World Bank Documentdocuments.worldbank.org/curated/en/424231468035438… · · 2016-07-14BHEL Bharat Heavy Electricals Limited ... FMR Financial Monitoring Report FMS Financial

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Document of The World Bank

Report No: ICR00003216

IMPLEMENTATION COMPLETION AND RESULTS REPORT

(IBRD-48900 and IBRD-75930)

ON

LOANS

IN THE AMOUNTS OF US$600 MILLION AND US$400 MILLION

TO THE

POWER GRID CORPORATION OF INDIA LIMITED

(WITH THE GUARANTEE OF INDIA)

FOR THE

FOURTH POWER SYSTEM DEVELOPMENT PROJECT AND ITS ADDITIONAL

FINANCING

January 30, 2015

Energy and Extractive Industries

India Country Management Unit

South Asia Region

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CURRENCY EQUIVALENTS

Fiscal Year Annual Average Exchange Rate to US$

2006–07 41.35

2007–08 43.50

2008–09 48.40

2009–10 45.73

2010–11 46.67

2011–12 53.44

2012–13 58.60

2013–14 69.50

Currency Unit = INR

FISCAL YEAR

April 1–March 30

ABBREVIATIONS AND ACRONYMS

ADB Asian Development Bank

AIS Air Insulated Switchyard

BHEL Bharat Heavy Electricals Limited

BU Billion Units

CAMPA Compensatory Afforestation Management and Planning Authority

CAS Country Assistance Strategy

CD Community Development

CEA Central Electricity Authority

CERC Central Electricity Regulatory Commission

CF Conservator of Forest

ckm Circuit Kilometer

CPS Country Partnership Strategy

CSR Corporate Social Responsibility

CTU Central Transmission Utility

D/C Double Circuit

DFO District Forest Officer

DIR Detailed Investigation Review

DPE Department of Public Enterprises

EHV Extra High Voltage

EHVAC Extra High Voltage Alternate Current

EMP Environment Management Plan

EMS Environment Management System

ERM Enterprise Risk Management

ERP Enterprise Resource Planning

ERR Economic Rate of Return

ERSS I Eastern Region System Strengthening I

ESMD Environment and Social Management Department

ESPP Environment and Social Policy and Procedures

EWTC East West Transmission Corridor

FEAR Final Environment Assessment Report

iii

FM Financial Management

FMR Financial Monitoring Report

FMS Financial Management System

FPO Follow-on Public Offering

FRA Forest Rights Act

FSC Fixed Series Compensator

GDP Gross Domestic Product

GIS Gas Insulated Substation

GoI Government of India

GRI Global Reporting Initiative/Index

GW Giga Watts = 1,000 Mega Watts

HTLS High Temperature Low Sag

HVDC High Voltage Direct Current

IEAR Initial Environment Assessment Report

IEGC Indian Electricity Grid Code

IMF International Monetary Fund

IPMCS Integrated Project Management and Control System

IPO Initial Public Offering

IPP Independent Power Producer

JV Joint Venture

KPI Key Performance Indicator

KIADB Karnataka Industrial Areas Development Board

kV Kilovolt

M&E Monitoring and Evaluation

MDG Millennium Development Goal

MIS Management Information System

MoEF Ministry of Environment and Forest

MoF Ministry of Finance

MoP Ministry of Power

MPPTCL Madhya Pradesh Power Transmission Company Limited

MSETCL Maharashtra State Electricity Transmission Company Limited

MTR Midterm Review

MU Million Units

MVA Megavolt Ampere

MW Megawatt

NLDC National Load Despatch Center

NOC No Objection Certificate

NRTP Northern Region Transmission Project

NWTC North West Transmission Corridor

OC Operations Committee

OPRC Operational Procurement Review Committee

PAD Project Appraisal Document

PAP Project Affected People

PAF Project Affected Family

PCCF Principal Chief Conservator of Forests

PDO Project Development Objective

PIP Project Implementation Plan

PMU Phasor Measurement Units

POSOCO Power System Operation Corporation Limited

POWERGRID Power Grid Corporation of India Limited

PSDP I First Power Sector Development Project

iv

PSDP II Second Power Sector Development Project

PSDP III Third Power Sector Development Project

PSDP IV Fourth Power Sector Development Project

PSDP IV AF Fourth Power Sector Development Project - Additional Financing

PSDP V Fifth Power Sector Development Project

PSE Public Sector Enterprise

QER Quality Enhancement Review

QPR Quarterly Progress Reports

R&D Research and Development

RA Rehabilitation Assistance

RAP Rehabilitation Action Plan

RCCF Regional Chief Conservator of Forest

RGO Renewable Generation Obligation

RHQ Regional Head Quarters

RLDC Regional Load Despatch Center

R&M Repairs and Maintenance

RMoEF Regional Ministry of Environment and Forest

ROC Regional Operations Committee

ROE Return on Equity

RoW Right of Way

RPC Regional Power Committee

RPO Renewable Purchase Obligation

S/C Single Circuit

SAARC South Asian Association for Regional Cooperation

SAG State Advisory Group

SBD Standard Bidding Document

SHG Self-help Group

SIA Social Impact Assessment

SLDC State Load Despatch Center

SPS Special Protection System

SRSS 13 Southern Region System Strengthening XIII

STU State Transmission Utility

TBCB Tariff-based Competitive Bidding

TCSC Thyristor Controlled Series Capacitor

TOR Terms of Reference

TTC Total Transfer Capability

UBS Use of Borrower System

UI Unscheduled Interchange

ULDC Unified Load Dispatch and Communication

UMPP Ultra Mega Power Project

UHVAC Ultra High Voltage AC

WAMS Wide Area Measurement Technology

WRSS II Western Region System Strengthening II

v

Regional Vice President: Annette Dixon

Country Director: Onno Ruhl

Practice Manager: Julia Bucknall

Project Team Leader: Kwawu Mensan Gaba

ICR Team Leader: Surbhi Goyal

vi

INDIA

FOURTH POWER SYSTEM DEVELOPMENT PROJECT AND ITS ADDITIONAL

FINANCING

CONTENTS

Data Sheet .................................................................................................................... viii

1. Project Context, Development Objectives and Design ............................................... 1

1.1 Context at Appraisal ............................................................................................. 1 1.3 Revised PDO (as approved by original approving authority) and KPI, and

reasons/ justification ................................................................................................... 4 1.4 Main Beneficiaries ................................................................................................ 5

1.5 Original Components (as approved) ..................................................................... 5 1.6 Revised Components ............................................................................................ 6

1.7 Other significant changes ...................................................................................... 8 2. Key Factors Affecting Implementation and Outcomes .............................................. 8

2.1 Project Preparation, Design and Quality at Entry ................................................. 8

2.2 Implementation ................................................................................................... 11 2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization .... 12

2.4 Safeguards and Fiduciary Compliance ............................................................... 13 2.5 Post-completion Operation/Next Phase .............................................................. 17

3. Assessment of Outcomes .......................................................................................... 18 3.1 Relevance of Objectives, Design and Implementation ....................................... 18

3.2 Achievement of Project Development Objectives (PDO) .................................. 19 3.3 Efficiency ............................................................................................................ 21 3.4 Justification of Overall Outcome Rating ............................................................ 21

3.5 Overarching Themes, Other Outcomes and Impacts .......................................... 22 3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops ... 25

4. Assessment of Risk to Development Outcome ......................................................... 25 5. Assessment of Bank and Borrower Performance ..................................................... 25

5.1 Bank Performance ............................................................................................... 25 5.2 Borrower Performance ........................................................................................ 27

6. Lessons Learned ....................................................................................................... 28 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners .......... 31 Annex 1. Project Costs and Financing .......................................................................... 32 Annex 2. Outputs by Component ................................................................................. 34 Annex 3. Economic and Financial Analysis ................................................................. 63

Annex 4. Bank Lending and Implementation Support/Supervision Processes ............ 81 (a) Task Team members ..................................................................................... 81 (b) Staff Time and Cost ...................................................................................... 82

Annex 5. Beneficiary Survey Results ........................................................................... 83

vii

Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR ..................... 85

Annex 8. Comments of Co-financiers and Other Partners/Stakeholders .................... 118 Annex 9. List of Supporting Documents .................................................................... 119 Annex 10: Eligibility Criteria for Selection of Candidate Schemes to be financed under

PSDP Loans ................................................................................................................ 120 Annex 11. Templates .................................................................................................. 121 Annex 12. Incorporation of Lessons from DIR .......................................................... 123

viii

Data Sheet

A. Basic Information

Country: India Project Name: POWER SYSTEM

DEVELOPMENT PROJECT IV

Project ID: P101653 L/C/TF Number(s): IBRD-48900,IBRD-75930

ICR Date: 01/02/2015 ICR Type: Core ICR

Lending Instrument: SIL Borrower: POWER GRID CORPORATION

OF INDIA LIMITED

Original Total

Commitment:

US$600.00

million Disbursed Amount: US$976.86 million

Revised Amount: US$1,000.00

million

Environmental Category: A

Implementing Agencies: Power Grid Corporation of India Ltd.

