from TRANSCO. XIDAS also monitored TRANSCO’s implementation of these remedial measures and reported on progress in its subsequent monitoring reports. With these strengthened institutional arrangements and implementation of the corrective measures listed above, the overall environmental performance improved considerably. TRANSCO confirmed that all statutory environmental and forest approvals as applicable under environmental regulations at national, state, and local levels were obtained prior to commencing works in the relevant stretches. It also confirmed that all terms and conditions associated with these approvals were complied with and that the relevant approvals were subsequently renewed as required. TRANSCO confirmed, too, that no complaints had been received from local communities regarding environmental aspects for any activities carried out under the project. 38. Effectiveness in Implementing Environmental Safeguards. Based on the assessment recorded in the environmental due diligence audit report, the nature of activities undertaken, and the available environmental records and monitored data, the implementation of environmental mitigation measures could be considered as partially effective. A systematic approach in developing awareness and building capacity regarding ADB’s safeguards requirements in the project staff could have addressed a majority of the shortcomings. The overall management of environmental safeguards improved later, after an external monitoring agency was engaged. 39. Overall Improvement in Environmental Conditions. The nature of targeted interventions was such that these addressed the transmission capacity constraints with the added benefit of enhancing system availability and reducing technical losses. These investments also included components that contributed to reduced leakages of sulfur hexafluoride (SF6). Thus, it can be considered that the environmental benefits from these investments could in the long term certainly outweigh the moderate negative impacts during the construction phase. In spite of several concerns related to operational and environmental performance, it appears that the project did contribute to some extent to overall improvement in environmental conditions. In the absence of data from TRANSCO, these environmental benefits could not be quantified. Further, the improved environmental awareness within TRANSCO staff is expected to be sustainable, and to be reflected positively in the employees’ work.

2. Social Impact 40. Background. ADB approved a short resettlement plan (SRP) in 2007. It was updated in 2009 to incorporate the impacts on private landowners whose land was acquired for constructing three substations, including one substation under tranche 3. Another SRP covered temporary impacts due to the likes of stringing transmission lines and erecting towers. The SRPs for the identified project components detailed the resettlement

10

policy and framework applicable for resettlement planning documentation, implementation, monitoring, and reporting. The SRPs reported insignificant impact on affected persons due to the construction of one substation on private land and stringing the related transmission lines. The project was classified as category B for involuntary resettlement and category C for indigenous people’s impacts in accordance with ADB’s Involuntary Resettlement Policy (1995) and Policy on Indigenous Peoples (1998), respectively. 41. Implementation of Social Safeguards. TRANSCO was responsible for efficiently managing resettlement. It established an environmental and social management cell (ESMC) in 2002 and designated one full-time official for resettlement management. Under the project, out of the total 10 substations, only 1 substation, namely Chichli (132 kV), involved private land acquisition and 9 substations were constructed on government land that was unencumbered and entailed no involuntary resettlement. For 1 substation, the land was acquired on a consent basis from the owners, who were compensated at the revenue department’s guidance value and in consultation with them. The land used for this substation was mostly barren and nonproductive. The stringing of transmission lines and erecting of towers were based on the Indian Electricity (Supply) Act, 1948 and the Indian Telegraph Act, 1885, which do not include any sort of land acquisition for construction of transmission pillars and lines. The compensation amount for the temporary crop damage due to works related to transmission lines was assessed by local revenue officials based on the market value of crop yields. The cost of trees affected on private land was based on a prescribed government rate. Temporarily affected cultivators were compensated for damage to their crops and trees after the commencement of physical works, as a revenue department’s assessment was done after the loss of crops. 42. The reviews of SRP implementations conducted by ADB missions indicated procedural lapses during the initial phase of implementation. This was mainly due to the executing agency’s (i) not deploying a resettlement specialist in the ESMC, (ii) not hiring a nongovernment organization for SRPs implementation, and (iii) not engaging an independent agency for monitoring and evaluation. The weak institutional arrangement and nonexistence of the requisite social and resettlement expertise resulted in commencing civil works without the updated resettlement plan and its approval by ADB for the changed scope of works. The civil works related in particular to stringing transmission lines and commenced prior to updating SRPs and disbursing compensation for crop damage to temporarily affected cultivators. Vulnerable groups were not identified for the purpose of disbursing them an additional allowance in accordance with the entitlement matrix. To address these inadequacies, ADB developed a time-bound corrective action plan and provided follow-up to monitor its implementation. The major corrective actions were (i) preparing updated resettlement planning documentation as per the agreed resettlement framework and indigenous peoples development framework to incorporate changes in alignments and new components under the subprojects, (ii) conducting social safeguards due diligence by an external agency to evaluate resettlement implementation for subprojects where the works had been completed without an updated resettlement plan, (iii) monitoring implementation of ongoing resettlement activities, (iv) public disclosure of SRPs in local languages and holding consultations regularly with the affected persons and other stakeholders, (v) establishing a grievance redress committee and ensuring its functioning, and (vi) submitting to ADB monitoring reports on implementation of SRPs. ADB also conducted orientation workshops focused on project-specific social safeguards issues for ESMC and project staff. In July 2010, TRANSCO engaged XIDAS as an independent agency to conduct due diligence for the completed works. XIDAS also prepared and updated the SRP for the transmission lines component. The executing agency also

11

engaged a resettlement consultant in 2009, who updated the SRP for the substation referred to above. The due diligence report indicated that all the affected persons under the completed works had been compensated adequately. TRANSCO reported that the full compensation had been paid to the affected persons and no complaint or grievance was received in this regard. The ESMC and field staff held meetings with affected persons, disclosed SRPs, and arranged grievance redress committee meetings as required. XIDAS monitored implementation of SRPs and provided reports to ADB. With these strengthened institutional arrangements and implementation of the corrective measures listed above, the overall social safeguards performance improved considerably. The executing agency confirmed that agreed SRPs were implemented following ADB policies along with national and state law to address the land acquisition and resettlement aspects related to the substation and transmission lines. TRANSCO also confirmed that there were no court cases or complaints from the affected persons relating to land acquisition, compensation, and associated aspects. 43. Effectiveness in Implementing Social Safeguards. Based on the findings of the social safeguards due diligence report, the implementation of SRPs, including the corrective action plan as reported in the external monitoring reports, the social safeguards performance is assessed to be satisfactory overall. The management of social safeguards improved later, after engaging an independent agency to conduct due diligence, monitor the implementation of SRPs, and prepare the resettlement planning document for the transmission line component. In addition, one resettlement consultant updated the SRP, including for the 1 substation under tranche 3. During implementation, capacity development and sensitization regarding ADB’s social safeguards requirements for the executing agency staff helped in rectifying the lapses that had occurred initially. The local people and other stakeholders recognized the positive impacts of the project, from which they will benefit in terms of improved electricity supply, an enhanced economy, and better quality of life.

