final SDC Evaluation Report-final-27-06-24

Swiss Agency for Development and Cooperation SDC Embassy of Switzerland Swiss Cooperation Office Pakistan

External Review of Water and Energy Security

Through Microhydel (MHP)

Islamabad, April, 2014

External Review of Water and Energy Security Through Microhydel (MHP)

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Table of Contents

Executive Summary .......................................................................................................... 1a Project Assessment ............................................................................................ 2b Expected Impact ................................................................................................. 3c Sustainability ....................................................................................................... 4d Delays and Impacts on Project Outcomes ......................................................... 4e Cross cutting issues ............................................................................................ 5f Summary of Lessons and Recommendations ................................................... 6g MHPs in Chitral ................................................................................................... 8h Conclusion .......................................................................................................... 8

1 Background and Context ............................................................................................ 102 Objectives and Scope of External Review ................................................................. 113 Approach and Methodology ....................................................................................... 11PART A: ASSESSMENT OF CURRENT PROJECT ..................................................... 134 Project Outcomes ....................................................................................................... 134.1 Technical Aspects ............................................................................................. 13

4.1.1 Design Considerations/ technical Measurements ..................................... 144.1.2 Energy Generation ..................................................................................... 294.1.3 Summary and Conclusions ........................................................................ 30

4.2 Environmental Aspects ..................................................................................... 324.3 Gender Aspects ................................................................................................ 334.4 Greenhouse Gas Reduction ............................................................................. 354.5 Financial Aspects .............................................................................................. 36

5 Sustainability of Project Outcomes ............................................................................ 385.1 Financial Sustainability ..................................................................................... 385.2 Institutional Framework and Governance ......................................................... 415.3 Key Stakeholders, their concerns and sociopolitical risks ............................... 415.4 Summary Conclusion and Recommendations ................................................. 42

6 Processes that affected Attainment of Project Results ............................................. 466.1 Preparation and Readiness .............................................................................. 466.2 Ownership ......................................................................................................... 466.3 Stakeholder involvement .................................................................................. 476.4 Financial Planning ............................................................................................. 476.5 Implementing/Executing Agencys supervision and backstopping .................. 486.6 Delays and Project Outcomes .......................................................................... 49

Part B: Future Outlook .................................................................................................... 517 Assessment & Mapping of potential Area(s) in KP and FATA for Microhydels ....... 517.1 Policy Reforms in KPK ...................................................................................... 527.2 Relevance of MHPs for Chitral district .............................................................. 53


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7.3 Chitral Electrification Concept ........................................................................... 537.4 Local State and Peace Building ........................................................................ 557.5 Hydro-Power in FATA ....................................................................................... 55

8 Cross cutting Issues ................................................................................................... 588.1 Governance ....................................................................................................... 588.2 Promotion of gender Equity .............................................................................. 58

9 Lessons and Recommendations ................................................................................ 599.1 Objective and Outcomes .................................................................................. 599.2 Planning ............................................................................................................ 609.3 Implementation .................................................................................................. 609.4 Operation........................................................................................................... 619.5 Sustainability: .................................................................................................... 61

10 Annexes ...................................................................................................................... 63Annex 1: Terms of Reference ........................................................................................ 63Annex 2: LogFrame ....................................................................................................... 71Annex 3: Women Field Interviews ................................................................................. 78Annex 4: LCCA .............................................................................................................. 83Annex 5: Electrification Concept Chitral District ............................................................ 88Annex 6: Utility Concept .............................................................................................. 133

List of Tables Table 1: Summary of Project Results ................................................................................... 2Table 2: Capacity and Energy Values for with and without fixed weir -Pawoor ............ 18Table 3: Capacity and Energy Values for with and without fixed weir - Harchin ........... 22Table 4: Plant Factor ........................................................................................................... 29Table 5: Existing Businesses .............................................................................................. 34Table 6: CDM Revenues ..................................................................................................... 35Table 7: Total Project Budget .............................................................................................. 36Table 8: Total SDC Project Budget ..................................................................................... 37Table 9: LCCA Summary Pawoor .................................................................................... 39Table 10: LCCA-Summary Harchin ................................................................................. 40Table 11: Micro-Hydels in FATA ......................................................................................... 56

List of Figures Figure 1: Cost development per capacity and head ........................................................... 14Figure 2: Powerhouse site - Parwoon ................................................................................. 15Figure 3: Catchment Area Parwoor ................................................................................. 16Figure 4: Flow Duration Curve - Parwoon ........................................................................... 17Figure 5: Annual energy Generation with and without fixed weir ............................... 18Figure 6: Powerhouse site Raman-Harchin ..................................................................... 19Figure 7: Catchment Area Raman-Harchin .................................................................... 20Figure 8: Flow Duration Curve Raman-Harchin............................................................... 21Figure 9: Annual energy Generation with and without fixed weir - Harchin ............... 22


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Figure 10: Transmission System - Parwoor ........................................................................ 26Figure 11: Transmission System Raman Harchin ........................................................... 27


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ACRONYMS AEDB Alternative Energy Development Board

AKRSP Aga Khan Rural Support Programme

BOO Built, Own and Operate

BOOT Built, Own, Operate and Transfer

CER Certified emission reductions

CDM Carbon Development Mechanism

DC District Commissioner

EPC Engineering Procurement Contract

CHF Swiss Franken

FATA Federal Administrated Tribal Area

FATA-DA FATA Development Aurhority

FRDP Fata Rural Development Programme

GB Gilgit-Baltistan

GHG Greenhouse Gas

NGO Non-Governmental Organization

O&M Operation & Maintenance

KPK Kyber Pakhtunkhwa

LCCA Life Cycle Cost Analysis

LSO Local Support Organization

MDTF Multi-Donor Trust Fund

MHP Micro/Mini Hydropower

PECRET Pakistan Engineering Center for Renewable Energy Technology

PHP Pakistan Hindukush Programme

PKR Pakistani Rupees

SDC Swiss Development Cooperation

SPC Solar Pumping System

SRSP Sahard Rural Support Programme

SSL Solar Street Lighting

TOP Terms of Partnership

TOR Terms of Reference

VC Village Council

VO Village Organisation


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WO Women Organisation

Exchange rate: 1 USD = 100 PKR

ACKNOWLEDGMENTS

This report was prepared with invaluable knowledge and ground support from a diverse group of stakeholders. The authors are grateful to SDC and AKRSP staff for furnishing relevant material on time and for facilitating field visits. The report has benefitted immensely from the knowledge and views of project participants and ultimate beneficiaries. Support and technical assistance provided by professional organizations and experts in both public and private sectors are greatly appreciated. However, the contents of this report are based on the findings of the review team and do not necessarily reflect the views or policies of SDC or AKRSP.


SDC Evaluation Report 04-14 Page 1

EXECUTIVE SUMMARY This report presents the findings of the External Review of the Water and Energy Security through Microhydels (MHP) Project in Chitral (two MHPs in Yarkhun and Laspur valleys), hereafter called the Project. The review was carried out by INTEGRATION, Energy and Environment (pvt) Ltd under a contract from SDC. An overview is provided below.