Co-financiers and Other External Partners: n.a.

B. Key Dates

Process Date Process Original Date Revised / Actual

Date(s)

Concept Review: 12/19/2007 Effectiveness: 05/16/2008 05/16/2008

Appraisal: 01/21/2008 Restructuring(s): 05/23/2014

Approval: 03/18/2008 Midterm Review: 02/28/2010 04/12/2010

Closing: 07/31/2013 07/31/2014

C. Ratings Summary

C.1 Performance Rating by ICR

Outcomes: Satisfactory

Risk to Development Outcome: Low or Negligible

Bank Performance: Satisfactory

Borrower Performance: Satisfactory

C.2 Detailed Ratings of Bank and Borrower Performance (by ICR)

Bank Rating Borrower Rating

Quality at Entry: Satisfactory Government: Satisfactory

Quality of Supervision: Satisfactory Implementing

Agency/Agencies: Satisfactory

Overall Bank

Performance: Satisfactory

Overall Borrower

Performance: Satisfactory

ix

C.3 Quality at Entry and Implementation Performance Indicators

Implementation

Performance Indicators QAG Assessments (if any) Rating

Potential problem project at

any time (Yes/No): No Quality at Entry (QEA): None

Problem project at any time

(Yes/No): No Quality of Supervision (QSA): None

DO rating before

Closing/Inactive status: Satisfactory

D. Sector and Theme Codes

Original Actual

Sector Code (as % of total Bank financing)

Transmission and Distribution of Electricity 100 100

Theme Code (as % of total Bank financing)

Infrastructure services for private sector development 100 100

E. Bank Staff

Positions At ICR At Approval

Vice President: Annette Dixon Praful C. Patel

Country Director: Onno Ruhl Isabel M. Guerrero

Practice Manager: Julia Bucknall Salman Zaheer

Project Team Leader: Kwawu Mensan Gaba Pedro E. Sanchez

ICR Team Leader: Surbhi Goyal n.a.

ICR Primary Author: Ahmed El-Hamri n.a.

F. Results Framework Analysis

Project Development Objectives (from Project Appraisal Document) The objective of the project is to strengthen India's electricity transmission system in order to

increase reliable power exchanges between regions and states.

Revised Project Development Objectives (as approved by original approving authority) n.a.

x

(a) PDO Indicator(s)

Indicator Baseline Value

Original Target

Values (from

approval

documents)

Formally

Revised

Target

Values

Actual Value

Achieved at

Completion or

Target Years

Indicator 1 : Growth in power exchange between the regions (million units [MU])

Value

(quantitative or

qualitative)

37,750 54,000 56,000 78,384

Date achieved 03/31/2007 03/31/2012 03/31/2013 03/31/2014

Comments

(incl. %

achievement)

At appraisal, the anticipated increase was 48% from 37,752 MU (2007) to 56,000

MU (2013) and 54% to 58,000 MU (2014) but the actual achievement was

65,860 MU (75% increase from baseline) (2013) and 78,384 MU (108% increase

from baseline) (2014).

(b) Intermediate Outcome Indicator(s)

Indicator Baseline Value

Original Target

Values (from

approval

documents)

Formally

Revised

Target Values

Actual Value

Achieved at

Completion or

Target Years

Indicator 1 : Growth in transformation capacity (megavolt ampere [MVA])

Value

(quantitative

or qualitative)

59,400 88,000 90,000 205,923

Date achieved 03/31/2007 03/31/2012 03/31/2013 03/31/2014

Comments

(incl. %

achievement)

At appraisal, the anticipated increase was 51% from 59,417 MVA (2007) to

90,000 MVA (2013) and 55% to 92,000 MVA (2014) but actual addition was

164,763 MVA (177% increase from baseline) (2013) and 205,923 MVA (247%

increase from baseline) (2014).

Indicator 2 : Growth in transmission capacity (circuit kilometer [ckm])

Value

(quantitative

or qualitative)

59,400 88,000 91,000 106,804

Date achieved 03/31/2007 03/31/2012 03/31/2013 03/31/2014

Comments

(incl. %

achievement)

At appraisal, the anticipated increase was 53% from 59,400 ckm (2007) to

91,000 ckm (2013) and 60% to 88,000 ckm (2014) but actual addition was

100,200 ckm (69% increase from baseline) (2013) and 106,804 ckm (80%

increase from baseline) (2014)

G. Ratings of Project Performance in ISRs

No. Date ISR

Archived DO IP

Actual

Disbursements

(USD millions)

1 07/30/2008 Satisfactory Satisfactory 0.00


xi





7 10/18/2011 Highly Satisfactory Satisfactory 778.82







H. Restructuring (if any)

Restructuring

Date(s)

Board

Approved

PDO

Change

ISR Ratings at

Restructuring

Amount

Disbursed at

Restructuring

(USD,

millions)

Reason for Restructuring & Key

Changes Made DO IP

05/23/2014 N HS S 913.38

The restructuring was triggered by

the significant savings surplus of

about US$145 million under the

loan—of which about US$60

million was under the Fourth

Power Sector Development Project

(PSDP IV) and about US$85

million was under the Fourth

Power Sector Development Project

– Additional Financing (PSDP IV

AF—resulting from the combined

effects of a highly competitive

market, the continuing devaluation

of the Indian rupee (INR) against

the U.S. dollar since loan approval,

and the regulatory requirements to

maintain a debt-equity ratio of

70:30 for all the schemes financed

by Power Grid Corporation of

India Limited (POWERGRID).

Further, in addition to inclusion of

a new scheme, another scheme was

shifted (originally approved at

appraisal) from the Fifth Power

Sector Development Project (PSDP

V) to PSDP IV AF to leverage the

flexibility in the POWERGRID

xii

portfolio that had the same PDO

and KPIs to optimally utilize

available funds across its various

engagements

I. Disbursement Profile

1

1. Project Context, Development Objectives and Design

1.1 Context at Appraisal (2007-08)

1. Country background. At appraisal, India’s gross domestic product (GDP) grew at a

remarkable rate of 9.4 percent during FY2007 and this was expected to be sustained and reach 10

percent by the end of the 11th Five Year Plan (2007–12). However, due to the global crisis,

growth slowed down and the GDP touched only 6.69 percent at the end of FY2012; in FY2013,

the GDP growth was only 4.47 percent. India’s growth is expected to rise to its medium-term

growth potential of about 6.75 percent once recently approved investment projects are

implemented and as global growth improves.1 Although India has made significant progress in

reducing absolute poverty, it remains home to one-third of the global poor. India has already

achieved the first Millennium Development Goal (MDG 1) by halving the proportion of people

living on less than US$1.25 a day as early as in FY2012.2 Rural poverty has decreased by 16

percent, and the less well-off are increasingly reaping the benefits of shared prosperity, with

consumption growth of the bottom 40 percent rising to catch up with average consumption

growth. However, Indian society still remains highly segmented and income inequalities are

rising. With a gross national income (GNI) per capita at US$1,570 in 2013, India remains at the

bottom of the group of middle-income countries and more than 400 million people still live in

poverty.3

2. Sector background. Post-independence, the Indian power sector was concentrated in few

towns and urban areas. To provide power to the population along with an effort to provide

irrigation benefits, massive river-valley projects were developed. With rapid industrial

development, there was a necessity to integrate various state grids, which resulted in the

formation of the five regional transmission grids in the country. With thermal generating plants

setting up near pit heads and producing large amounts of power, transmission voltage levels

increased from an initial 220 kV to 400 kV in the 1980s and to high voltage direct current

(HVDC) in the 1990s, enabling bulk transfer of power across the states and regions. This was

even more important as large consumption centers were scattered across the country while power

generation centers were predominantly located in select states. In parallel, the sector was

unbundled and regulatory commissions were set up at the central as well as state levels. This led

to private sector participation beginning with power generation and followed by the distribution

and transmission sectors.