IV. OVERALL ASSESSMENT AND RECOMMENDATIONS A. Overall Assessment 44. Project formulation and design were consistent with ADB’s country and sector strategies and with TRANSCO’s plan to develop a better and efficient transmission system for Madhya Pradesh. The performance of the executing agency, borrower, and contractors was generally satisfactory. Implementation of all project components was achieved as proposed at appraisal with no cost overrun, and in fact along with additional works made possible by a saving scheme. 45. All project components and subprojects have performed at a high level. TRANSCO has the capability sustainably to operate and maintain these also in the future. The project in general has met the objectives and it is rated successful. B. Lessons 46. To improve the environmental performance of loans, the following measures are suggested: (i) a systematic and continuous approach in developing awareness and periodic capacity enhancement of the project staff regarding ADB’s environmental policy, procedures, and requirements; (ii) as appropriate, ensuring timely mobilization

12

and continuation of environmental experts by the executing agency, consultants, and contractors until loan closure; (iii) systematic supervision, monitoring, data mapping, and reporting mechanisms on implementation of environmental safeguards; and (iv) periodic reviews by environmental experts associated with the loan in order to undertake timely corrective actions, where needed. 47. The following social measures are suggested: (i) advance capacity development for project staff on ADB’s social safeguards policy, procedures, and requirements; (ii) deployment of resettlement experts by the executing agency and consultants until loan closure, as appropriate; (iii) engagement of experienced nongovernment organizations to assist in implementing resettlement; (iv) timely supervision, monitoring, evaluation, and reporting on implementation of resettlement plans; (v) periodic social safeguards reviews by ADB experts and then initiating corrective actions, as required; (vi) addressing issues related to temporary impacts due to use of private land for stringing transmission lines and erecting towers, which are perceived by affected persons to cause permanent impacts by restricting access to the affected land for purposes of cultivation and devaluing land and assets under the corridor of impact; and (vii) ensuring disbursement to affected persons of compensation for damage to crops and trees prior to commencing civil works related to stringing transmission lines. Such measures can be expected to improve the social safeguards performance in ADB-assisted projects. 48. MPTRANSCO followed integrated project management practices to ensure (i) proper planning, (ii) effective project monitoring mechanisms, and (iii) application of skills of motivated and well-trained personnel. In addition, ADB needs to strengthen its assessment of the safeguards capacity of the executing agency at the project appraisal stage, identify capacity gaps, and suggest measures for efficient safeguards management. These would help in successfully implementing infrastructure projects even on vastly spread terrains like that of Madhya Pradesh. The knowledge and insights TRANSCO has gained in these aspects may be assembled and disseminated to other executing agencies in appropriate fora. Timely management of rights-of-way in spite of constraints and optimally utilizing ADB and counterpart fund, offer lessons to be adopted for other projects. 49. The advance procurement actions greatly helped in timely project execution and should be adopted for future projects. Moreover, this project’s partnership process involving stakeholders, and particularly contractors, in addressing complex technical and economic matters can set an example for future ADB projects in India. In general, good project management practices were followed and involved sequencing activities and a well-structured breakdown of the work content. This resulted in enhancing construction management practices to a higher level of efficiency by adopting a more formal project management methodology that is based on global standards. 50. TRANSCO is of the view that the multitranche financing facility was appropriate for managing a large infrastructure project. This helped it to be in an appropriate state of project readiness and contributed to savings on commitment fees and interest cost. TRANSCO advocates using similar structures elsewhere, and particularly for fledgling new organizations. Depending upon the complexity of a given project, it views a facility with duration of 7–10 years to be about ideal.

13

C. Recommendations

1. Project Related 51. Future Monitoring. Continued monitoring of the project is recommended as the project has resulted in positive socioeconomic impacts in the project area. 52. Covenants. Most of the project covenants were appropriate and adequately complied with, except for delayed compliance of (i) Cash Management Responsibities, (ii) social and resettlement specialist and (iii) establishment of Grievance redress committee. Covenants in respect of (i) Self Financing Ratio and (ii) Pension funds could not be met, however, an arrangement has been put for compliance in future. 53. Further Action or Follow-Up. The Project has been completed successfully and loan accounts properly closed and cancellation of the undisbursed loan amount. The project objectives as set forth at appraisal have been met. 54. Additional Assistance. The project has been completed at a cost lesser than appraisal cost estimate and no additional assistance is required. 55. Timing of the Project Performance Evaluation Report. In order to assess and document the socioeconomic benefits and the lessons learned for incorporation into future projects, a benefits monitoring and evaluation study should be undertaken after the full development benefits and impacts have been realized for all tranches after mid-2016.

2. General. 56. The project has been completed as per the design and monitoring framework. The executing agency has adequate capacity to implement technically complex project within the estimated costs and time across different parts of the vast State of Madhya Pradesh while conforming to approved specifications and standards to the satisfaction of ADB.

14 Appendix 1

CHRONOLOGY OF MAIN EVENTS IN PROJECT PROCESSING AND IMPLEMENTATION

Date Event

2006

16–24 October Fact-finding

11 December Management review meeting

12–14 December Appraisal mission

2007

19 January Staff review committee

16–17 August Loan negotiations

21 August President’s consideration and approval

23 August Loan agreement signing

24 September Loan effectiveness, including conditions

2008

7–17 January Review mission

1–3 September Review mission

2009

15–17 April Review mission

15–20 June Review mission

24–27 November Special loan administration mission

2010

6–16 April Special loan administration mission

27–30 October Loan review mission

29 November–1 December Review mission

2011

11–14 October Review mission

2012

14–16 February Review mission

2014

18–24 April Project completion review mission Source: ADB.

Appendix 2 15

PROJECT FRAMEWORK

DESIGN AND MONITORING FRAMEWORK

Design Summary Performance Indicators/Targets Results Impact Contributed to sustaining economic growth and social development in Madhya Pradesh Contributed to meeting the energy demand growth in Madhya Pradesh

Gross state product grows by at least 6% annually in 2007–2012 Energy deficit is reduced from 13% in 2007 to 0% in 2012

State compounded annual growth rate was 8.5% for 2007-2012. Peak demand of 9,484 megawatt (MW) was met successfully during 2012–2013.

Outcome Improvement in operational efficiency, voltage profile, and power delivery capacity of Madhya Pradesh.