MHP Features Powoor Harchin

1 Households (nos) 1.300 1.140

2 Installed Capacity (kW) 800 500

3 Assumed average Plant Load Factor ( %) 60 60

4 Estimated annual demand (GWh/a) 1.682 1.051

5 Productive Uses and Comercial (GWh/a) 252,3 157,7

6 Private Households and Services (GWh/a) 201,8 126,1

7 Average Tariff rate (PKR/kWh) 5 5

8 Total Investment Cost (mill. PKR) 130,15 100,35

9 Total O&M over 20 years (mill. PKR) 41,64 32,114

10 Energy production cost (PKR/kW/h) 0,54 0,67

11 GHG emission reduction (tCO2 ) 21 years 79.821 49.896

Source: Green Alternative Power (GAP), the EPC contractor of both projects; ref to chapter 4.1.1.2. The investment figures are unrevised.



a Project Assessment The project implementation has been delayed by more than two years. Table 1 provides a snapshot of the project results, as of April 2014. Table 1: Summary of Project Results

Outcome Indicator Achievement Remarks 1. Energy and

water security for the population

800 kW MHP Pawoor and 600 kW MHP Raman Harchin successfully constructed and transferred to the community.

Two community based power utility company established and successfully operating and maintaining the projects

About 80% of civil work completed

Two utility companies established and registered

Remaining works seem difficult to be realised within the remaining budget

Arrival of electromechanically equipment is expected by the end of May; which seems not very realistic Few adjustments of civil works required Re-design of T&D system and inclusion of distribution system including house connections required additional funds are required for completion No clear understanding of how demand will develop due to missing data Operation & Management needs to be outsourced; respective decisions are to be taken and enforced.

2. Reduced pressure on forests

Enough electricity is generated and supplied from the power houses

The electricity generated is used as advised by the engineers of AKRSP

Load shedding and management adopted by the community with social harmony

NA Communities are expecting sufficient amount of electricity to be used for cooking / heating. Positive impact expected on agro-forest cover from reduced consumption of fire wood, which needs monitoring by the communities jointly with AKRSP

3. Reduced workload on women

The households using electric appliances for heating, cooking and washing.

NA Peak load management plan needed to make the optimum utilization of electricity; No clear vision on possibilities for households to afford additional appliances Cooking and heating create additional costs, which may



be partly (?) recovered by respective savings Expected consumption figures will require clear load management schedules

4. Income and enterprise from diversified and value-added livelihoods

The communities trained and capacitated for enterprise and business development

Potential entrepreneurs identified, trained and linked with micro finance and other supporting windows

NA Limited natural resources (especially in agriculture), low skills and limited access to financing hamper the expected productive use; No budget provision for respective support measures available. However, availability of sufficient electricity is expected to support new enterprises

5. Carbon income and reduced emissions

Standard UNFCCC record keeping maintained at the project site, regional office Chitral and head Office Islamabad.

NA Record keeping systems need to be established in the two power station; Due to drastically reduced CER prices, CDM benefits are almost one quarter of the originally estimated figures

b Expected Impact The projects true impact can only be measured some 5 years after the final installation of the generators and commissioning of the two MHPs (approx. from 2020) in an ex post facto evaluation mission. Based on current status, the following observations are made:

After the envisaged completion of the investment phase in 2014, the project is expected to supply 1,300 households (about 11,700 people) at Pawoor and 1140 households (about 10,260 people) at Raman Harchin with electric power of high quality and reliability.

The round the clock supply of sufficient electricity can be used for more options than only lighting purposes, resulting in increased productivity at the household level and reducing the workload in rural households, particularly of women. It is expected that stable electricity will contribute to improved household education, health, awareness levels, income-earning opportunities of which women benefit more than men.

The extent to which these impacts are being realized depends on factors like affordability of electricity (tariffs); available savings for buying of additional household appliances, additional savings (reduced purchase of fuel wood, kerosene, CNG, etc.)



available for cooking and heating; functionality and acceptance of the required demand side management schedule (reduction of peak load).1

At the village and valley levels, the project is expected to support increases in income and employment opportunities by allowing people to undertake micro and small level economic enterprises in a range of sectors at the village and higher levels2. To which extent and within which time horizon is due to lack of data not clear.

Moreover, it is expected to increase the leisure/productive/ study hours, especially for women and children. Another expected benefit of electrification is enhanced access to information and awareness through the use of a number of means of information technology (supposing that respective devices are already available or can be purchased by using available household savings).

Based on the evaluation of previous MHPs in Chitral (C. Maier, 2007), which were substantially smaller than the two reviewed here, the overall impact of the project over a period of 20 years is expected to be significant in terms of reducing the number of people living under poverty line, social development, enterprise, trade and commerce related benefits.3

c Sustainability Based on achieved projects assumptions and the existence of a functional and professional working utility management, the expected revenue from tariff, CERs, new productive uses, and savings in the cost of fuel-wood will contribute to the sustainability of the project outcomes (see Annex 4) in the medium to long-terms (after 5-7 years from project commissioning).

Within the first years of operation less income and resulting deficits (especially with respect to cash flow and considering the repayment of loan and interests) are to be expected and to be considered in the tariff system to be elaborated.

Financial planning and revenue projections, which are based on 60% of plant load from the first year of operations, are most probably overestimated, which may contribute to liquidity problems and, among others, require a longer period to repay the loan to the Acumen Fund (AF) than the current 10-year as planned. Therefore, some revised cash budget is urgently called for, and needs consultations with the projects donors.

d Delays and Impacts on Project Outcomes The original commencement of operation was planned for December 2013 and has been re-scheduled to end of June 2014. This seems no longer realistic. With no further delay, full operation may be envisaged for end of October 2014.

Late decision to go for higher quality electromechanical (E&M) equipment led to re-design of important structures (e.g. powerhouse, tailrace, penstock) and late start of the corresponding international procurement. The time required and possible delays involved in international procurement appear to have been substantially underestimated by AKRSP as compared to

1 All of these aspects need to be investigated, discussed with the beneficiaries and condensed in a final operation concept, prior to commencement of operation. 2 Communities are organized into village and womens organizations (V/WOs), with substantial savings of their own, and access to microfinance from the First Micro Finance Bank (FMFB), jointly owned by AKRSP, Aga Khan Fund for Economic Development (AKFED) and International Finance Corporation (IFC) 3 http://www.geo.fu-berlin.de/geog/fachrichtungen/anthrogeog/zelf/Medien/download/OccPapers33_Maier.pdf?1373748625



the local procurement. The same is valid for other parts of the project (e.g. transmission & distribution).

Also the time required for organizing and streamlining of the complex investment project and financing structure with different funding sources (grants, loan, CDM, community contribution) was underestimated. In addition, donor funds were made available with almost 6 months delay, resulting in an almost one year delay in construction due to upcoming winter.

During field visits, the community stakeholders expressed their concern that these delays have affected their morale and also increased the costs and risks for them. They also stated that they have delivered on their part of the deal and completed tasks assigned to them according to the schedule, which has also been affected by delays in tasks assigned to AKRSP. Therefore, they expect AKRSP to take responsibility for the additional risks and costs, resulting from changes to the initial planning.

Although the delays are considerable and have increased the initial costs of the project, it will not have a significant impact on the achievement or under achievement of the final project outcomes or sustainability:

Due to missing time lines in the Logframe, completion on time or with delay has no influence on the on results and outcomes; the expected impacts will be just also delayed

What influences the results and sustainability are design specs, underlying assumptions of benefits, capacity and quality of work, etc., which remain the same

Whereas economic factors like project costs, repayment of loans, etc. are influenced by delays in project implementation

One positive outcome of the delay is that AKRSP has still time to collect essential data and information which are essential for the formulation of a sound operation and management concept.

e Cross cutting issues Gender equality aspects were found to be strong in project participation. Women are included in the governing Boards of both MHPs, which are registered as legal companies or Community based Electricity Utilities (GENCOS/DISCOS). The project outcomes are intended to be more favorable to women and children, in terms of reduced workload, opportunities and extra hours for social, economic and educational activities. However, to support the general statements collected during the field visits and meetings respective baseline surveys and impact monitoring should be implemented and included in the operation concept.