3. At project appraisal (2007–2008), the sector was affected by chronic shortages of

electricity and a growing demand. Given the priorities of India’s 10th Five Year Plan (2002–

2007), investments in the sector needed to deal with (a) the limitations of grid integration; (b) the

1 IMF country report February 2014 and India Labor Market Update - December 2013. Following a sustained period of

growth, India’s economy slowed down rapidly over the last eighteen months. The GDP growth rate touched a low of

5.0 per cent in FY2012/13, before bottoming out at 4.4 per cent in the first quarter of FY2013/14. In general, economic

growth in India is largely driven by services (from a supply-side perspective) and private consumption (taking a

demand-side view). However, the slowdown during 2012 and 2013 was associated with a dramatic decrease in the

growth of industry and investment. These two dimensions are critical if India is to return to higher and sustained rates

of growth. 2 Millennium Development Goals, India Country Report 2014, Ministry of Statistics and Programme Implementation,

Government of India. 3 India Country Partnership Strategy (CPS) 2013–2017.

2

deficit in power sector capacity; and (c) severe shortages as peak load shortages reached 12.1

percent and energy shortages 7.2 percent (in 2005) resulting in substantial losses to the economy.4

In 2010, the country’s peak power deficit was at 12.7 percent and the average deficit at 10.1

percent. Therefore, the country constantly needed additional power as it suffered from shortfalls

in both generation and transmission capacity.5 The country's installed generation capacity was

expected to be more than 200 GW by 2012 from the level of 140 GW in 2008. This meant that

demand was to be fully met by 2012 (‘Power for All by 2012’) while shortages were to be

recouped. To deliver this power across the country, an expansion of the regional transmission

network and interregional capacity to transmit power was essential. The country's transmission

plan focused on the consolidation of the National Grid by adding over 31,500 ckm of

transmission network by 2014, over the project period starting from 2007. However,

POWERGRID actually added over 47,000 ckm to reach 106,804 ckm of transmission lines,

which carries about 50 percent of the power generated in the country. For creation of such a grid,

an investment of about US$18 billion was estimated under the 12th Five Year Plan (2012–17).

Out of this, about US$14 billion was planned to be mobilized by POWERGRID and the

remaining US$4 billion through private sector participation.

4. Operational aspects of the sector. The sector’s operations and management by

POWERGRID continue to be regulated by the Electricity Act of 2003 which brought together

structural and regulatory reforms designed to foster competitive markets, encourage private

participation, and transform the state's role from service provider to regulator. In transmission, the

enforcement of grid discipline, facilitation of interstate and interregional power transfers, and

trading have improved overall power system efficiency. The Electricity Act of 2003 is now being

amended6—the amendments are yet to be finalized—to implement further power sector reforms

through promoting competition, improving efficiencies, and encouraging the clean energy sector.

5. POWERGRID has been reinforcing its operational capability of grid management and

operations through Power System Operation Corporation Limited (POSOCO), a fully owned

subsidiary of POWERGRID. POSOCO, with its state-of-the-art Unified Load Dispatch and

Communication (ULDC) facilities is mandated to carry out proficient, consistent, and

4 Implementation Completion and Results Report for Third Power System Development Project (PSDP III), The World

Bank. 5 South Asia Project Brief by the Asian Development Bank (ADB) 2011–2012 - National Grid Improvement Project in

September 2011. The project impact was to accelerate the development of the interregional grid system to deliver

increased power supply to sustain the country’s economic growth. The project outcome, strengthening of the transmission

capacity and more efficient operations, aimed at increasing reliable power supply from private independent power

producers (IPPs) and public utilities through the interconnected grid. 6 The amendments aim at strengthening the penalty provisions, increasing the penalty manifold, and making them more

enforceable. Changes to the tariff policy are also expected, to encourage more competition in power distribution, and to

give consumers a choice of companies for power supply. While there will be a government distributor of power to

ensure that power is provided to the weaker sections of society, competition will be introduced through a private sector

role in the sector. Furthermore, to boost the wind energy sector, the government proposes to bring in amendments to the

act introducing stricter penalties for failing to meet renewable purchase obligation (RPO) targets. Under the RPO

system, the state power distribution companies have to mandatorily purchase electricity generated through renewable

energy sources during the year. The proposed changes will also introduce the renewable generation obligation (RGO),

which will make it compulsory for thermal power producers to generate electricity through renewables. Overall, the

government is aiming at 2 trillion units of electricity generation by 2020, in which renewable sources are to account for

15 percent. The share of renewable energy is currently around 6 percent of a total base of 1 trillion units of electricity.

Source: ibnlive.in.com, December 11, 2014.

3

transparent grid operation and management in the country. Further, the National Load Despatch

Center (NLDC) and Regional Load Despatch Centers (RLDCs) have been continuously

upgraded and modernized to establish an effective grid management infrastructure in the

country. During FY2014, to meet the demands in the country, an interregional energy transfer of

about 78.38 billion units (BU), which is more than double of 37.75 BU in FY2007, was

facilitated across the nation using pan-India interregional transmission links and modernized

RLDCs.

6. Rationale for World Bank assistance. The Bank’s strategy for the power sector in India

remains centered on promoting economically and financially sustainable access to electricity by

addressing bottlenecks in generation, transmission, and distribution at both the state as well as

national level through the financing of relevant public investments, while at the same time

promoting policies and regulatory measures for efficient sector operations and private sector

participation. This project, which was part of a larger program, was designed to contribute to

addressing the constraints existing in the transmission subsector and to optimize the development

of its infrastructure. The Bank has in the past supported investments in POWERGRID to

strengthen the national transmission network and increase the interregional power transfer

capacity. These investments aimed at improving the outcome-orientation and service delivery of

POWERGRID, by (a) facilitating higher economic use of generation resources and helping to

harness low carbon primary energy sources such as hydropower and wind; (b) providing optimal

integration and greater grid stability; (c) establishing the open access regime mandated in the

Electricity Act of 2003; and (d) facilitating the development of a power trading market within the

country and, wherever feasible, with India's neighbors. The Bank has helped POWERGRID

emerge as one of the world's largest transmission utilities through a series of investments

amounting to about US$3.7 billion since 1993 and intensive capacity-building support during

POWERGRID’s formative years. The Power System Development Project (PSDP) series has

been very effective in delivering financial assistance by the Bank to the projects launched by

POWERGRID in the transmission subsector—the Northern Region Transmission Project (NRTP)

for US$475 million that closed in September 2000; the First PSDP (PSDP I) with a loan of

US$350 million that closed in December 2000; the Second PSDP (PSDP II) with a loan of

US$450 million that closed in June 2006; and PSDP III with a loan of US$400 million that closed

in July 2011.