Improvement in TRANSCO’s financial position

Increase transmission capacity from 5,563 MW in 2005–2006 to 8,170 MW in 2008–2009 Enhance system availability from 95% in 2005–2006 to 97.5% in 2008–2009

Reduce technical losses in transmission system from 5.2% in 2005–2006 to 4.9% in 2008–2009. Debt service coverage ratio of 1.2 to be maintained from 2007 and onwards Self-financing ratio of 20% (3 years moving average capital expenditure) to be maintained from 2010 and onwards

During 2012–2013, transmission system capacity increased to 10,200 MW while peak demand of 9,484 MW was met successfully. System availability was raised to 99.44%.

Technical losses in transmission system were reduced to 3.3%. For 2012–2013, a ratio of 1.24 was achieved. Efforts are being made to comply in the future. Not doing so has not, however, impacted project implementation.

16 Appendix 2

Outputs Institutional: Improvement in corporate governance

By December 2007: (i) Independent directors at board level recruited (ii) Board level committees formed, including an audit committee (iii) Internal audit functions and internal audit guidelines strengthened in line with best practices; internal audit scope to cover revenue audit; and internal audit reports to the audit committee of the board. (iv) Internal controllers appointed and report to the chairman and managing director of TRANSCO on a regular basis

Achieved.

Strengthening of human resources Physical infrastructure: Construction of transmission lines to connect 220 kilovolt (kV) and 132 kV substations to the 33 kV distribution substations

By December 2008: (i) Directors for operations, IT, commercial functions, and finance appointed (ii) Chartered accountants, IT specialists, and specialists in commercial areas recruited (iii) Management training programs in finance, operations, and commercial functions established (As per Project Administration Memorandum) By 2011: 132 kV transmission lines: 1,451.5 circuit-kilometers 132/33 kV new substation: 10 x 40 megavolt-ampere (MVA) 132/33 kV additional transformers 10 x 20 MVA and 3 x 40 MVA 132/33 kV transformers augmentation 6x (20 to 40 MVA) and 14x (40 to 63 MVA) Procurement of testing instruments and maintenance equipment. Works envisaged to be completed at appraisal is stated in Appendix 2 Part A.

Achieved. 100% of target achieved.

Appendix 2 17

Activities with Milestones 1 . Transmission:

1) Procurement of major equipment: issuance of bidding documents by March 2007 and contract awards by September 2007

2) Land acquisition for substations by July 2007 3) Construction started by January 2008 4) Commissioning by 2011

All activities and milestone achievement details are provided in Appendix 4 and Appendix 7.

Input Asian Development Bank loan: $620 million

Loan amount for tranche 3: $144 million

Actual disbursement was $141.91 million. Target was fully achieved, including additional subprojects which were also completed in totality. Additional subprojects are indicated in Appendix 2.

18 Appendix 2

PART A WORKS ENVISAGED TO BE COMPLETED AT APPRAISAL

Sr. No. Description 1. 1,451.5 circuit kilometers (cct-km) of 132 kV transmission lines

2. 10 new 132/33 kV substations, each having 40 megavolt-ampere [MVA] transformer capacity, at Badgaon, Bagdi, Berchha, Betma, Bhanegaon, Chhanera, Ghosla, Kasrawad, Chichli, and Vijaypur

3. 10 additional 132/33 kV transformers of 20 MVA each and 3 of 40 MVA each at existing substations

4. Augmentation of 6 132/33 kV transformers from 20 to 40 MVA, and 14 from 40 to 63 MVA at existing substations

5. Testing instruments and maintenance equipment

PART B SAVING SCHEME 1

Sr. No. Description 1. 4 additional 220/132 kV, 160 MVA power transformers at Chhegaon,

Sabalgarh, Seoni, and Tikamgarh

2. 220 kV current transformers (90 units) and potential transformers (18 units) at existing substations

3. 132 kV and 33 kV current transformers (150 units of 132 kV and 180 units of 33 kV) and potential transformers (60 units of 132 kV and 60 units of 33 kV) at existing substations

4. 220 kV SF6 circuit breakers (20 units) at existing substations


6. 33 kV vacuum circuit breakers (300 units) at existing substations

PART C SAVING SCHEME 2

Sr. No. Description 1. 10 additional 132/33 kV, 63 MVA power transformers at 132 kV substations

Alirajpur, Hatta, Jatara, Jora, Kanwan, Madhotal, Sanawad, Sendhwa, Tarana, and 220 kV substation Vidisha

2. 132 kV current transformers (150 units) and potential transformers (45 units) at existing substations


4. 33 kV vacuum circuit breakers (180 units) at existing substations

Appendix 3 19

COST BREAKDOWN BY PROJECT COMPONENTS ($ million)

Appraisal Estimate Actual

Item Foreign Local Total Foreign Local Total A. Project Component

Equipment costa 112.0 0.0 112.0 136.91 0.00 136.91 Erection and civil works 4.2 27.9 32.1 0.00 0.00 0.00 Others 0.0 18.9 18.9 0.00 34.19 34.19 Subtotal (A) 116.2 46.8 163.0 136.91 34.19 171.10

B. Contingencies

Physical 5.8 2.3 8.1 0.00 0.00 0.00 Price 11.6 4.7 16.3 0.00 0.00 0.00 Subtotal (B) 17.4 7.0 24.4 0.00 0.00 0.00

Interest and commitment charges during construction 10.4 0.0 10.4 5.00 0.00 5.00 Total 144.0 53.8 197.8 141.91 34.19 176.10 a The category “related services” is here included in equipment cost.

20 Appendix 4

SUMMARY OF CONTRACTS

Table A4.1: Contract Amount ($)

PCSS No.

Category No. Item Description

Contract Amount

Contract Disbursed

0001 02 132 kV 63 MVA transformer 11,417,960.10 11,417,960.10


0003 02 132 kV CTs ratio 800/1-1-1 200/1-1-1 259,259.54 259,259.54

0004 02 132 kV CTs ratio 400/1-1-1 820,875.01 820,857.05

0005 02 220 kV PTs 132 kV PTs 407,290.46 407,290.46

0006 02 33 kV CTs 33 kV PTs 33 kV NCT 407,357.70 405,231.50

0007 02 132 kV control and relay panels 1,311,746.98 1,244,807.07

0008 02 33 kV control and relay panels 366,793.48 360,466.63

0009 02 32/16 L EPAX 16/8 L EPAX Telephone sets 43,142.01 43,142.01

0010 02 HF coaxial cable Telephone cable 168,480.61 166,738.29

0011 02 400 kV wave traps 220 kV wave traps 132 kV wave traps with mandatory spare parts 783,619.05 783,618.98

0012 02 400 kV cap. vol. transformers 220 kV cap. vol. transformers 132 kV coupling capacitors with mandatory spare parts 1,241,322.74 1,208,166.34