The community ownership of the project is broad, facilitated by strong involvement of VOs/ WOs and LSOs, and equity participation by over 90% of the project beneficiaries. Community participation in project implementation and management has been formalized through the creation of legal utilities as described above. The decision-making processes are democratic, transparent and participatory.



f Summary of Lessons and Recommendations Lessons/ Findings:

Project implementation is considerably delayed which could have been avoided through comprehensive planning at the beginning

The expected impacts (e.g. reduce of fuel wood, productive use, womens work load, health) will be most probably realized to a certain extent, but with respective delays and to an unknown level.

A quantification of the impacts would require respective surveys and data collection at the two project sites which hasnt been done yet.

Another factor strongly influencing the level of impact achievement is the future operation & management system which hasnt been developed yet.

The economic benefits in terms of growth in enterprise development will be slow in initial years requiring supplementary actions; funds for supporting measures should be made available within the project.

The equity and ownership of the project is high. All stakeholders have an interest in continuing and sustaining the project gains after completion

The project also meets CDM objectives, but carbon income will be roughly one-quarter of the original estimates

An additional outcome that is not specified in the ProDoc is creation of equitably owned economic assets in the form of two Utilities/ companies, and formalizing new commons.

Planning:

The selection of site should have been based on available development concepts or plans or if not available on defined priorities supporting the achievement of the overall project goal

Project planning should also consider complementary operations and funds to protect the new installations and infrastructure and to mobilize local economic development by means of stable supply and productive use of electricity.

The project planning did not adequately anticipate possible delays in implementing a technically and financially complex project

There is a lack of clarity as to what technology to use and how much to pay, which ultimately cost the sponsors and beneficiaries more money and time than originally envisaged, besides delaying project results and outcomes

Once the issues of technical and financial threshold were resolved, necessary data and standards were lacking, which led to some technical omissions, such as gaps in the design of civil works and T&D

The project costs are low compared with international experiences which may compromise the quality to the system and puts additional burden on the O&M (transfer of investments to operation costs).

Implementation:

For construction, the project has used a mixed approach of community management and Engineering Procurement Contractor (EPC), which may have reduced the cost, but it also potentially compromises the construction quality and risks reducing project life

Key calculations and construction designs are missing for some elements, including



time-series hydrological data, weir, penstock, power house, load distribution during peak-load period, and T&D

Changes in design caused considerable delays in project implementation

Operation:

O&M guidelines and concepts are fluid at best, and technical services and required skills may not be available in these remote valleys of Chitral, which often remain cut off from urban centers during winter

Power stations of such size are not manageable by the community, and they require a professional mechanism which need to be established

In the past community users have been paying very low flat rate tariffs for the provision of small quantities of energy, which needs to change if these utilities shall be sustainable

The revenues must be sufficient to repay the loan and interest, which will also result in higher tariffs (at least during the re-payment period of seven years).

Provisions in the form of bank savings should be made for larger repairs and replacements.

Sustainability:

The sustainability of the project outcomes are a critical issue. The sustainable operation solely depends on the collected revenues created through the sale of electricity. The underlying assumptions (e.g. plant factor, sold energy, tariff) are themselves based on secondary assumptions (e.g. development of productive use, availability of household savings to purchase equipment, additional savings to pay the electricity bill)4 for which except general and global statements no evidence could be provided.

In addition, the physical condition of the schemes is another important factor for a sustainable operation. The compared with international standards lower implementation standard will create higher operational costs due to higher maintenance and repair load and earlier replacements which need to be considered.

Finally, the Operation & Management form will have significant impacts on the sustainability.

Key recommendations:

The expectations from the project must be revisited, redefined, and made more realistic to achieve for all partners. Also, projections of tariff revenue and O&M costs need revision, based on an initial lower load factor of 20-30% (not 60%). Based on these new calculations, tariff rates and loan repayment schedule need to be adjusted.

The project design should be revisited and missing elements identified in the report incorporated as much as possible, including a) construction of an engineered weir, b) reassessing the capacity of step-down transformers and T&D lines and, c) re-designing load distribution system.

There are concerns on the part of the community at both locations with regard to the functioning of the plants according to the technical specifications, and projected generation of electricity in the anticipated quantity and quality, and revenue generation. The current terms of partnership between AKRSP does not address all

44 There is even a third level: development of productive use depends on availability of entrepreneurship, access to financing, skilled labour, access to market, adequate infrastructure, etc.



these concerns. The recommendation of this report is to revise these partnership agreements and build in elements and commitments that are typically found in a build, own, and operate (BOOT), or BOO project agreement.

O&M system needs to be critically reviewed and possibly revised. A useful approach will be to outsource O&M functions of both Utilities, and other MHPs through a service or leasing contract, ensuring professionalization of O&M functions of installations across several villages.

g MHPs in Chitral The MHP landscape is evolving in Chitral and the larger Malakhand division, largely as a result of the acceptance of the decentralized community based approach popularized by AKRSP, and later taken up by SRSP and other support organizations.

However, the socio-economic development in Chital lacks a comprehensive district or provincial development strategy which would identify priority areas to be supplied, taking into account the structure and growth of the population, the prospects of economic development and potential social conflicts amongst the ethnic groups.

Although almost all sector programs launched in various districts of KPK do have economic growth and poverty alleviation objectives, linked with basic electricity supply schemes, but they are largely targeting just one aspect, which is physical infrastructure of MHPs, and that too, at very basic standards.

Without a sound electricity development strategy and its integration of other sectors, isolated MHP interventions will have lesser impact and no synergy effects. Further planning and coordination activities should, therefore, be undertaken as part of an integrated rural electrification plan.

In the context of Chitral, small-scale hydropower could also be used to strengthen local governance. At the local government level, hydropower can be a key source of local revenue, creation of equitably owned assets, a fundamental economic driver, and a readily available adaptation tool. MHPs in Chitral are seen as an innovation on traditional practices of common property management, and accepted as new commons. They foster cooperation and mitigate conflict over common resource ownership and management.

h Conclusion Further support in rural electrification by means of MHP is worthwhile and necessary in view of improvement of living conditions in general and the economic development in particular, of the rural areas in Chitral

Based on the identified fields of priority and socio economic potentials possible fields of intervention are:

Contributing to the electric power supply of central places (high population density, social infrastructure, administration, economic potentials) or places of high economic potentials through the construction of new / improvement of existing power supplies. Main targets would be Garamchashma and Mulkhow contributing to the supply of regions with high population density and high to medium economic potentials through the upgrading and interconnection of existing hydropower stations to small local or regional grids. In this context the establishing of small utilities that buy the power from the community owned power stations and distribute and sell it to the customers would be an important aspect.



Rehabilitation and upgrading of existing small power stations in the rural area for basic power supply. As stated in the GIZ report (MHP situation in Chitral 2013) and in the attached District Electrification Concept (Annex 5) a considerable number of MHPs are out of order or operate at very basic level. These interventions would address basic needs and the improvement of living conditions of people living in rural areas without larger economic potentials and out of reach of any grid extension plan.

These interventions can be implemented as single programme as an important chain in the overall development and resulting improvement of the living conditions in the district and will be one important.



1 Background and Context This report presents the findings of the External Review of the Water and Energy Security through Microhydels (MHP) in Chitral (two MHPs in Yarkhun and Laspur valleys), hereafter called the Project. The review was carried out by INTEGRATION, Energy and Environment (pvt) Ltd under a contract from SDC.

The purpose of this review is to assess the relevance, effectiveness, efficiency, sustainability, and cost effectiveness of the Project design, planning and implementation, in relation to local context, objectives and outcomes. Specifically, the review assesses implementation performance and results, factors affecting achievement of these results, and sustainability of Project outcomes. It also traces the evolution of MHPs in Chitral, in terms of institutional systems, technology development, and financing, ownership and business models, as well as future potential.