7. POWERGRID projects have contributed to the development of high-capacity

transmission corridors which increased the interregional capacity of the National Grid from 1,500

MW in FY1999 to 14,100 MW in FY2007 (baseline year for PSDP IV) and to 37,950 MW in

FY2014 (end year for PSDP IV). Correspondingly, it significantly expanded the network of

transmission lines from 35,119 ckm in FY1999 to 59,400 ckm in FY2007 and to 106,804 ckm in

FY2014. In FY2007, the interregional transmission capacity facilitated energy exchange of

almost 37,750 million units (MU) across India to about 78,384 MU in FY2014. During the period,

the total transformation capacity increased from 59,400 MVA (FY 2007) to 205,923 MVA

(FY2014).

8. Infrastructure development and supply-demand balance management. The PSDP loans

are at the core of the sector’s capacity to deal with expanding demand as repetitive energy and

peak shortages need to be resolved. POWERGRID has established a strong and reliable national

grid in a phased manner to facilitate the optimum utilization of generating resources, the

conservation of eco-sensitive ‘right of way’, and the enhancement of its flexibility to

accommodate uncertainty of generation plans. On December 31, 2013, POWERGRID achieved a

milestone when the Southern Grid was synchronously interconnected with the rest of the national

grid through the commissioning of the 765 kV Raichur (Karnataka)-Solapur (Maharashtra) single

4

circuit (S/C) line (funded under PSDP V). This has resulted not only in increasing the

transmission transfer capacity by 2,100 MW but also in dealing effectively with the congestion

being experienced in the transmission corridor. These infrastructure improvements were a boost

for further economic growth of the country.

1.2 Original Project Development Objectives (PDO) and Key Performance Indicators (KPI)

(as approved)

9. The objective of the project was to strengthen India's electricity transmission system in

order to increase reliable power exchanges between regions and states. ‘Growth in Power

Exchange between Regions’ was used as the key indicator to measure the performance in

achieving the PDO.

PDO Key Outcome Indicators

To strengthen India's electricity transmission system in order to increase reliable power exchange between regions and states

Growth in power exchange between regions (MU)

QQ

Intermediate Results Results Indicators for Each Component

Component 1: Transmission System Strengthening Schemes

Growth in transmission capacity (ckm) Growth in transformation capacity (MVA)

1.3 Revised PDO (as approved by original approving authority) and KPI, and

Reasons/Justification

10. Although the project was restructured7 in May 2014, its PDO was not revised as it

remained focused on strengthening India’s electricity transmission system in order to increase

reliable power exchange between regions and states.

11. The restructuring was triggered by the significant savings/surplus of about US$145

million under the loan (of which about US$60 million was under PSDP IV and about US$85

million was under PSDP IV AF) resulting from the combined effects of a highly competitive

market, the continuing devaluation of the India rupee (INR) against the U.S. dollar since loan

approval, and the regulatory requirements to maintain a debt-equity ratio of 70:30 for all the

schemes financed by POWERGRID. Further, in addition to the inclusion of a new scheme,

another scheme was shifted (originally approved at appraisal) from PSDP V to PSDP IV AF to

leverage flexibility in the POWERGRID portfolio among projects that had the same PDO and

KPIs to optimally utilize available funds across its various engagements. Specifically, the

restructuring included:

a. Inclusion of a new scheme in PSDP IV—Southern Region System Strengthening Scheme

XIII (SRSS 13)

b. Shifting a scheme from PSDP V to PSDP IV AF—System Strengthening in Western

Region for Sasan Ultra Mega Power Project (UMPP)

7 It was a level-2 restructuring that required Country Director clearance.

5

12. Change in KPI. The project had only one outcome indicator (interregional power

exchange) that outperformed its existing (as per the PAD) end-year (FY2014) target. The project

also had two result indicators: (a) transmission capacity and (b) transformation capacity. For

transmission capacity, targets for FY2010 till FY2013, as agreed during the appraisal, were

revised downward during the April 2010 implementation support mission of the project due to

factors beyond the control of POWERGRID as explained below.

13. In August 2009, the government of India (GoI) issued a notification under the Forest

Rights Act (FRA) that required the project implementing agency (POWERGRID) to obtain a no-

objection from every gram sabha (at village level) for all the proposals involving diversion of

forest land under the Forest (Conservation) Act. This requirement was later waived for linear

projects8

(including the transmission business) in February 2013. However, it is noted that all the

indicators had already outperformed their original (as per the PAD) targets in FY2013 after which

the end-project targets (FY2014) were revised upward during the implementation support mission

of September 2013, which was also the midterm review mission for PSDP V. The upward

revision in targets was also formally recorded through restructuring of the Project. POWERGRID

outperformed all the revised targets except for a marginal gap of 0.18 percent in transmission

capacity.9

1.4 Main Beneficiaries

14. POWERGRID, the central transmission utility (CTU) of India, was the borrower and the

direct beneficiary of PSDP IV loans. The loans provided resources and funds for investments

needed by POWERGRID to undertake the physical expansion of the transmission system while at

the same time improving its technical, financial, and institutional capacity to enhance the transfer

of energy across regions and reduce transmission costs, system losses, and unserved energy.

15. The benefits of the project also extended to the various transmission and distribution

utilities at the state level, as well as to the IPPs, which could rely on a stronger network to allow

them to fully benefit from the open access regime that was mandated by the Electricity Act of

2003. Furthermore, the beneficiaries are also the urban and rural populations as a result of

increased efficiency and reduction in power shortages.

1.5 Original Components (as approved)

16. PSDP IV (US$ 600 million) was designed to contribute to the financing of

POWERGRID’s investment program totaling US$2.125 billion for the 2006–2014 period (as per

the PAD). The project consisted of only one component, namely, Transmission System

Strengthening Schemes, which included the following:

I. Partial construction of the East-West Transmission Corridor (EWTC)

8 Transmission lines usually need narrow, long strips of land and hence, these are considered linear projects. Roads,

canals, and optical fiber lines are other examples of linear projects. 9 Growth in power exchange - Target as per the PAD (PSDP V for FY2014): 58,000 MU; Restructured target: 68,000

MU; Actual: 78,384 MU.

Transmission capacity - Target as per the PAD (PSDP V for FY2014): 95,000 ckm; Restructured target: 107,000 ckm;

Actual: 106,804 ckm.

Transformation capacity - Target as per the PAD (PSDP V for FY2014): 92,000 MVA; Restructured target: 185,000

MVA; Actual: 205,923 MVA.

6

The work consisted of:

Transmission Lines

(a) From Ranchi to Rourkela 400 kV double circuit (D/C) line on a distance of 145 km (290

ckm)

(b) From Rourkela to Raigarh 400 kV D/C line on a distance of 210 km (420 ckm)

(c) From Raigarh to Raipur 400 kV D/C line on a distance of 220 km (440 ckm)

Substations

(d) Extension of 400/220 kV substations at Ranchi, Rourkela, Raipur, and Raigarh.

II. Partial construction of the Western Region System Strengthening II (WRSS II)

The work consisted of:

Transmission Lines

(a) From Korba to Birsinghpur 400 kV D/C line on a distance of 227 km (454 ckm)

(b) From Birsinghpur to Damoh 400 kV D/C line on a distance of 254 km (508 ckm)

(c) From Damoh to Bhopal (MP Transco) 400 kV D/C line on a distance of 216 km (432

ckm)

Substations

(d) New 400/220 kV substations at Pune and Solapur.

(e) Extension of 400/220 kV substations at Aurangabad, Parli, Kolhapur, Damoh, Gwalior,

Bina, Korba, and Bhopal

III. Partial construction of the Eastern Region System Strengthening I (ERSS I)

The works consisted of:

Transmission Lines

(a) From Durgapur to Jamshedpur 400 kV D/C line on a distance of 157 km (314 ckm)

(b) From Jamshedpur to Baripada 400 kV D/C line on a distance of 141 km (282 ckm)

(c) From Baripada to Mendhasal 400 kV D/C line on a distance of 272 km (544 ckm)

Substations

(d) Extension of 400/220 kV substations at Jamshedpur, Durgapur, Baripada, and Mendhasal

(e) Renovation of 400/220 kV substations at Siliguri and Purnea

IV. Completion of construction of ±500 kV, 2,500 MW Balia-Bhiwadi HVDC Bipole System

The works consisted of Substations:

(a) HVDC terminal for 2,500 MW at Balia along with associated works

(b) HVDC terminal for 2,500 MW at Bhiwadi along with associated works

HVDC bipole line between Balia and Bhiwadi (1,580 ckm) was completed under PSDP III

financing.