0013 02 132/33 kV substation switchyard structure 3,280,390.33 3,253,202.45

0014 02 M. S. flats 408,228.00 406,677.69 0015 02 132 kV circuit breakers 3,132,201.54 3,129,354.88 0016 02 33 kV vacuum circuit breakers 1,260,539.51 1,255,520.74 0017 02 132 kV solid core insulator

33 kV solid core insulator 1,483,744.65 1,472,459.97 0018 02 control cables 1,886,975.76 1,886,975.76 0019 02 70 kN disk insulators 1,610,022.00 1,595,859.69 0020 02 90 kN disk insulators 1,258,848.00 1,249,071.84 0021 02 Hardware (23 items) for lines and

substations 1,985,068.91 1,978,043.06 0022 02 Accessories for conductors and earth wire 568,708.55 568,708.55

Appendix 4 21

0023 02 Supply of tower parts with accessories for Chhegaon 132 kV–Chhegaon 220 kV–Khargone 132 kV DCDS line and Nimrani 220 kV–Manawar 132 kV DCDS transmission line 3,429,235.79 2,941,219.93

0024 02 Supply of tower parts with accessories for Maksudangarh 132 kV–Biaora 132 kV DCSS–Rajgarh 220 kV DCDS–Raghogarh 132 kV DCSS transmission line

3,043,411.99 2,964,504.15 0025 02 Supply of tower parts with accessories for

Badwani 132 kV–Nimrani 220 kV DCSS–Julwania 132 kV DCDS line and Nimrani 220 kV–Kasrawad 132 kV DCSS transmission line 2,513,374.24 2,386,995.86

0026 02 ACSR Zebra conductor 7,895,354.98 7,888,976.63

0027 02 ACSR Panther conductor 5,278,498.88 5,274,980.62

0028 02 132 kV isolators 638,716.52 623,329.98

0029 02 33 kV isolators 269,245.19 260,315.67

0030 02 Supply of tower parts with accessories for 132 kV line 7,820,826.21 7,811,235.51

0031 02 Clamps and connector 496,424.59 477,108.00

0032 02 120 kN and 160 kN disk insulators 2,063,371.65 2,063,371.65

0033 02 HTGS earth wire 1,596,782.45 1,596,782.45

0034 02 Power cables 97,436.28 97,436.28

0035 02 Capacitor banks 345,397.79 344,240.18

0036 02 Hot line tools for lines 353,276.44 353,276.44

0037 02 Hot line tools for substations 99,472.20 99,472.20

0038 02 Survey equipment 83,137.70 83,137.70

0039 02 Overhead line fault analyzer systems 371,481.31 371,481.31

0040 02 Shearing bridge for tan delta and capacitance measurement 112,019.23 112,019.23

0041 02 Kelvin bridge for winding resistance measurement 39,010.20 38,717.16

0042 02 Leakage current monitor for LA 99,000.00 99,000.00

0043 02 Puncture insulator detector 88,103.95 88,103.95

0044 02 3-phase relay test kit 142,087.41 142,087.41

0045 02 Portable dissolved gas analysis kit 124,777.18 124,777.18

0046 02 Infrared camera 169,140.00 169,140.00

0047 02 Station transformers 242,506.36 242,506.36

0048 02 Battery chargers 112,981.42 112,981.42

0049 02 Carrier cabinet with protection coupler Coupling devices (LMU) Mandatory spare parts 567,677.96 567,677.91

0050 02 Carrier cabinet without protection coupler Coupling device (LMU) Mandatory spare parts

725,773.23 725,773.21

22 Appendix 4

PCSS = procurement contract summary sheet. Source: Asian Development Bank Loan and Grant Financial Information System

0051 02 Supply of tower parts with accessories for 132 kV Indore II–Depalpur and 132 kV Betma–Pithampur–Bagdi line 1,885,915.14 1,844,415.89

0052 02 Station batteries 295,267.31 295,034.33

0053 02 Lighting equipment 38,986.33 38,986.32

0054 02 Clamps and connector (repeat order) 107,848.64 107,848.64

0055 02 54/7/3.18 MM ACSR Zebra conductor 17,596,741.50 17,429,591.76

0056 02 30/7/3.00 MM ACSR Panther conductor 4,854,469.58 4,854,469.58

0057 02 70 kN EMS ball-and-socket-type porcelain disk insulator 1,353,514.60 1,353,255.83

0058 02 90 kN EMS ball-and-socket-type porcelain disk insulator 435,527.23 435,527.23

0059 02 160 kN disk insulator 593,370.30 593,370.30 0060 02 Hardware for T/L and S/S (additional

procurement) 466,893.71 466,893.71 0061 02 Accessories for 220 and 132 kV lines and

substation—additional 146,085.22 146,085.22 0062 02 Procurement of ACSR Panther conductor

3,055,575.57 3,034,378.10 0063 02 HTGS earth wire 247,930.06 247,930.01

0064 02 Procurement of ACSR Zebra conductor 4,983,647.39 4,966,399.66

0065 02 132 kV current transformers ratio 800/1-1-1 132 kV current transformers ratio 400/1-1-1 132 kV current transformers ratio 200/1-1-1 33 kV current transformers ratio 1200/1-1-1 33 kV current transformers ratio 800/1-1-1 33 kV current transformers ratio 400/1-1-1 132 kV potential transformers 33 kV potential transformers 346,784.69 336,054.66

0067 02 132 kV SF6 circuit breakers 312,428.60 304,643.75


0069 02 33 kV vacuum circuit breakers 877,383.42 857,985.85

0070 02 220 kV current transformers ratio 1200-600/1 220 kV current transformers ratio 800-400/1-1 220 kV Potential Transformers

368,083.18 344,273.81 0071 02 220 kV 160 MVA transformer 3,194,574.47 3,160,431.86


0073 02 132 kV CT and PT 251,037.01 249,162.24


0075 02 33 kV vacuum circuit breakers 521,965.81 519,659.58

Totals 138,515,102.97 136,911,021.97

Appendix 4 23

Table A4.2: Contract Award Details

Sr. No.