The methodology used was desk research and field observations, combining qualitative and quantitative measurement techniques, supplemented with interviews and collection of data sheets from project records, and corroborated with information obtained from each MHP site.

The study was carried out from March 15 to April 30, 2014.

The brief background of the project is as follows:

Under its 'Pakistan Hindukush Programme (PHP), SDC in April 2011 signed a financing agreement with Aga Khan Rural Support Programme (AKRSP) to implement Water and Energy Security through Microhydels Project in Chitral, KPK, to contribute to PHP. The objective of PHP is socio-economic development of the respective communities through provision of electricity for domestic purposes, and utilization of energy for community based rural enterprises The projects layout includes building of two MHPs in the villages of Pawoor and Raman Harchin in Yarkhun and Laspur valleys of Upper Chitral.

As per the original plan, the project was to be completed during the period April 2011 to March 2013. However, due to delays in the procurement of revised electromechanical equipment, evaluating corresponding bids from international manufacturers and suppliers and extended negotiations led to an extension of the initial project schedule.

As per the revised schedule agreed between SDC and AKRSP, the final project completion date is set for September 2014. This extension was linked to a supplementary budget support of CHF 400,000 - to pay for higher quality costs.

The SDC budget increased to an equivalent of PKR 158,483,716. The total project budget so far amounts to 238,552,134 PKR.



2 Objectives and Scope of External Review The purpose of this external review is to provide an independent, comprehensive assessment of project results, their sustainability, and future outlook for similar initiatives in the context of Chitral and the larger Hindu Kush region.

A specific objective is to assess project results (Outcomes) whether the project is on track to deliver the expected project outputs, objectives and stated results. This includes physical and financial progress, performance and achievements against project targets, and factors and processes limiting the achievement of results.

As this is a project still under implementation, the review provides best estimates on the likely realization of project outcomes and objectives, such as intended social, economic and environmental services; equitable sharing of benefits among all the beneficiaries, including households, especially women and children.

The second key objective of the review is to assess project sustainability. It includes assessing the relevance and appropriateness of projects technical design, the quality and durability of the electromechanical equipment, and the civil works; financial resources and revenue streams to pay for O&M costs, and participatory and cost-benefit sharing systems and institutional arrangement that are likely to sustain the Project Outcomes beyond project completion and commissioning.

A third objective of this external review exercise is to look at the evolving context of Chitral and the wider region, and evaluate the scope and prospects for extending and/or upgrading rural electrification by means of similar micro initiatives, and to identify opportunities for institutional reforms, scaling and integration of community-level energy initiatives with larger government and private sector plans. To this purpose the study was asked to map current trends in MHP development in Chitral and Malakhand Division.

As the two MHPs are also part of a Clean Development Mechanism (CDM) project implemented by AKRSP in cooperation with Pakistan Poverty Alleviation Fund (PPAF), the review also touches upon the likely impact of the project on GHG emissions and related issues, including reduced deforestation..

Finally, the review has identified and articulated the lessons learned from the project and made recommendations both to overcome obvious deficiencies and to strengthen opportunities of rural electrification in Chitral..

3 Approach and Methodology Given the multifaceted scope of the assignment, a multi-layered methodology has been adopted for this research. The methodology focuses on assessing the appropriateness of projects design and other technical parameters to the context of Chitral; social, economic and environmental relevance, management effectiveness; original and evolving rationale; implementation performance and limiting factors; coordination with public sector players and institutional arrangements, quality of beneficiary participation, including gender and social inclusiveness; financial management, and specificity of project results and benefits sought and its likely post-project impact and sustainability. For measuring progress and achievement of outputs, outcomes and results, the methodology uses targets and indicators provided in the Logframe included in the revised Financing Agreement between AKRSP and SDC (Annex 2).



Information for this study was gathered through document review, group and individual interviews and site visits. More specifically, the review results are based on the following sources of information:

Review of relevant reference/policy documents (SDC/KPK and FATA Government/Federal Government/donor papers, exchange of letters, Bid Document, Engineering Design, minutes of Steering Committee meetings and relevant policy decisions).

Structured interviews with relevant staff in the field, regional and head office, i.e. Chitral Regional Programme Manager, Programme Coordinator based in Islamabad, representatives of Village and Women Organizations (VO/WOs) in the two project locations, Project Committees and beneficiaries, etc.

Field visits to Chitral and project sites in Yarkhun and Laspur Valleys Presentation of the preliminary findings to SDC and initial feedbacks, Presentation of the draft report and obtained feedback.



PART A: ASSESSMENT OF CURRENT PROJECT

4 Project Outcomes The project envisages to achieve five specific results or outcomes, as detailed below, by means of constructing two MHPs and building support infrastructures, including distribution lines and link roads, where necessary, establishing of an adequate operation and management structure and to arrange respective financing.

The expected annual energy generation is indirectly specified at being >4.2 GWh for Pawoor and >3.15 GWh for Raman Harchin (Logframe: Indicator 1 of Output 2.1).

Outcome 1: Energy and water security for the population Indicators:

i. 800 kW MHP Pawoor and 600 kW MHP Raman Harchin successfully constructed and transferred to the community.

ii. Two community based power utility company established and successfully operating and maintaining the projects

4.1 Technical Aspects

The following sections provide a description of the design and physical implementation, which took place so far and the resulting impacts on sustainable operation. Because the civil works are not completed yet, not all structures could be inspected and the powerhouses were also not operational.

The quality of design and construction is directly correlated with available funds. Expecting international or European standard on national Pakistani cost basis will inevitably lead to unmet expectations, frustration, and problems among the stakeholders.

Recent investigations (e.g. compiled and summarized in: PPAF Manual & Guidelines No 1: MHP Implementation Aspects, 2013) on cost for MHPs built on international standards clearly indicate that:

Specific cost of small stations is in general varying between 1,300 and 8,000 USD/kW.

India and the Asian region as a whole, show specific cost of 800 to well above 4,000 USD/kW.

Power stations of low heads and of smaller capacities show significant higher specific costs (Figure 1).



Figure 1: Cost development per capacity and head

Source: RE technologies: Cost Analysis series; Volume 1: Hydropower; IRENA, June 2012

Considering the above figures and the specific situation in the project area (e.g. remoteness, lack of local skilled labor, long transport ways) and the envisaged sizes of the plants a specific investment of about 3,000 USD/kW (power station only) seems to be a realistic approach5.The two stations evaluated in this report show the following cost figures:

Pawoor: 1,660 USD/kW (1.33 mill. USD in total)

Harchin: 2,600 USD/kW (1.0 mill USD in total).

The available budget is about USD 1.6 m below the expected minimum value of 3,000 USD/kW.

Consequently, the following findings and conclusions are drawn in the light of these budget limitations.

4.1.1 Design Considerations/ technical Measurements

4.1.1.1 Site Selection and Hydrology

Site selection was based on topographic features, available water flow and the remoteness to the next load centers. No other aspects, such as economic potential, availability of natural resources or raw products, or detailed estimates on the expected consumption of energy by different consumer groups: households, business facilities, administration, social institutions were taken into consideration.

No long-term discharge measurements are available for both sites. Calculation of design discharge was based one single discharge measurements taken during low flow season. However, for power stations of this size, setting of design discharge should be always based on reliable flow data taken at intake site. In absence of on-site measurements data obtained

5 T&D not included; first cost estimates based on adjusted designs are currently under preparation

Pawoor Harchin



Figure 2: Powerhouse site - Parwoon

Source: Google Earth

from gauging stations in neighboring catchment areas could have been used for calculation of discharge.