V. Completion of construction of the transmission lines in the North-West Transmission

Corridor (NWTC)


(a) Substations. Extension of 400/220 kV substations at Agra, Gwalior, Kankroli, and Zerda

(Gujarat Energy Transmission Co. Ltd).

(b) Transmission lines. Agra-Gwalior 765 kV second circuit (initially to be operated at 400

kV) (128 ckm) and Kankroli-Zerda 400 kV D/C (470 ckm) were completed under PSDP

III financing.

1.6 Additional Components

17. At the time of appraisal of PSDP IV, the GoI had indicated its intention to request a

follow-on loan (additional financing) of US$400 million to finance the completion of the schemes

7

initiated under PSDP III and PSDP IV. The timing of the additional financing was dependent on

POWERGRID initiating advance procurement of these schemes. These schemes also contributed

to the financing of POWERGRID’s investment program totaling US$2.125 billion for the 2006–

2014 period. In line with PSDP IV, the additional financing also constituted of only one

component, namely Transmission System Strengthening Schemes. Revised components under

additional financing (US$400 million) supported the implementation of the following schemes:

I. Completion of the East-West Transmission Corridor (EWTC)


Substations

(a) Fixed Series Compensator (FSC) at Raipur substation for 400 kV D/C Rajgarh-Raipur

transmission line

II. Completion of the Western Region System Strengthening II (WRSS II)


Transmission Lines

(a) From Wardha to Parli 400 kV D/C (quad) line on a distance of 337 km (674 ckm)

(b) From Bhadrawati to Parli 400 kV D/C line on a distance of 388 km (776 ckm)

(c) From Raipur to Wardha 400 kV D/C line on a distance of 371 km (741 ckm)

(d) From Parli (Maharashtra State Electricity Transmission Company Limited [MSETCL]) to

Parli (POWERGRID) 400 kV D/C line on a distance of 5 km (10 ckm)

Substations

(e) A new 400/220 kV substation at Parli

(f) Extension of 400/220 kV substations at Bhadrawati, Parli (MSETCL), Wardha, Seoni,

and Raipur

(g) Extension of 400/220 kV substations at Rajgarh, Karamsad, Limbdi, Zerda,

Ranchhodpura, and Birsinghpur

(h) FSC at Rajgarh substation for 400 kV D/C Rajgarh-Karamsad line

(i) FSC at Wardha substation for 400 kV D/C Wardha-Raipur line

III. Completion of the Eastern Region System Strengthening I (ERSS I), specifically:


Transmission Lines

(a) Supply of conductors for 400 kV D/C Durgapur-Jamshedpur, Jamshedpur-Baripada, and

Baripada-Mendhasal transmission lines

(b) Re-conductoring of 400 kV D/C Siliguri-Purnea transmission line

18. Further, after completion of project restructuring in May 2014, two schemes (one new

and one shifted from PSDP V to optimally use the funds available across various POWERGRID

projects with the Bank) were added to the project. Specifically, the restructuring included the

following schemes:

IV. Completion of Southern Region System Strengthening Scheme XIII (SRSS 13)


Transmission Lines

(a) From Gooty to Madhugiri 400 kV D/C line on a distance of 209 km (417 ckm)

(b) From Madhugiri to Yelahanka 400 kV D/C (quad) line on a distance of 66 km (132 ckm)

(c) Supply of conductors and insulators for 400 kV D/C Gooty-Madhugiri and Madhugiri-

Yelahanka transmission lines

Substations

(d) New 400/220 kV substation at Madhugiri

8

(e) Extension of 400 kV bay at substation at Gooty

V. Completion of System Strengthening in Western Region for Sasan UMPP


Substations

(a) New 765/400 kV substation at Indore

(b) Upgrade of substations to 765 kV from 400 kV at Gwalior and Bina

(c) Extension of 400/220 kV substations at Indore (Madhya Pradesh Power Transmission

Company Limited [MPPTCL])

(d) Shunt reactors at 765/400 kV substations at Bina, Gwalior, and Indore

1.7 Other Significant Changes

19. The loan for PSDP IV was appraised in January 2008, approved on March 18, 2008,

signed on March 28, 2008, and became effective on May 16, 2008. The midterm review

(MTR) was carried out during April 12–23, 2010. It was necessary to provide PSDP IV with

an additional financing of US$400 million and expand the scope of the project by adding

new schemes as it was agreed with the GoI during the appraisal of PSDP IV. During the

appraisal of PSDP IV AF, it was agreed that the loan closing date of PSDP IV will be

extended by one year from July 31, 2013, to July 31, 2014, to match the loan closing date of

PSDP IV AF as it was funding the components of the same schemes with no spillover of

contracts across the loans for ease of monitoring the funds flow.

20. The Bank and the borrower agreed during the appraisal of PSDP IV to hold a common

MTR for PSDP III and PSDP IV around October–December 2009, which was a year later

than agreed for the MTR of PSDP III during its appraisal (December 2008). During the MTR,

an implementation support mission was also undertaken for PSDP V that became effective on

January 8, 2010.

21. It is important to note that these three projects (PSDP III, PSDP IV including its

additional financing, and PSDP V) had the same PDO, supported the same entity/sector and

were structurally linked. There were no changes in implementation arrangements. With

availability of the additional financing, the original loan amount underwent a change leading

to an adjustment of the disbursement schedule, which was also impacted by the dynamism in

the environment in which the schemes were being implemented (for instance, introduction of

the notification under the FRA in 2009).

2. Key Factors Affecting Implementation and Outcomes

2.1 Project Preparation, Design, and Quality at Entry

22. Robustness of the background analysis. POWERGRID’s satisfactory achievements and

learning experience resulting from the implementation of PSDP I, PSDP II, and PSDP III had a

positive impact on the preparatory process of the project. Continuous and sound sector review by

the Bank ensured that key aspects of the project had been included in the design and appraisal.

23. A Regional Operations Committee (ROC) meeting was held on December 19, 2007, to

determine if PSDP IV should be considered as a repeater project (to PSDP III). The ROC opined

that since another US$400 million request (additional financing) was to be received soon, the

PSDP IV loan (of US$600 million) should be considered as a repeater only reflecting that

POWERGRID was well-prepared for PSDP IV. Even though the guidelines called for any

9

operation of US$600 million to go to Operations Committee (OC) review, since the project had

no major issues and was low/moderate on risk operation, it was agreed during the ROC meeting

that an OC review will not be required, indicating the robustness of the project design.10

24. Further, since PSDP IV was structurally interconnected with PSDP III activities that

had been well underway and supported by the Bank, the arguments and analytical perspective

from the Quality Enhancement Review (QER) for PSDP III, which took place in October 2004,

were still valid and applicable for PSDP IV and its additional financing, given that the PDO, KPIs,

and the structure of these projects did not change in qualitative terms.

25. The implementation of several schemes under PSDP IV was already underway as part of

PSDP III at the appraisal. Advance procurement of all packages to be financed under PSDP IV

was initiated by POWERGRID in accordance with the Procurement Guidelines prevailing at that

time after obtaining no objection on the bidding documents from the Bank.

26. Assessment of the project design. POWERGRID has been instrumental in providing

efficient, reliable, and smooth grid operations in the country. In line with the urgency of physical

investment actions to be undertaken by POWERGRID, lessons from PSDP II and III were taken

into account for the design of PSDP IV. POWERGRID’s strong technical design capability,

including its Research and Development (R&D) capability and its solid collaboration with the

Central Electricity Authority (CEA), which is a technical regulatory institution under the Ministry

of Power (MoP), was and still is the cornerstone for the power system planning studies and the

targeting of investments. The investments are prioritized in consultations with the various

stakeholders, such as beneficiary states and generators. This process has been helpful and

efficient in determining the types and voltage levels of transmission network development that

were and are required. The key to this aspect of project design was underscored by planning

relevant sections of the new transmission network at higher voltage and capacity to efficiently

meet the growing demand that was scattered across the country while proactively addressing

Right of Way (RoW) problems demonstrating POWERGRID’s planning capability.11

The

technical experience of POWERGRID combined with the use of eligibility criteria of PSDP III

were critical for identifying investments as well as financing mechanisms for transmission

systems under PSDP IV and PSDP IV AF. The use of eligibility criteria to identify investments

was an appropriate analytical tool adapted to carry out project design12

(refer to annex 10).