Bid Identification No. Item

Contract Value Rs. in Million US $

Million

Draft Bidding

Documents Prepared

Draft Bidding

Documents

Approved by ADB

Bidding Documents Issued to

Bidders

Bids Received

and Opened

Bid Evaluation Completed and Sent to

ADB

ADB Approval

of Recomme

nded Contract Award

Contract Award Date (Signing of Contract)

1 04-01/ADB-II/ MPPTCL/TR-111 (ICB)

Power transformer 132 kV (no. of packages 2)

1177.4 Jul 2006 Apr 2007 8 6

6 21-6-07 21-6-07

7-8-07 7-8-07

7-9-07 7-9-07


Circuit breaker 132 and 33 kV (no. of packages 2)

214.66 Jul 2006 Apr 2007 9 4 6

18-6-07 18-6-07

1-8-07 1-8-07

18-9-07 18-9-07


CT/PT (no. of packages 4)

81.9701 Jul 2006 Oct 2006 14

10 7 4 5

18-6-07 18-6-07 18-6-07 18-6-07

1-8-07 1-8-07 1-8-07 1-8-07

L I & III: 3-9-07; L II: 6-9-07; L IV:18-9-07


Isolator (no. of packages 2)

43.3955 Jul 2006 Oct 2006 8 6

6 30-7-07 30-7-07

10-9-07 10-9-07

L I: 16-10-07; L II: 9-10-07


Solid core insulator (no. of packages 1)

69.376 Jul 2006 Oct 2006 4 2 18-6-07 1-8-07 18-9-07 6 04-01/ADB-II/

MPPTCL/TR-116 (ICB)

Control and relay panel 132 and 33 kV (no. of packages 2)

82.319 Jul 2006 Apr 2007 13 12

12 18-6-07 18-6-07

1-8-07 1-8-07

L I: 3-9-07; L II: 17-9-07


Carrier communication equipment (no. of packages 4)

102.51565 Jul 2006 Apr 2007 15

10 10

10 10

18-6-07 18-6-07 18-6-07 18-6-07

3-8-07 3-8-07 3-8-07 3-8-07

L II: 5-9-07; L IV & V: 6-9-07; L III:

11-9-07 9 04-01/ADB-II/

MPPTCL/TR-118 (ICB)

Switchyard structures (no. of packages 2) 204.657 Jul 2006 Apr 2007 15

7 4

18-6-07 18-6-07

1-8-07 1-8-07

L I: 7-9-07; L II: 5-9-07

24 Appendix 4

Sr. No.



Million

Draft Bidding

Documents Prepared

Draft Bidding

Documents

Approved by ADB


Bidders

Bids Received

and Opened


ADB

ADB Approval

of Recomme

nded Contract Award



Control cabinet (no. of packages 1)

87.2115 Jul 2006 Apr 2007 12 6 18-6-07 1-8-07 4-10-07 10 04-01/ADB-II/

MPPTCL/TR-120 (ICB)

Clamps and connectors (no. of packages 1)

24.425 Jul 2006 Apr 2007 5 3 30-7-07 17-8-07 24-10-07 11 04-01/ADB-II/

MPPTCL/TR-121 (ICB)

Tower parts 132 kV (no. of packages 1)

324.1375 Jul 2006 Apr 2007 16 9 30-7-07 10-8-07 17-10-07 12 04-01/ADB-II/

MPPTCL/TR-122 (ICB)

Conductors and ground wire (no. of packages 3)

Rs.67.2 M+

$1.2536 M Jul 2006 Apr 2007 27

7 10 5

30-7-07 30-7-07 30-7-07

31-8-07 31-8-07 31-8-07

L I & II: 8-10-07; L III: 26-11-07


Disk insulators (no. of packages 3)

Rs.96.6 M+

$0.4043 M Jul 2006 Apr 2007 12

4 4 4

30-7-07 30-7-07 30-7-07

L I & II: 23-8-07

L III: 1-10-07

L I & II: 29-9-07; L III: 29-10-07


Tran-line and S/S hardware and accessories (no. of packages 2)

120.3026 Jul 2006 Apr 2007 5 4

4 18-6-07 18-6-07

1-8-07 1-8-07

L I: 18-9-07; L II: 4-10-07


Hotline maintenance tools (no. of packages 3)

25.412 Jun 2007 Jun 2007 7

4 4 4

31-12-07 31-12-07 31-12-07

31-1-08 31-1-08 31-1-08

L I & II 4-3-08 L III 21-2-08


Testing equipment (no. of packages 8)

RS. 88.7233 M+$

0.0416654 M

Jun 2007 Jun 2007 22

17 17 17 17 17 17 17 17

31-12-07 31-12-07 31-12-07 31-12-07 31-12-07 31-12-07 31-12-07 31-12-07

L-I,II,III,V,VI,VIIVIII,IX 7-2-08

L I: 27-2-08; L II: 26-2-08; L III: 5-3-08; L V: 18-3-08; L VI: 3-3-08; L VII: 4-3-08; L VIII: 3-3-08; L IX:

5-3-08

Appendix 4 25

Sr. No.



Million

Draft Bidding

Documents Prepared

Draft Bidding

Documents

Approved by ADB


Bidders

Bids Received

and Opened


ADB

ADB Approval

of Recomme

nded Contract Award


17 04-01/ADB-II/ MPPTCL/TR-127(ICB)

Supply cum erection contract (no. of packages 3)

477.0556 Apr 2007 May 2007 19

7 7 7

30-7-07 30-7-07 30-7-07

4-9-07 4-9-07 4-9-07

L I & II: 29-9-07; L III: 4-10-07


Procurement of tower and erection 220 and 132 kV (no. of packages 7)

712.7 Aug 2007 Nov 2007 28

8 8 1 4 5 8 6

13-2-08 13-2-08 13-2-08 13-2-08 13-2-08 13-2-08 13-2-08

L I,II,III,IV,V,VI,VII: 1-3-

08

L I,II,III,IV,V,VI,VII:

11-6-08 19 04-01/ADB-II/

MPPTCL/TR-129 (ICB)

Carrier cabinet and protection couplers (no. of packages 2)

59.663 Aug 2007 Sep 2007 3 2

3 31 12-07 31 12-07

L I & II: 6-2-08 L I & II: 24-3-08


ACSR Moose, Zebra and Panther conductor (no. of packages 2)

1243.5 Feb 2008 Mar 2008 14 9 9

2-6-08 2-6-08

L I & II: 2-7-08 L I & II: 8-8-08


Disk insulators 70 kN and 90 kN (no. of packages 2) 83.78 Apr 2008 Apr 2008 10

6 6

13-8-08 13-8-08

L I & II: 27-8-08

L I: 6-9-08; L II: 11-9-08


Conductor

221.65 Jun 2009 Jul 2009 18 11 3-12-09 11-12-09 29-1-10 23 04-01/ADB-II/

MPPTCL/TR-138 (ICB)

Conductor and earth wire

153.500 Jul 2009 Jul 2009 22 15 15

3-12-09 3-12-09

L I & II: 11-12-09

L I: 20-1-10; L II: 24-2-10

24 ADB II (S)/MPPTCL/TR-211 (ICB)

220 kV 160 MVA transformer

289.45 Jan 2011 Jan 2011 14 8 5-5-11 21-6-11 30-6-11

26 Appendix 4

Sr. No.