Modeling of flow data by using the catchment area ratio method has been conducted within the framework of this report. The results are presented below.

Besides, the question of minimum discharge, the maximum discharge or flood flow, is another important information for the design of the intake, powerhouse and tailrace structures (protection of structures against flooding). Especially, the intake area where stream section is often narrow floods may easily overflow the intake structure and the first part of the headrace canal and create shutdowns and damages.

Flood protection structures had been designed by using existing flood marks and information gained from the local population. Both these sources of information are important but not sufficient to estimate the flood flow. The resulting flood values should have been confirmed by using hydrological data and empirical flow equations, which are available for northern Pakistan.

a Parwoor

The Parwoor site is shown in Figure 2. Site selection, with respect to topography, resulting head and stability of structures, was found to be reasonable. The comparable steep slope provides high head within a short distance; powerhouse and tailrace canal are safely located about 7 m above flood watermarks of the receiving stream. With respect to geology high sediment rates are to be expected. The design foresees the construction of a natural weir, which is unlikely to capture and convey especially in dry season all stream flow into the power canal with resulting less energy generation during these times.

intake

Headrace canal

forebay

powerhouse



The Parwoor catchment area is shown in Figure 3. The size of the catchment area is 120 km; the design discharge is given at 0.701 m/s.

The flow duration curve resulting from the modeling of 11 years daily flow data from Miragram no 2 gauging station together with the design discharge is presented in Figure 4.

Figure 3: Catchment Area Parwoor


intake



The results indicate that with the current design of a natural weir the power station will generate less energy during the winter season:

For an average year the power station will operate on 50 days at about 90% part load, reducing the max output to about 723 kW. During dry years the minimum flow will be considerable lower with resulting higher number of days and less capacity.

The planned natural intake can divert at best 50% - 70% of the stream flow during dry season. Most of the water will flow subsurface and percolate beneath the intake structure. In this case, the number of days with part load may range from 155 to 182 days, which is almost 5 to 6 month per year. During about 60 days available water is below 50% of design discharge, which may even result in shutdown of power station.

Monthly generation figures with and without an engineered weir and assuming the expected 60% plant factor for both cases (Indicator 1 of Output 2.1) are compiled in Figure 56; total annual figures in Table 2.

6 Based on 60% plant factor, modelled daily flow data and 30% percolation rate

Figure 4: Flow Duration Curve - Parwoon

Source: own compilation

0 50 100 150 200 250 300 350

Stream

flowm/s

days

Flow Duration Curve Pawoor



Table 2: Capacity and Energy Values for with and without fixed weir -Pawoor

Month Mean discharge With Without

m/s kW MWh m/s kW MWh 1 0,74 796 353 0,5 588 247 2 0,70 795 316 0,5 556 221 3 0,68 772 341 0,5 540 239 4 0,93 796 344 0,7 739 319 5 2,52 796 355 1,8 796 355 6 5,84 796 344 4,1 796 344 7 12,34 796 355 8,6 796 355 8 13,20 796 355 9,2 796 355 9 6,37 796 344 4,5 796 344 10 2,28 796 355 1,6 796 355 11 1,27 796 344 0,9 796 344 12 0,99 796 355 0,7 787 351

Total 4.161 3.830 Source: own compilations; based on plant factor: 60%; modelled daily average flow data

Based on a tariff of 5 PKR/kWh, the difference of about 330 MWh represents a lost income of about 1.65 mill PKRs or about 16,500 USD per year.

The available capacity would decrease by about 200 kW during the winter months.

Flood Flow With regard to flood flow, the calculated Q100 amounts to about 443 m/s which has to be passed through the river cross section at intake and tailrace side with no impact on the structures or respective flood walls are to be constructed.

Figure 5: Annual energy Generation with and without fixed weir


MWh

month

Annual Energy Generation - Pawoor



Conclusions/Recommendations: The site selection with respect to topography, geology, etc. is adequate to the capacity of the station. The general lay-out is considering the installation of a fixed weir adequate.

With respect to water availability the situation should be improved by constructing of a fixed weir at the intake.

Flood flow protection measures should be recalculated and if necessary adjusted.

To control validity of the modeled discharge data a flow measuring station should be installed at the powerhouse site with daily readings of height and monthly readings of flow.

To control validity of the modelled discharge data a flow measuring station should be installed at the powerhouse site with daily readings of height and monthly readings of flow.

b Raman-Harchin Originally the power station as planned to be built in the main Laspur valley. Due to social

problems the entire project had to be relocated in a western tributary to Laspur valley. The new Raman-Harchin site is shown in Figure 6. The site with respect to topography, resulting head and stability of structures is reasonable. The powerhouse is well protected by the hill ridge; slopes seem to be stable and able to bear the load of the structures. The river slope is slightly lower compared with Parwoor, thus the length of the headrace canal is with about 1.3 km two times longer and the resulting head with 77.8 m about 58 m lower. Powerhouse and

Figure 6: Powerhouse site Raman-Harchin


intake

Headrace canal

forebay

powerhouse



tailrace canal are safely located about 8 m above floodwater marks of the receiving stream. The intake is designed as natural intake. With respect to the geology high sediment rates are to be expected.

The Raman-Harchin catchment area is shown in Figure 7. The size of the catchment area is 210 km; the design discharge is given at 0.82 m/s.

The flow duration curve resulting from the modeling of 11 years daily flow data from Miragram no 2 gauging station together with the design discharge is presented in Figure 8.

Figure 7: Catchment Area Raman-Harchin


intake



The results indicate that with the current design of a natural weir the power station will generate less energy during the winter season

The calculated minimum flow of about 1m/s is (at least during average years) above the design flow of 0.82 m/s. Thus, the power station will be able to operate during 365 days on full capacity.

The planned natural intake can divert at best 50% - 70% of the stream flow during dry season. Stream water will flow subsurface and percolate beneath the intake structure. In this case, the power station will operate on part load for about 120 to 60 days, which is almost 2 to 4 month per year.

Monthly generation figures with and without an engineered weir and assuming the expected 60% plant factor for both cases (Indicator 1 of Output 2.1) are compiled in Figure 47; total annual figures in Table 3.

7 Based on 60% plant factor, modelled daily flow data and 30% percolation rate

Figure 8: Flow Duration Curve Raman-Harchin


0 50 100 150 200 250 300 350

Stream

flowm/s

days

Flow Duration Curve Raman Harchin



Table 3: Capacity and Energy Values for with and without fixed weir - Harchin

Month Mean discharge With Without

m/s kW MWh m/s kW MWh 1 1,24 554 247 0,9 554 245 2 1,17 554 223 0,82 554 220 3 1,13 554 247 0,79 534 247 4 1,55 554 239 1,1 554 239 5 4,21 554 247 2,9 554 247 6 9,73 554 239 6,8 554 239 7 20,56 554 247 14,4 554 247 8 22,01 554 247 15,4 554 247 9 10,61 554 239 7,4 554 239 10 3,79 554 247 2,7 554 247 11 2,12 554 239 1,5 554 239 12 1,65 554 247 1,2 554 247

Total 2.911 2.905 Source: own compilations; based on 60% plant factor and modelled daily average flow data

The difference is with only 6 MWh acceptable.

Figure 9: Annual energy Generation with and without fixed weir - Harchin


MWh

month

Annual Energy GenerationHarchin



Flood Flow With regard to flood flow, the calculated Q100 amounts to about 586 m/s which has to be passed through the river cross section at intake and tailrace side with now impact on the structures or respective flood walls are to be constructed.

Conclusions/Recommendations: The site selection with respect to topography, geology, etc. is adequate to the capacity of the station.