27. The schemes funded under PSDP IV were an integral part of the schemes supported

under PSDP III and were required to increase the interregional power exchange capacity (refer

paragraph 36 of the PSDP IV PAD). As a result, Project Implementation Plans (PIPs) for all the

schemes covered under the project had been reviewed and approved by the Bank early in the

10 The project’s preparation and review of all required conditions (rationale, procurement, social and environmental

safeguards, financial management, and risk assessment) were considered to be fully satisfactory. POWERGRID had

been a reliable partner of the Bank in financing the transmission infrastructure in India (through past projects)). 11 Experienced with the construction of 765 kV Extra-High Voltage Alternate Current (EHVAC) and ±500 kV HVDC

transmission system, POWERGRID has been working on higher transmission voltages of 1,200 kV Ultra High Voltage

Alternate Current (UHVAC) and ±800 kV HVDC systems to achieve efficient utilization of RoW and increased power

transfer capability for bulk power transmission over long distances. 12 By applying these criteria, POWERGRID ensured that the investment scheme was technically and operationally

justified and had been formulated after taking into account other alternative investments. Furthermore, the scheme had

to be based on the least cost options and was part of the overall least cost investment program of POWERGRID.

Moreover, the project’s schemes were economically and financially justified. The eligibility criteria were discussed at

length with the Bank team during the appraisal of PSDP IV and PSDP IV AF.

10

appraisal stage, as they met the eligibility criteria. These PIPs provided extensive analysis and

review of all financial, economic, technical, safeguards, and fiduciary aspects of the schemes.

28. Further, as PSDP IV supported the additional transmission investments initiated under

PSDP III to scale up the project’s impact and development effectiveness, the bidding process for

packages worth US$434 million (to be financed under PSDP IV) was initiated as part of the

procurement process underway for PSDP III in late 2005, which was before the 2006 revisions

to the Procurement Guidelines were adopted by the Bank. The procurement process for some of

the packages covered under PSDP IV had already been completed and some were in an advanced

stage at the appraisal. It was agreed that for the packages to be covered under PSDP IV,

POWERGRID would have the relevant additional clauses included where contracts had not yet

been awarded, and would request the contractors for suitable inclusion of clauses where the

contracts had been signed. In fact, PSDP IV was already under way at the appraisal since some of

its expenditures had already been claimed under PSDP III.13

The Bank and POWERGRID

proceeded to make the needed adjustments to ensure that there was no spillover of contracts

across the two loans.

29. Adequacy of government’s commitment. The strong ownership by the borrower and the

GoI continued to be a key factor that resulted in the effective implementation of POWERGRID

projects. POWERGRID’s commitment to the project as well as its extensive experience and close

working relationship with the Bank facilitated the preparatory work done during the project’s

preparation and appraisal phases. Early preparation that started during PSDP III provided

valuable insights into issues to be resolved by both the parties in PSDP IV and its additional

financing. Furthermore, the continued use of the eligibility criteria (see annex 10) ensured the

borrower’s commitment to the project.

30. The GoI’s commitment to the project is demonstrated through strategic and managerial

directives for the power sector, specifically for the CTU, put forth in the 11th and 12th five year

plans, translated into institutional measures (through the MoP, Central Electricity Regulatory

Commission [CERC], and the CEA). Further, the nationwide grid failure that happened in July

2012 prompted CERC to take several measures to stabilize the system and thereby ensure grid

discipline. In its report on grid disturbance in August 2012, the enquiry committee constituted by

the MoP had concluded that grid failure was linked to a series of events such as multiple forced

outages leading to weak interregional corridors, transmission line overloading due to overdrawing

by some of the northern region constituents, inadequate response by the State Load Despatch

Centers (SLDCs) to the instructions of the RLDCs, and loss of the 400 kV Bina-Gwalior link.

Some of the key actions that were proposed were (a) third-party protection audits, (b) formulation

of islanding schemes in different states, (c) review of the unscheduled interchange (UI)

mechanism, and (iv) further tightening of the frequency band. After NLDC’s (POSOCO) petition

to CERC, congestion charges were approved in April 2013, thereby amending the congestion

charge regulation of 2009. The amendments were in line with the CEA’s planning criteria.

13 POWERGRID claimed an amount of around US$48.9 million under PSDP III for contracts that were meant to be

financed under PSDP IV. These expenditures were incurred for various periods starting from March 2007 onward.

Retroactive financing was applied to refinance these already claimed expenditures from PSDP IV proceeds and reduce

these from PSDP III disbursements. This approach ensured that there is complete disconnect between the packages of

the PSDP III and PSDP IV loans for ease of monitoring and tracking of funds flow.

11

31. Assessment of risks. The overall risk rating for project implementation was ‘low’.

Specific risks for implementation of key investments were rated ‘low’. To mitigate these risks,

mostly foreseen delays in implementing the project’s schemes, advance procurement action was

taken for the investments before the first year of the project. Further, risk linked to delays in

implementation due to environment and social safeguards was rated ‘moderate’ before mitigation

and was rated ‘low’ after mitigation as POWERGRID has already institutionalized safeguard

policies. The safeguard policies of POWERGRID were being considered for Use of Borrower

System (UBS) at appraisal. These were later accepted under the Bank’s UBS during the PSDP V

project period. The financial management risk was rated as ‘moderate’ because at the time of

appraisal POWERGRID had launched its initial public offer (IPO) in the Indian stock market for

which it had to adhere to higher and stricter corporate governance requirements. POWERGRID,

through its implementation of PSDP projects, has demonstrated its ability to plan and implement

even complex investments on time and to cost. Appropriate mitigation measures were put in place

and consisted of actions and measures that were directly relevant for POWERGRID’s operations

such as compliance with financial covenants, arrears payments, and safeguards compliance.

2.2 Implementation

32. The implementation of the project component and the utilization of the loan proceeds

were satisfactory. POWERGRID and the GoI were instrumental in ensuring that project

implementation was successful and that all components planned at the time of appraisal were

completed satisfactorily and became operational within the project period. The transmission

schemes in this project had been designed, engineered, and implemented by POWERGRID, and

local and foreign contractors carried out supply and installation works. All the originally

approved schemes under PSDP IV and its additional financing have been commissioned

successfully. With regard to the two new schemes that were added later through level-2

restructuring of the project (while keeping the PDO, KPI, and structure of the project the same),

one scheme (System Strengthening for Western Region for Sasan UMPP) has been commissioned

whereas the second scheme (Southern Region System Strengthening XIII, SRSS 13) is subject to

delays caused due to severe RoW issues being faced at the state level, which is beyond the control

of POWERGRID. This scheme is now expected to be completed not before March 201514

as

necessary approvals from the involved state government of Karnataka are being processed. The

monitoring of implementation of this scheme will now be done under PSDP V (for which the loan

closing date is May 31, 2017). Both parties ensured that supervision focused on resolving key

project implementation issues, including physical implementation of transmission schemes and

compliance with environmental and social safeguards (issues of forestry clearance and

resettlement), financial performance, and arrears collection objectives. Details about

implementation of each of the schemes are provided in annex 2 and annex 9.

33. POWERGRID’s continued use of Integrated Project Management and Control System

(IPMCS) has contributed to closer and effective monitoring of project implementation leading to

the adoption of necessary steps for corrective actions. Moreover, close supervision by the Bank

team with day-to-day responsibilities fully delegated to Delhi-based staff, facilitated by the

availability of effective support from POWERGRID’s staff at field offices, also contributed to

efficient monitoring of project components and timely completion of the project. In addition to

adherence to the Bank’s Procurement Guidelines, POWERGRID's managerial and operational

culture, and project management allowed for effective monitoring of implementation.