Million

Draft Bidding

Documents Prepared

Draft Bidding

Documents

Approved by ADB


Bidders

Bids Received

and Opened


ADB

ADB Approval

of Recomme

nded Contract Award



Circuit breakers

126.12 Dec 2010 Jan 2011 7

7 6 4

5-5-11 5-5-11 5-5-11

L I,II & III: 16-5-11

L I & II: 17-6-11; L III: 1-7-11


CTs and PTs

49.94 Dec 2010 Jan 2011 15 10 5

5-5-11 5-5-11

L I & II: 10-5-11

L I: 2-7-11; L II: 15-6-11


Circuit breakers

75.627 Apr 2012 May 2012 8 3 5

18-9-12 18-9-12

L I & II: 11-10-12

L I: 1-11-12; L II: 29-10-12


132 kV 63 MVA transformer

300.66 Apr 2012 Apr 2012 7 4 12-7-12 2-8-12 18-8-12 29 ADB II

(S)/MPPTCL/ TR-218 (ICB)

CTs and PTs

139.98 Apr 2012 May 2012 10 7 18-9-12 4 10-12 30-10-12 ADB – Asian Development Bank, ADB-BO = ADB Business Opportunities, ICB = international competitive bidding, MPPTCL = Madhya Pradesh Power Transmission Company Limited. Source(s): Quarterly Progress Reports, Madhya Pradesh Power Transmission Company Limited

Appendix 5 27

PROJECT FINANCING PLAN

($ million)

Source

Appraisal Estimate

Actual

Foreign Local Total

Foreign Local Total ADB 144.0 0.0 144.0 141.91 0.00 141.91

MPPTCL 0.0

18.9 18.9 0.00 24.19 24.19

Other 0.0

34.9 34.9 0.00 10.00 10.00

Total 144.0 53.8 197.8 141.91 34.19 176.10 ADB = Asian Development Bank, MPPTCL = MPPTCL = Madhya Pradesh Power Transmission Company Limited. Source(s): Asian Development Bank, Loan and Grant Financial Information Services.

28 Appendix 6

PROJECTED AND ACTUAL DISBURSEMENTS OF LOAN PROCEEDS

($ million)

Calendar Year

Projected Actuala

For the Year Cumulative For the Year Cumulative

2007 0.00 0.00 7.36 7.36

2008 35.00 35.00 43.34 50.70

2009 35.00 70.00 58.57 109.27

2010 15.80 85.80 17.11 126.38

2011 10.00 95.80 3.52 129.90

2012 6.20 102.00 5.32 135.22

2013 3.50 105.50 6.69 141.91 a Includes disbursements

sanctioned for additional projects.

Source: ADB Loan and Grant Financial Information Services.

Disbursement Details

Appendix 7 29

IMPLEMENTATION SCHEDULES

J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D

Transmission Lines

220kV & 132kV Substations

Projected

Actual

Source : MPPTCL

2011 2012Activity

2010

Route Finalisation &

Pretendering

2007

APPENDIX 7

Construction & Commissioning

Tendering & Contract Awards

Manufacturing & delivery of

Equipments

Construction & Commissioning

2009

Tendering & Contract Awards

Land Acquisition &

Pretendering

2008


Equipments

2006

PROJECT IMPLEMENTATION SCHEDULE FOR APPRAISAL SCOPE

Note:- For transmission lines, all original envisaged contracts were placed before Sep'08. However, two additional ICB were awarded later on for Conductor (PCSS no. 0062 & 0064 contract awarded in Jan'10) and for Earth wire (PCSS no. 0063 contract awarded in Feb'10). All the physical sub projects were completed before Sep'11 except for 2 lines namely 132kV Sabalgarh-Vijaypur (commissioned on Mar'12) and second circuit stringing of 220kV Sarni-Pandhurna line (commissioned on Dec'12).

30 Appendix 7

J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D

J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D

Projected

Actual

Source : MPPTCL

Tendering & Contract Award


Equipments

Installation & Commissioning

Tendering & Contract Award


Equipments

Installation & Commissioning

Activity 2012

APPENDIX - 7

Activity 2010 2011 2012

PROJECT IMPLEMENTATION SCHEDULE FOR ADDITIONAL WORKS (SAVING SCHEME - 1)

2013

PROJECT IMPLEMENTATION SCHEDULE FOR ADDITIONAL WORKS (SAVING SCHEME - 2)

2011

Appendix 8 31

Organization Chart

CE

(Procurement)Transmission line

& Substation

Turnkey contracts

and Procurement

CE (Plg &

Design)Power System

Planning and

Transmission line

& Substation

Design

C.F.O.All works related

to Finance

CE (EHT-

Construction)Construction work

of Transmission

lines

CE (Civil)All Civil works

in New &

existing

Substations

CE

(Personnel)

CE (T&C)Construction

work in existing

Substations

CE (EHT-

Maintenance)Maintenance

work of

Transmission

lines

CE (CRA)Commercial &

Regulatory

Affairs

CE (LD)State load

Dispatch

Centre

CE (HRDI)Human

Resource &

Development

Institute

Addl. C.E. - 1

S.E. - 3S.E. - 3

Addl. DIR.- 2

Joint. DIR.- 1

S.E. Office - 1

S.E. Field - 5S.E. - 2 S.E. - 2

S.E. Office - 3

S.E. Field - 12

S.E. Office - 1

S.E. Field - 3S.E. - 1 S.E. - 3 S.E. - 1

DIRECTOR (Technical)

ORGANIZATIONAL CHART OF MADHYA PRADESH POWER TRANSMISSION COMPANY LIMITED

MD, MPPTCL

Leadership, Coordination & Guidance

Addl. = additional, CE = chief engineer, CFO = chief financial officer, CRA = commercial and regulatory affairs, DIR = director, EHT = extra high tension, HRDI = human resource development institute, LD = load dispatch, MD = managing director, MPPTCL = Madhya Pradesh Power Transmission Company Limited, SE = superintendent engineer, T&C = transmission and construction Source: Madhya Pradesh Power Transmission Company Limited

32 Appendix 9

STATUS OF COMPLIANCE WITH MAJOR LOAN COVENANTS

Covenants Reference Responsible

Agencies Compliance Status

Project Implementation

Executing Agency (EA). The State, acting through TRANSCO, shall be the EA for the Project and shall be responsible for the execution of the Project.

Loan agreement, Schedule 5, para. 2

Government, GOMP, TRANSCO

Complied with.