The site selection with respect to topography, geology, etc. is adequate to the capacity of the station. The general lay-out is considering the installation of a fixed weir adequate.

With respect to water availability and later maintenance works the situation should be improved by construction of a fixed weir at the intake.

Flood flow protection measures should be recalculated and if necessary adjusted.

To control validity of the modeled discharge data a flow measuring station should be installed at the powerhouse site with daily readings of height and monthly readings of flow.

4.1.1.2 Organization of Works

Design and construction was appointed to a local EPC contractor (Green Alternative Energy; GAP) who was responsible for design and implementation of the entire project. The construction was organized and implemented in close cooperation with the local communities. The EPC contractor GAP, provided design and site engineers. Due to the ongoing winter break no site engineer could be met on site.

4.1.1.3 Design of Civil Works

The construction of the stations follows in principle the common design of MHPs in the area. Information on discharge and floods was taken from the local people, plans, drawings, structural and hydraulic calculations are of very basic quantity and quality. The design of T&D comprises of sketch maps showing load centers, transformer sizes and principle conductor alignment. Voltage drop, short circuit calculations are not available as well as overall and detailed system sizing.

Conclusions/Recommendations: The general design work is inadequate for power stations of such size. However, due to the delay in construction, some of the basic system calculations could still be done, at least for the T&D system.



4.1.1.4 Civil Structures

Due to the lack of adequate design documents8 at AKRSP, only those civil structures, which are already constructed, could be reviewed.

The constructed parts (gravel trap, sedimentation basin, headrace canal, partly forebay) provide in general a good impression. They are constructed by applying local technologies and standard designs. Their functionality with respect to sedimentation rate and volume, discharge volumes, etc. could not be evaluated at this stage of construction.

As already briefly mentioned above, there are no fixed permanent intake structures in the form of well-adapted weirs, which is unusual for power stations of this size. Beside the above-mentioned higher risk and disadvantages of lower operational time and annual energy generation, it would inevitable increase the operational costs due to higher maintenance costs and necessary realignment works after floods. Thus the economic performance of the plant will suffer.

Plans for powerhouse, penstock, and tailrace structures are not available. According to the design engineer main reason was the late change of powerhouse equipment to be installed.

The headrace canal is built along steep slopes consisting of hill debris (gravel, boulders, blocks) over rock. The steep slopes support erosion of surface material, the creation of gulley and landslides which may cause heavy damages of civil structures and high maintenance and repair load. Stabilization of slopes could reduce the risk and the resulting work load.

Conclusions/Recommendations: Not all civil structures are constructed in an adequate way. There are several higher risks, which may affect the efficient operation of the systems. Therefor the civil structures need close supervision by the operating utility companies from the very beginning.

Adequate design drawings and calculations should be elaborated for the structures still to be built; inspection should be conducted during commissioning phase

The stabilization of slopes through biological protection measures should be investigated.

4.1.1.5 Electro-Mechanic Equipment (E&M)

Originally, the installation of local equipment was foreseen. Taking the current manufacturing capabilities in Pakistan into account, the use of local equipment of such size and with the intention to provide high quality and reliable power supply for economic development, would have counteracted the projects objectives and expected impacts.

Especially the Pakistani turbine manufacturers are by no means able to manufacture turbines of the required size and quality. The same is valid for other equipment like generators, inlet valves, governors, safety and control devices like synchronization panel, exciter, etc.

The project partners also recognized this at a later moment. Finally, the E&M equipment was tendered through ICB (International competitive Bidding). An evaluation committee evaluated the quotations received. The contract was awarded to a Pakistan firm, which offered Chinese equipment. The firm, Al-Fajar, enjoys a good reputation and has already implemented a

8 All design documents, plans, drawings, etc are compiled in two reports project proposal for the Mini Hydel Unit Pour Yarkhoon and Raman Harchin both dated October 2010.



number of similar projects in Pakistan (e.g. Machai HPP 2.6 MW, Malakand III HPP, 5 MW, Reshun HPP 3.5 MW (all KPK), Cane HPP 3.2 MW, Jaglote HPP 3 MW (all GB), etc.).

Conclusions/Recommendations: It can be expected that the E&M equipment complies with international standards and provides the basis for sustainable operation.

4.1.1.6 Transmission & Distribution of electric power

a Transmission The transmission is based on an 11 kV line and a number of step-down transformer stations (Figure 10 and 11). No design calculations had been performed which is not adequate to such an extended system of comparable high load. Minimum requirements usually are:

Load flow analysis of transmission system Sizing analysis of step-down transformers Short circuit analyses of transmission system including sizing of protection devise

(MCBs).

Earthing system of sub-stations is not described and unclear. The transformer sizes are comparably low. A rough assessment of load considering the assumed outcomes (e.g. 50% heating and cooking, 60% plant factor) shows the following results:

Peak load per households (according to AKRSP):

Basic consumption: 1 kW Advanced consumption: 3 kW Average: 2 kW/household.

Adjusting a coincidence factor of 0.5, the average per household load would amount to about 1 kW. Consequently, a 50 kW transformer can safely supply 50 households; whereas a 100 kW transformer can supply 100 households.

The demand of other than household consumers, havent been calculated by the project. They are usually in the range of:

small shops: 250 W workshops (3-phase): 3 kW Public buildings: 1 kW Hospitals: 10 kW.

Consequently, in Pawoor about 18 of 19 transformers (Figure 10) and in Raman Harchin all transformers (Figure 11) are undersized9. Taking a permissible overload of about 25% into account in Pawoor 13 of 19 (68%) and in Raman Harchin 10 of 13 (77%) of the transformers are still undersized.

Another issue is the load management during start of power station. In general a power station cannot be started under full load. Therefore, load has to be reduced by disconnecting parts of the transmission/distribution system down to an acceptable load (about 30% of full

9 These figures do not consider any consumption growth due to population growth or shifting of business activities into the peak hours or increasing number of advanced consumers with increasing income.



load). The remaining 70% of load must be incrementally re-connected after the power station is fully operational.

Due to absence of a remote control system the feeder lines have to be manually switched, requiring staff, transport to the branching points of feeder lines, and communication between linesmen and power house operator10. Figure 10: Transmission System - Parwoor

10 This procedure is required at all times after complete shut-down of the station. To reduce the time consuming re-start and to allow separation of faulty sections, usually disconnectors or reclosers are installed on main feeder lines. They allow for automatic temporary switch off and re-connection of faulty sections without causing a complete shut-down of the station.



Figure 11: Transmission System Raman Harchin

Conclusions/Recommendations: The transmission system needs to be rechecked with respect to load flow, protective and safety measures required. The design should follow available Pakistani standards for 11 kV transmission lines; transformers need to be re-sized.

The systems design needs to consider start and shutdown of the power stations. Adequate numbers of line breakers, reclosers or disconnecting switches should be foreseen.



b Distribution There appears to be a gap in the planning of distribution system in the project. Originally, it was planned to use the existing network 11 as distribution system and to leave the responsibility to the communities. However, there are a number of issues to be considered:

Not all consumers of the new system are connected to old ones Load flow of former and future system is total different; thus cable sizes required are

differing The usual extreme low quality of distribution systems of existing MHPs does not allow

any further use in a upgraded system of higher standard and quality The expected higher per household consumption in connection with the consumption

workshops and other large business consumers partly using three-phase power requires an adequate system.

The system design should consider:

Demand analysis of consumers and appropriate sizing of distribution system and service cables.

Load calculation based on standard load per consumer type (basic household, wealthy consumer household, public building, mosque, shop, workshop, etc.).

Short circuit analyses of distribution systems including sizing of protection devise (MCBs).