14 Initially, this scheme was planned to be completed by July 2013 according to the PIP (submitted in December 2010).

12

2.3 Monitoring and Evaluation (M&E) Design, Implementation, and Utilization

34. Monitoring and evaluation (M&E) design. Arrangements for M&E of the project

consisted of targets that were linked to the completion of the transmission schemes and their

impacts over a given timeframe. The M&E framework focused on annual monitoring and regular

reporting of the progress in achievement of the PDO and project outputs. The targets for

completion of investment projects consisted of physical achievements as well as their impacts on

the performance of the transmission system. In addition, the design of the M&E framework was

intended to provide a comprehensive view on POWERGRID’s performance in every aspect. To

this effect, indicators additional to KPIs and covenanted targets were also agreed upon with the

Bank to objectively measure improvements in power sector performance as well as

POWERGRID's corporate performance. Given the satisfactory performance of POWERGRID in

achieving and reporting such indicators, these were discontinued during the MTR of PSDP IV

and its additional financing. Later, during the MTR of PSDP V in September 2013, the

monitoring of these additional indicators was reinstated to allay concerns linked to the slower

disbursement of PSDP V, reversing the decision taken at the MTR of PSDP IV and PSDP IV AF.

The result of consistent efforts and round-the-clock monitoring is demonstrated through

POWERGRID’s high operational performance from 2007 to 2014 in terms of transmission

system availability that improved from 99.2 percent to 99.9 percent and the number of trippings

per line reduced from 3.64 to 0.56 during this period. The corporate level indicators depict a

strong performance of POWERGRID across several metrics (Refer annex 2 for details).

35. The sectoral indicators reflect that private sector participation has increased by more than

4.5 times in terms of circuit kilometers of line constructed from 2007 to 2014. Further, power

traded as a percentage of total power generated in the country has shown an upward trend from

3.6 percent in 2007 to 11 percent in 2014. This implies an improved utilization of existing

capacities as the power trade ensures that surplus regions/states can easily transfer generated

power to deficit regions/states when needed. After the July 2012 grid failure, CERC has tightened

the grid frequency band15

to put a check on overdrawing by various constituents, hence, ensuring

grid security and encouraging distribution utilities to procure power through contracts in

organized markets. In December 2013, the Southern Region was also connected synchronously

with the rest of the National Grid. Given these factors, the grid frequency has shown a downward

trend but all measures have been adopted to bring back the frequency within the prescribed band.

POWERGRID along with POSOCO is now handling one of the largest transmission networks at

a single frequency in the world.

36. Further, the quarterly financial monitoring report (FMR) included the detailed contracts

monitoring report and physical monitoring report, which were essential for both the Bank as well

as POWERGRID to take corrective actions when required (refer annex 11 for templates).

37. M&E implementation. Data collection was in line with the PAD guidelines and the

borrower’s information system. The data collected for progress achieved on outcome (growth in

power exchange) and outputs indicators (transmission and transformation capacities) were

monitored through an agreed reporting format. The IPMCS provided POWERGRID with real

time monitoring of the physical installation of transmission lines and the NLDC provided

continuous monitoring and data for power exchanges and transfers. POWERGRID established

15 Indian Electricity Grid Code (IEGC) Range: Till September 16, 2012: 49.5 Hz to 50.2 Hz and from September 17,

2012 onwards: 49.7 Hz to 50.2 Hz

13

and provided the Bank with a monthly report on billing and collection, quarterly progress reports

(QPRs), quarterly financial management reports, annual information about progress on key entity

and sectoral performance indicators, audited annual financial statements (within six months of the

end of each financial year), and other information as the Bank required. These arrangements were

working in a satisfactory manner in earlier loans and were continued under the project and are

replicated for PSDP V as well. In addition, the Bank team periodically conducted site visits as

part of the implementation support missions, to monitor compliance with the project design with

a special emphasis on environmental and social safeguards, and to engage in discussions

regarding benefits achieved from the investments. The Bank team also interacted regularly with

various project stakeholders including the MoP and the Ministry of Finance (MoF), which have a

keen interest in seeing sustained, high performance from POWERGRID.

38. M&E utilization. In addition to POWERGRID’s own scoreboard that provided decision

makers with a retrospective analysis on performance and inputs for planning purposes, it

produced and submitted QPRs containing M&E data to the Bank for review every quarter (refer

annex 11 for table of content of QPR). The quarterly reports resulted in discussions on all aspects

of the project ranging from procurement, engineering, safeguards, financial management, and

finance to the corporate monitoring group. These reports also provided close monitoring of

covenanted targets such as the debt-equity ratio, the self-financing ratio, and payment of arrears.

39. Implementation of the Enterprise Resource Planning (ERP) system. POWERGRID is in

the process of enhancing its operational capabilities through the deployment of an integrated ERP

system. The system is being deployed to integrate processes and data pertaining to key business

processes of the organization. Among others, the key objective for setting up the ERP system

includes integration and standardization of various business processes and hence the flow of

information. The full deployment of ERP in the organization is expected by February 2015.

2.4 Safeguards and Fiduciary Compliance

40. Environmental and social safeguards. PSDP IV and PSDP IV AF were rated ‘Category A’

on safeguards management. Aspects linked to environmental and social safeguards associated

with the project have been addressed in accordance with the corporate Environment and Social

Policy and Procedures (ESPP) developed by POWERGRID in 1998 and revised from time to

time. The corporate ESPP is in compliance with the Bank's safeguards policies and its provisions

systematically applied to all POWERGRID projects regardless of the source of financing. The

ESPP outlines POWERGRID's approach and commitment to deal with the environmental and

social issues relating to its transmission schemes and lays out management procedures to address

them. The ESPP provides POWERGRID with a framework for identification, assessment, and

management of environmental and social concerns at both organizational as well as field levels.

Capacity building in the environmental and social management department of POWERGRID

contributed significantly to the update of the corporate ESPP in 2005, which resulted from

research on legal and institutional frameworks, analysis of priority issues (gap analysis) in the

power transmission sector and wide ranging discussions including national and regional

consultations. The ESPP was further updated in 2009 to meet the requirements of the new

enactment, revised rules, and guidelines including those of multilateral funding agencies and to

adopt international best practices to preempt all possible safeguards issues. During this revision,

even wider stakeholder consultations including project affected people and local communities

were carried out. The revised ESPP was adopted by the Bank as a pilot for Use of Country

Systems (OP 4.00) under PSDP V.

14

41. The safeguards process followed during the preparation and appraisal stages of a scheme

under the project included preparation of an Initial Environmental Assessment Report16

(IEAR)

for these transmission schemes. These IEARs were reviewed by the Bank and the feedback was

incorporated in the Final Environmental Assessment Report (FEAR). In addition to measures

taken for PSDP III,17

the Bank team had also recommended the use of Environmental and Social

Sustainability Reporting on a regular basis with the objective of improving POWERGRID’s

communication with internal and external stakeholders regarding its environmental and social

management track record. POWERGRID agreed to develop such a sustainability report, with

consultant assistance for the first year, to showcase its achievements so far and the way forward

as seen by it and other stakeholders.

42. In addition, POWERGRID implemented specific actions to improve implementation

monitoring, such as tracking and collating information on actual compensatory afforestation on

the ground; updating of statutory clearances from the Ministry of Environment and Forest

(MoEF) and state pollution control boards, if needed; extending application of the integrated

Environment Management System (EMS) to regional headquarters and project locations; and

strengthening environmental training and capacity building. At project closing, POWERGRID

has demonstrated a clear appreciation and adherence to the ESPP provisions pertaining to

minimum disturbance of forest areas by the field office staff both in the Regional Head Quarters

(RHQ) and site (substation and line) offices. Overall, POWERGRID has satisfactorily dealt with

safeguards issues associated with the project. These aspects of the project were adequately

addressed by implementing the provisions of corporate ESPP effectively.