The Project Management Unit (PMU). The Project Management Unit (PMU), established within TRANSCO, shall be headed by a PMU Manager. The PMU Manager shall report all Project related matters to the Chairman and the Managing Director of TRANSCO. The PMU shall comprise technical, financial, procurement and safeguard sections.


TRANSCO Complied with.

The PMU was established. A head of PMU was appointed and adequate staff were in place.

Coordinating Committee. An Investment Program Coordinating Committee, chaired by the Chairman and the Managing Director of TRANSCO, shall be established to coordinate and monitor the overall implementation of the Investment Program. The Coordinating Committee shall report to the PD through a Program Implementation Unit (PIU) to be established within the PD and to MPERC.



The Energy Department via its order dated 18 November 2009 established an Investment Program Coordinating Committee with the Principal Secretary (Energy Department) as its chairman and managing directors of TRANSCO and distribution companies as its members.

Selection Criteria and Approval Process for Subprojects. The Government and TRANSCO shall ensure that all subprojects are selected and approved in accordance with the criteria and approval process stipulated in Schedule 4 to the FFA.


Government, TRANSCO

Complied with.

Financial and Sector Reforms

Counterpart Funding. The Government and GOMP will ensure and cause the availability and timely release of counterpart funding for the timely implementation of each subproject.


Government, GOMP

Complied with.

GOMP provided timely release of the counterpart funding, as required.

Cash Management Responsibilities. GOMP will ensure that the cash management responsibilities are transferred to TRANSCO from 1 April 2008 so that TRANSCO can commence commercially independent operations, with any deficits met by commercial borrowings or other satisfactory means.


GOMP, TRANSCO

Delayed Compliance.

The cash management responsibilities were transferred to the respective companies through Madhya Pradesh Government Gazette no. 140, dated 29 March 2012.

Appendix 9 33

Audits. TRANSCO will engage independent private audit firms to conduct annual financial and procurement audits and submit reports to ADB promptly after their preparation but in any event not later than 6 months after the close of the fiscal year to which they relate.

Loan

agreement,

Schedule 5,

para. 8

TRANSCO,

ADB, GOMP

Complied with.

An independent private audit firm was engaged. The Audited Project Accounts and Audited Financial Statements for FY2012 were submitted on 26 December 2012.

In addition TRANSCO will ensure that (i) business process and (ii) performance audits in all operational areas are conducted annually by independent private audit firms whose qualifications, experience and terms of reference are acceptable to ADB.

Loan

agreement,

Schedule 5,

para. 9

TRANSCO,

ADB, GOMP

Complied with. This was covered under the terms of reference of the audit firm to which internal audit of the company was outsourced.

Corporate Governance. The GOMP will ensure the accountability and transparency of TRANSCO is maintained through the stakeholders meeting and publication of its agendas, actions through the duration of the investment program. TRANSCO will ensure that the following measures to strengthen corporate governance will have been completed by 31 December 2007:

(i) independent directors at the board level are recruited;

(ii) board-level committees, including audit and risk management committees, are formed;

(iii) internal audit functions strengthened and internal audit guidelines in line with best practices are developed (internal audit scope to cover revenue audit and internal audit reports to the audit committee of the board);

(iv) internal controllers reporting to the chairman and managing directors of the respective EAs on a regular basis are appointed.

Loan

agreement,

Schedule 5,

paras. 10

and 11

GOMP,

TRANSCO

Complied with.

(i) Independent

directors were recruited composed of 3 independent directors and 3 government nominees.

(ii) An audit and risk management committee was formed.

(iii) Internal audit was being done by chartered accountants.

(iv) Internal controllers were appointed.

Debt Service Coverage Ratio. The GOMP will ensure that TRANSCO maintains a debt service coverage ratio of 1.2 from financial 2007–2008 and onwards.

Loan

agreement,

Schedule 5,

para. 15


For FY2013, a ratio of 1.24 was achieved.

Self-Financing Ratio. The GOMP will ensure that TRANSCO will maintain historic self-financing ratio of 20% from 2010 onwards (3 years moving average capital expenditure).

Loan

agreement,

Schedule 5,

para. 16

TRANSCO Not Complied with.

A process for compliance is in progress. The revenue of the company is decided by the state electricity regulator (MPERC). This did not impact project execution as TRANSCO could provide a balance of 15% from its own funds.

Commercial

Turnkey Contracts. TRANSCO will (i) ensure utilization of turnkey contracts, where appropriate; (ii) negotiate longer terms of guarantees on equipment; and (iii) include long-term maintenance provisions in the

Loan

agreement,

Schedule 5,


Items (i) and (ii) were complied with. Item (iii) is moot because

34 Appendix 9

turnkey contracts. para. 13 maintenance is not a requirement.

Execution of Civil Works Contracts. TRANSCO shall ensure that, subsequent to award of civil works contract under any subproject, no section or part thereof under the civil works contract shall be handed over to the contractor unless the applicable provisions of the RF/RP and the EARF/EMP have been complied with.

Loan

agreement,

Schedule 5,

para. 32


Any changes to the location, land alignment, or environmental impacts on account of detailed designs or related subproject shall be subject to prior approval by ADB and/or the TRANSCO as the case may be, in accordance with the selection criteria and process stipulated in Schedule 4 to the FFA.

Loan

agreement,

Schedule 5,

para. 33


Human Resources

Recruitment. TRANSCO will have appointed managers for operations, information technology (IT), commercial functions, and finance; and will have appointed (i) chartered accountants, (ii) information technology specialists, and (iii) specialists in commercial areas. By 31 December 2008. TRANSCO will have established management training programs in finance, operations, and commercial functions.

Loan agreement, Schedule 5, Para. 14


A chief information technology officer and accountants were appointed.

Pension Funds. TRANSCO will have legally established trust funds to cover pension arrears by 31 December 2008.


TRANSCO Not Complied.

An arrangement is in process for compliance in the future.

Safeguards

Land Availability, Resettlement. GOMP will cause respective TRANSCO to ensure that affected persons by each subproject are fairly compensated in a timely manner on replacement values in accordance with the related RPs and RF, such that their living standards are not adversely affected. TRANSCO will submit progress and completion reports on land acquisition and resettlement under the quarterly progress reports for each subproject. In addition, the external monitoring report shall be submitted to ADB on a semi-annual basis for review.


Government, GOMP, TRANSCO, ADB

Complied with.

All required reports were submitted during the processing stage.

An external monitoring report for the period April–September 2010 was submitted to ADB on 6 December 2010.