The service cables including meters and protection devices in the consumers premises should be standardized to achieve appropriate voltage level at the consumer points, to minimize power losses (which are to paid by the generator) and to optimize the safety of the users.

A typical house connection should comprise:

Service cables (2*8 to 10 mm Al) and not longer than 50 m Electronic meter RCBO.

Conclusions/Recommendations: To achieve the targeted increased household and business consumption and at finally the intended plant factor, the T&D system should be redesigned, adjusted to the new requirements and installed at adequate standard. Otherwise it will comprise the entire overall outcomes, increases power losses and reduces power quality.

11 Most of the villages are currently supplied by MHPs of small size



4.1.2 Energy Generation

4.1.2.1 Plant Factor

With the expected plant factor of >60% (Indicator 1 to Output 2.1) the annual energy generation figures are amounting to:

Pawoor HPP (800 kW): >4.2 GWh Raman Harchin (600 kW): >3.15 GWh.

However, in an isolated system a plant factor of 60% seems unrealistically high and will hardly be met (if at all) during the first years of operation, especially when consumption fees are really to be paid. Table 4 shows some examples for load factors and required consumption. Table 4: Plant Factor

A typical basic consumption pattern shows a high peak load during the evening and little to no load during the rest of the day. The resulting load factor hardly exceeds 20%.

With increasing economic development the load during the days increases and peak load is extended for 1-2 hours (advanced consumption). However economic activities, which demand up to 50% (300 and 400 kW respectively during 8 hours!) will not so easily be developed. Even if power consumption is extended to 24 hours of consumption (6 hours peak load, 14 hours 50% load and 4 hours 20% load; target consumption), the resulting plant factor will be about 50%, well below 60%.

Conclusions/Recommendations: A plant factor of >60% will hardly to be met at least during the first years of operation. An increasing use for heating will, due to its limitation to winter season, not significantly increase the overall plant factor.

In order to achieve maximum possible plant factor, an intensive demand side management plan (with respect to heating, cooking and business activities) needs to be elaborated and introduced. This may include the introduction of peak-load and low load tariffs.

Load situation S1 S2 S1 S2hours kWh hours kWh hours kWh hours kWh hours kWh hours kWh kWh kWh % %

Basic consumption 4 2.400 4 3.200 3 900 3 1.200 17 0 17 0 3.300 4.400 22,9% 22,9%Advanced consumption 6 3.600 6 4.800 8 2.400 8 3.200 10 0 10 0 6.000 8.000 41,7% 41,7%Target consumption 6 3.600 6 4.800 12 3.600 12 4.800 6 0 6 0 7.200 9.600 50,0% 50,0%

S2: Pawoor S2: Raman Harchin

Totalenergy/day

ResultingPlant factor

Source: Own compilation

Plant Factor

Peak load period

S1 S2

low load period (50% of peak load)

S1 S2

No load period

S1 S2



4.1.2.2 Per capita power available

The typical values of per capita consumption and load for remote rural areas are12:

Basic consumption: 500 W peak load and about 1 kWh/day; Wealthy consumption: 1,500 W peak-load and 5 kWh/day.

With Indicator 2 of Output 2.1 (at last 50% of households reported using electricity for heating and cooking) the figure are amounting to:

Pawoor (1,127 families): peak load: 1,127 kW Raman Harchin (1,025 families): peak load: 1,025 kW.

This already pre-supposes that heating is not performed during the peak hours and that extended load shifting and load shedding is required.

On the contrary, load shedding will not satisfy the consumers and will have adverse effects on other expected outcomes (e.g. household savings and environmental protection due to reduced use of in fuel wood).

Conclusions/Recommendations: The indicator 2 of Output 2.1 will be difficult to be met. Load management requires high attention. Adequate load management plans for generation and distribution of electricity, including differential tariff structures for peak and minimum load hours, should be prepared and discussed with the consumers prior to commencement of operation.

4.1.3 Summary and Conclusions

4.1.3.1 Validation of Results achieved

Due to the delay in project implementation there are no final results achieved so far. The construction of civil works is ongoing, E+M equipment has been ordered, and transmission and distribution system is partly installed. The finalization of all works until end of October 2014 seems to be more realistic.

4.1.3.2 Weaknesses/ Reasons thereof

Main weaknesses are to be seen in very optimistic assumption on consumption development and in the resulting plant factor. Other issues are:

Unclear basic demand and load figures used for calculation of transformers, connections, and the final calculation of station capacity. Although there are sufficient long-term experiences in the area, no standard load and consumption patterns have been developed during design stage

The unavailability of any discharge measurement at least during construction provides an inacceptable high risk to any power station.

12 Including a coincidence factor of 0.5



The very basic design of civil works was balanced by close construction supervision and by day-to day design at the site, leading to as far as one can see at the current stage of construction acceptable results.

The design of T/D was rather weak or not existent. The distribution system was not included in the project design and cost. The safety and operational conditions of the system cannot be ensured. An improper electric distribution system will directly compromise power station performance (unsecure system, high number of shut-downs due to shortcuts, etc.), operational cost (high power losses, higher shut-down rates), productive utilization of power (low voltage, frequency flotation compromises motors and electronic equipment) and will finally have negative impacts on consumers satisfaction.

4.1.3.3 Conclusions/Lessons learned

The general project objectives and expected outcomes are appropriate, but are based on unrealistic timelines.

The site selection was based on insufficient data on the hydraulic potential and potential consumption of electric power. Identification should have ideally considered factors like, natural resources, economic development potentials, and population density, and (if existing) regional/provincial development plans.

The technical design of the power stations capacities and technologies was inadequate for such capacities. It should have been based on reliable discharge data. In case no site measurements were available, modelling of daily discharge should have been done, using flow data from neighbouring gauging station and developing of flow duration curves. In all cases permanent discharge measurement stations should be erected and operated at construction site at least during the construction period.

For both power stations the technical planning did not consider detailed hydraulic and structural designs for each civil structure and appropriate set of drawings and plans. Seismic activities were not taken into account.

The technical planning for the T/&D-system is marginal. It should follow respective standards and should be based on sound demand analysis and its development. Safety and protection issues should be considered.

The design should have been based on a comprehensive approach discussed and decided prior to the start of the design and construction works. Changing of essential parts within the construction will inevitably lead to delays and bear the risk of design failures.

The construction quality itself seems to be adequate to available resources.



4.2 Environmental Aspects

Outcome 2: Reduced pressure on forests

Indicators: Enough electricity is generated and supplied from the power houses The electricity generated is used as advised by the engineers of AKRSP Load sharing and management adopted by the community with social harmony

The related indicators are not directly measuring the reduced pressure on forests but assume that the expected outcome will be achieved when enough electric power is available. There are also no quantities and time lines set.

Currently, households are using an average of 30 kg of fuel-wood per day, with an estimated value of PKR 5,128 per month. About 50% of the 1,127 beneficiary households of Pawoor and1,050 beneficiary households in Raman Harchin are assumed to use electricity for heating and cooking purposes, after Project completion. In the absence of actual evidence, it is difficult to calculate the monetary savings in the use of wood. Field observations show that most of the fire-wood used comes from own plantations, and about 30% of households purchase fire-wood for heating purposes during winters, which comes from suspected illegal cutting of forests in southern Chitral. Community members interviewed for this report unanimously cited the high cost of fire-wood as a major problem. Even if wood burning is only partially replaced by electric power, the extraction rates can be reduced both from farm-forestry and from natural forests. Our rough calculations show that farm forestry surpluses can replace fuel-wood extracted from natural forests and supplied to local market.

However, it is important to note that reduction of pressure on forest does not only depend on availability of electric power. Factors driving deforestation include, among others:

Illegal felling of trees by timber mafia, not fuel-wood extraction by communities, causes major deforestation

Most of the fuel-wood comes from irrigated private plantations, which are sustainable at present but increased population in future could change this equation;

Reduced consumption of wood, would save cash for those who buy fire-wood from the market, however, the surplus from farm plantations could replace illegal wood in the local market

Although poorer households are sometimes forced to cut their fruit trees to meet their energy needs during winder period, their ability to switch to electricity for cooking and heating, and paying higher tariff rates needs verification

Conclusions/Recommendations: In conclusion, it can be expected that electricity will replace the use of firewood in some of the middle to better off families, especially in areas where fuel-wood is comparatively expensive and where electricity is more economical than buying (legally or illegally extracted) fuel-wood. Community members have very high expectations at both power plant locations that low cost electricity will solve all their cooking, heating and lighting problems. Our recommendation is to discuss facts with them and lower their expectations.



4.3 Gender Aspects

Outcome 3: Reduced workload on women

Indicators: The households using electric appliances for heating, cooking and washing.

Field interviews with women (Annex 3) in both project locations have confirmed that women spend an average of 5 hours a day in fuel-wood collection, cooking and washing. The project is expected to reduce the workload on women in these activities, which are their traditional tasks. The time saved can be allocated to other productive and social activities such as education and home-based enterprises, and a little more time for rest. A clear benefit of electricity for cooking and heating is seen in improved family health, especially a reduction in respiratory diseases, which are common. Improved living conditions (smokeless traditional homes) are expected to also reduce health related costs, and increased labor productivity (SRSP, 2013). 13 However, the extent of these benefits can only be ascertained when electricity is available in the expected quality and quantity. A detailed impact assessment would require a respective baseline survey.

An interesting discovery during field visits was that in addition to equity participation at the household level to the power supply project, which is fixed at PKR 9,000 at Raman and PKR 7,000 at Pawoor, women could buy individual shares at a discounted rate of PKR 1500. At Pawoor, 43 women had so far purchased individual shares. The share-ownership system appears to follow a conscious policy to promote equity among all households, regardless of their economic status, and particularly designed to include women.

Conclusions/Recommendations: Potential social benefits of sufficient electricity supply are significantly more for women and children. Their extent can only be ascertained when electricity and more baselines data are available.

4.3.1.1 Productive Use

Outcome 4: Income and enterprise from diversified and value-added livelihoods

Indicators: The communities trained and capacitated for enterprise and business development Potential entrepreneur identified, trained and linked with micro finance and other supporting

windows

Relatively low-cost electricity generated by the communities has generally supported a small but growing cottage industry sector, including workshops, tyre repairs, wood processing and other productive uses of energy. Discussions with AKRSP staff revealed that the future focus would be on productive uses of renewable energy (PURE), and promotion of energy efficient

13 http://srsp.org.pk/srsp_new1/home/83-evaluations-new/199-evaluation-of-immediate-impacts-of-community-physical-infrastructure-cpi-under-expanded-early-recovery-project-eerp



household appliances. However, a specific project and funding for PURE was yet to be developed.

The PURE potential is a major bonus for communities where the MHPS are located. The current baseline is summarized in Table 5. Table 5: Existing Businesses

Enterprise types Raman Pawoor8-hrs

demand for energy (kWh)

Observations

Saw mills 13 16 11,600 PKR 69,600 energy bill

Flour mills 6 7 5,200 PKR 32,200 energy bill

Other micro businesses 30 26 22,400 PKR 134,400 energy bill

Source: Own compilation

Considering the usually high cost for diesel-driven generators, all businesses stated their wish ti be supplied by the hydropower station.

Based on previous experience in Chitral, it can be assumed that reliable supply of electricity can lead to enhanced livelihoods and economic diversification. However, the indicators appear to be outside the scope of the project, as training and capacity building in enterprise development are not part of the project budget.

However, in the absence of funds within this project, the achievement of Outcome 4 depends on available funds like those in AKRSPs regular enterprise support training programmes14, including access to microfinance from its own bank, on-going community-based lending activities, national development projects and from commercial banks.

Conclusions/Recommendations: The productive use is a major assumption, and potential exists for a variety of economic activities, such as food preservation, storage and some level of processing, wood processing, stone and other crafts, and small-scale electromechanical repair services. However, left to their own pace, these enterprises will develop overtime, depending on local market opportunities, financial capability of entrepreneurs, available skills, electricity tariffs, etc.

The recommendation is to devise a deliberate strategy, seeking relevant opportunities, identifying potential entrepreneurs, technology and skill transfers, and access to financial and non-financial business development services.

Developing of business activities in the envisaged time and volume requires additional accompanying measures in the field of entrepreneurship development, know-how transfer, access to markets, and access to financing.

Box 1: Public institutions, such as schools, offices and health centers will use electricity for lighting and to some extent for heating purposes but their consumption is not counted as productive. They will pay their bills though, or they will be disconnected from the private utility service as per rules!

14 Aga Khan Planning and Building Service (AKPBS) and Aga Khan Culture Services (AKCSP), the two sister agencies of AKRSP offer products and services in home construction, retrofitting and other improvements, using energy efficient construction materials, and behavior change interventions.



4.4 Greenhouse Gas Reduction

Outcome 5: Carbon income and reduced emissions

Indicators: Standard UNFCCC record keeping maintained at the project site, regional office Chitral and

Head Office Islamabad.

The CER projections and income are dependent on effective consumption of electricity generated at the two plants, which are included in the bundled CDM project registered by AKRSP (UNFCCC 1713)15. One of the major promises of these larger MHPs was that they will generate higher amounts of CERs and thus drive the CDM project, which includes nearly 100 smaller MHPs; including the two projects dealt with in this report.

According to the agreement one kWh of generated hydropower avoids about 1.24 kg CO2eq. With the original price of 16.5 USD per ton of carbon substitution AKRSP expect an income of about USD 500,000-700,000 per annum (based on the assumed annual generation of 15 MW from 103 plants with a plant factor of 60%).

However, the drastic drawdown of CER prices from 16.5 USD in 2010 to actually about 4 USD per CER has drastically lowered the possible income. It must be noted that AKRSP and not communities are entitled to carbon income (Table 6): Table 6: CDM Revenues

Power Station Base price

16.5 USD* 4 USD*

Pawoor 85,932 20,832 Raman Harchin 64,449 15,624 Source: own compilations; 1 kWh = 1.24 kg avoided CO2; generated energy at 60% plant factor *: per CER; 1 CER = 1 ton of avoided CO2eq Figures in USD/a

However, with about 15,000 to 20,000 USD/year (equivalent to a per kWh price of 0.322 PKRs) the potential additional revenues are still remarkable high.

Conclusions/Recommendations: Standard UNFCCC records need to be maintained during operation.

The benefits of CDM go beyond carbon income, as it provides a powerful adaptation tool to climate change, and link rural communities with a variety of knowledge sources and partnerships. Our recommendation is to include communities/ utilities, especially those above 500 kVA, in carbon income through a mutually agreed formula between AKRSP and utility owners.

15 http://cdm.unfccc.int/Projects/DB/DNV-CUK1204739473.81/view



4.5 Financial Aspects

The project is financed from various financial sources. From the indicative total budget of 238.5 mill PKR, SDC covers about 158.5 mill PKR or about 66% (Table 7). Table 7: Total Project Budget

Sources of Financing Planned (PKR) Spent (PKR)*

1 SDC 158,483,716 153,113,853

2 Community cash contribution 19,100,000

3 AKRSP cash contribution 21,000,000 263,161

4 Loan 39,968,418

5 Total 238,552,134 153,377,014

Source: AKRSP *: per 31.

Documents

final SDC Evaluation Report-final-27-06-24