GOMP will cause TRANSCO to ensure that prior to land acquisition and any resettlement under subproject, the related RP including its update based on consensus of AP, disclosed with all necessary information made available to persons affected by the subproject and confirm that it be uploaded on to ADB’s web site. TRANSCO will ensure that essential public infrastructure that may be affected under land acquisition and resettlement is replaced as appropriate in an expeditious manner in accordance with the RPs.



Complied with.

Almost all subprojects have passed through government lands, except for 3 substations for which the updated short resettlement plan was submitted to ADB on 3 November 2010.

The updated resettlement plan for the complete project was submitted on 18

January 2011 while the due diligence report had been submitted on

Appendix 9 33

12 January 2011.

The short resettlement plan on social task was submitted to ADB on 18 May 2011.

The due diligence report on social issues was submitted on 3 August 2011.

All the reports were accepted by ADB.

GOMP will cause TRANSCO to ensure that construction contracts contain binding requirements for construction contractors to fully reinstate pathways, other local infrastructures, and agricultural land to at least their pre-project condition upon construction completion. Provision should be made for adequate recording of the condition of roads, agricultural land, and other infrastructure prior to transport of material and construction commencement.



Complied with.

GOMP will cause TRANSCO to ensure that the requirements set out in the IPDF and the Government’s and GOMP’s applicable loans on IP will be implemented.



Complied with.

Within 3 months of the Effective Date, TRANSCO will engage an independent external expert/agency, acceptable to ADB, for monitoring and verification of the RP implementation under each subproject that will be responsible for providing ADB through the PMU quarterly monitoring and evaluation reports on resettlement implementation in accordance with RPs.



Delayed Compliance.

The order for appointment of a social and resettlement specialist was placed with Xavier Institute of Development Action and Studies, Jabalpur, to review the resettlement plan and update it in light of the changes in length under different capacities of transmission lines. To date, it has submitted reports on implementation of the resettlement plan, an updated resettlement plan, a due diligence report, and a short resettlement plan on social task. These reports were further submitted to ADB.

Within 3 months of the Effective Date, TRANSCO shall establish a grievance redress committee with representation from all stakeholders for the project to address any grievances from APs concerning resettlement, environment and other social issues in a timely manner.



Delayed Compliance.

The Grievance redress committee is constituted via order no. AS/MPPTCL/1230, dated 10 May 2010, and meetings are being conducted regularly.

36 Appendix 9

Environmental. GOMP through TRANSCO will ensure that proposed investments under the MFF are undertaken and that all subproject facilities are operated and maintained in accordance with all applicable laws, rules, and regulations of the Government and ADB’s Environment Policy (2002).



Complied with.

For each subproject, TRANSCO will prepare and implement the necessary IEE, environmental impact assessment, and EMP (with budget) in accordance with the EARF. Environmental category A or B sensitive subprojects shall be subject to the 120 days public disclosure requirement of ADB. TRANSCO shall ensure that the recommendations of the environmental assessment and EMPs approved by ADB and relevant government agencies are adhered to during design, construction and operation phases of the subprojects.

Loan agreement, Schedule 5,

para. 29


Complied with.

The updated IEE report for the entire project, updated IEE report for deviated line and IEE with due diligence report for three transmission lines not included in the earlier IEE were submitted to ADB on 16 December 2010. The environmental due diligence report was submitted to ADB on 18 May 2011.

TRANSCO shall monitor, audit and report to ADB twice a year on the implementation of the EMPs for each subproject.



Complied with.

An external monitoring report for the period of April–September 2010 was submitted to ADB on 9 December 2010.

TRANSCO shall ensure that (i) the subprojects are not located within national parks and wildlife sanctuaries, unless prior environmental clearance is obtained from relevant government agencies; (ii) monuments of cultural or historical importance are avoided; and (iii) EMP with adequate budget is developed and implemented for each subproject.



Complied with.

The project did not pass through wildlife sanctuaries.

Performance Monitoring and Reporting

The Borrower shall ensure that within 3 months of the Effective Date, a Project Performance Monitoring System (PPMS) shall have been established by the EA in a form and with a composition acceptable to ADB in accordance with the Investment Program and Project performance indicators. The EA shall undertake periodic Project performance review, and also the Investment Program in accordance with the PPMS to evaluate the scope, implementation arrangements, progress and achievements of objectives of the related subproject and overall Investment Program.



Complied with. TRANSCO followed the ADB guidelines.

An advisor for project monitoring was engaged by TRANSCO to supervise and/or coordinate all activities related to constructing transmission lines.

The EA shall prepare quarterly progress reports and shall submit these to ADB within 30 days of the end of each quarter. These reports shall provide (i) a narrative description of progress made during the period (progress on compliance with environment and social requirements including EMP and RF shall also be included), (ii) changes in the implementation schedule, (iii) problems or difficulties encountered, and (iv) work to be carried out in the next period. The progress reports shall also include a summary financial account for the components, including subprojects, consisting of



Complied with.

Progress reports are being submitted as scheduled.

Appendix 9 33

expenditures during the period, total expenditure to date, and reports on environmental, resettlement and benefit monitoring.

The Borrower shall ensure the submission to ADB of a Project Completion Report within 3 months of physical completion of the Project by the EA, and the Facility Completion Report within 3 months of physical completion of the Investment Program. These reports shall cover a detailed evaluation of the Project and the Facility respectively, covering the design, costs, contractors’ and consultants’ performance, social, environmental and economic impact, economic and financial rates of return, and other details of the Project and the Facility, as may be requested by ADB.



Complied with.

Review

ADB, the Borrower and the EA shall meet regularly as required to discuss the progress of the Project and any changes to implementation arrangements or remedial measures required to be undertaken towards achieving the objectives of the Project and the Investment Program.


ADB, Government, TRANSCO

ADB, the Borrower and the EA met regularly and the first review mission was fielded 7–17 January 2008.

A mid-term review of the Project shall be undertaken by ADB and the EA. The mid-term review shall include a review of issues and any problems or weaknesses in implementation arrangements, and agree on any changes needed to achieve the objectives of the Project and the Investment Program.


ADB, Government, TRANSCO

The special loan administration mission for the loan visited during 24–27 November 2009 and 6–16 April 2010

ADB = Asian Development Bank, EA = executing agency, EARF = environmental assessment and review framework EMP = environmental management plan, FFA = framework financing agreement, GOMP = Government of Madhya Pradesh, IEE = initial environmental examination, IPDF = indigenous peoples development framework, MFF = multitranche financing facility, MPERC = Madhya Pradesh Electricity Regulatory Commission, PD = project director, PMU = project management unit, RF = resettlement framework, RP = resettlement plan, TRANSCO = Madhya Pradesh Power Transmission Company Limited.

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