43. In carrying forward its Corporate Social Responsibility (CSR) activities, POWERGRID

has ensured that resources were made available to cover local needs and provide adequate

solutions to social safeguard aspects in terms of development impact. POWERGRID’s CSR

policy is clearly stated in its biennial Sustainability Report and in line with international best

practices in order to preempt possible environmental and social issues. In line with the Bank’s

social safeguards, the CSR policy is aimed at promoting community development around its

establishments and substations with a focus on education, health care, infrastructure development,

ecology and environment conservation, and disaster relief in the country. The CSR initiatives are

aimed to improve the quality of life of the local population and bring the marginalized people to

the mainstream of development. POWERGRID has articulated a ‘Social Entitlement Framework’

based on the National Resettlement and Rehabilitation Policy of 2007 and other progressive

trends in its ESPP applicable for the affected families. In line with its land acquisition policy (for

the construction of substations), POWERGRID acquires land with minimal social impact on

account of land loss. Site selection is planned on the basis of avoiding irrigated land, homestead

land/houses, religious structures, cultural property, or public infrastructure. Overall,

16 IEARs were prepared for schemes proposed under PSDP IV. These were submitted to the Bank for review and

disclosed on the POWERGRID website. These environmental assessment reports and the Environmental Management

Plan (EMP) have been prepared using baseline information available concurrently with the preliminary surveys, and

include analyses of alternative routes/alignment and community consultation. The FEAR shall include additional

information collected at the time of detailed surveys, details of compensatory afforestation and other regulatory

approvals, and details of EMP implementation. 17 Actions for further strengthening the environmental management practices as was done for PSDP III through (a)

designation and assignment of environmental management specialists in the field and regional offices to assist with

implementation and reporting of the EMP implementation at POWERGRID; (b) undertaking of yearly independent

environmental audits of a sample of transmission lines and substations; and (c) preparation of sustainability reports

(prepared annually).

15

implementation of ESPP along with measures adopted under CSR has played a major/vital role in

mitigation of social impacts of the project.

44. The safeguards rating was Moderately Satisfactory since the start of the project to

maintain consistency across the various repeater projects as PSDP IV partly funded some of the

schemes under PSDP III. To improve safeguards performance, POWERGRID was advised to

strengthen its Environment and Social Management Department (ESMD). In response,

POWERGRID started taking measures to strengthen its ESMD both at its head office and at

regional offices to manage safeguards concerns of the projects. On environmental issues, the

focus was on two specific aspects related to forests: (a) coordination with MoEF to reduce delays

in obtaining clearances under the Forest (Conservation) Act and (b) coordination with the

recently formed state-level Compensatory Afforestation Management and Planning Authorities

(CAMPAs) to monitor the plantation to be carried out as part of compensation. In parallel,

POWERGRID, through the MoP, requested the MoEF to streamline the clearance process under

the Forest (Conservation) Act. Further, the RoW issues and delays in obtaining forest clearances

started cropping up after the GoI’s notification regarding the FRA in August 2009,18

which was

later waived for linear projects19

(including the transmission business) in February 2013. The

rating was later upgraded to Satisfactory in June 2011 when (a) POWERGRID strengthened its

ESMD at its corporate office as well as RHQs to factor in activities required to comply with the

MoEF’s notification to the FRA of August 2009 and (b) upon obtaining long-pending forest

clearances (final approval for Wardha-Parli and in-principle approval for Baripada-Mendhasal)

for transmission lines in May 2011. Since then, the rating has been kept at Satisfactory. All the

schemes are complete except for SRSS 13, which is now expected to be completed not before

March 201520

due to severe RoW issues being faced in the state of Karnataka, which were out of

the control of POWERGRID. Annex 2 provides the details about the chronological sequence of

activities by POWERGRID to resolve this issue. Monitoring of implementation of this scheme

will now be done under PSDP V.

45. Financial management (FM). At the beginning of the project, in July 2008, the FM rating

was Moderately Satisfactory due to certain outstanding issues21

on PSDP III, PSDP IV, and PSDP

IV AF. Given the progress on implementation of agreed actions, the FM rating was again

upgraded to Satisfactory in May 2010. The FM ratings were Satisfactory till October 2013 when

the rating was downgraded to Moderately Satisfactory due to delay in submission of the project

audit report for FY2013 (due to the delay in appointing an auditor) that falls due for submission at

the end of September every year. Further, the FY2013 audit report was qualified due to temporary

diversion of Bank-funded material for other projects. The audit report for FY2014 was submitted

on time (September 30, 2014), meeting the legal covenant, after these loans had been already

closed. However, the qualification remained on diversion of material by POWERGRID from the

sites where delays occur due to issues (like RoW in SRSS 13) to sites that have become higher

priority on the National Grid thereby reducing capital work in progress. A proper arrangement is

formulated between the sites where the material has been diverted to return the material of the

18 Under this the project, the implementing authority (POWERGRID) had to get a no-objection certificate from every

gram sabha (at the village level) for all proposals involving diversion of forest land under the Forest (Conservation)

Act. 19 Transmission lines usually need narrow, long strips of land and hence, these are considered linear projects. Roads,

canals, and optical fiber lines are other examples of linear projects. 20 Initially, this scheme was planned to be completed by July 2013. 21 Such as, agreed terms of reference (TOR) of audits, application of the various provisions of TORs in the audit of the

underlying financial statements, the audit opinion, and the management letter on audit (as issued by auditors).

16

same specifications and diligently followed. Both the Bank and POWERGRID are working

together to resolve the issue at the earliest and this will be closely monitored under PSDP V.

46. Although rated Moderately Satisfactory initially and briefly toward the project end,

POWERGRID’s FM system accurately accounted and reported for the project resources and

expenditures. The FM systems of POWERGRID (housed as a part of their general accounting and

financial systems) were used to generate the financial and other quarterly progress reports under

the project. The reporting framework for the project included a quarterly FMR, an equivalent of

the interim unaudited financial report, prepared by POWERGRID in a format agreed with the

Bank (detailed in the PIP). Initially, the FMRs were being submitted by POWERGRID on a

monthly basis, which was later amended to quarterly submission starting from the April–June

2009 quarter. FMRs were prepared using information generated from POWERGRID's FM system

(FMS) and management information system (MIS) and were rated Satisfactory. These systems

are now being upgraded through implementation of the ERP system. POWERGRID has

strengthened its FM capacity during its partnership with the Bank through implementing ERP,

strengthening its internal audit function, and undertaking Enterprise Risk Management (ERM)22

and has been able to adhere to its policies and procedures as its FM performance under previous

loans has been rated Satisfactory.

47. Procurement. Under PSDP IV and PSDP IV AF, procurement was carried out for all the

schemes in accordance with the Bank’s Procurement Guidelines. The Bank team worked together

with POWERGRID to review relevant sections, such as qualification requirements, special

conditions of contract, and technical specifications, in the Standard Bidding Documents (SBDs)

of the Bank, resulting in model bidding documents of POWERGRID under the loan. This

facilitated preparation of the package-specific bidding documents expeditiously and thereby,

reduced the overall time consumed during the administrative part of the procurement process.

Additional provisions were also introduced to provide substantial flexibility to POWERGRID in

handling the procurement process and interactions with contractors. Further, the Operational

Procurement Review Committee (OPRC) threshold limits were also revised upward, except for

high risk packages, from US$50 million to US$200 million for low-risk packages and to US$115

million for moderate-risk packages that are generally the risk profile of POWERGRID packages.

48. Under this loan and in line with the Bank’s procedures, procurement was carried out for

transmission system projects which were either uniquely positioned or pertained to emerging

transmission technologies in India. For example, the Balia-Bhiwadi Transmission System, a long

distance (approximately 800 km) bipole HVDC transmission system for transfer of 2,500 MW

power at ±500 kV voltage level was a unique project, considering the complexity of procurement

of the HVDC Terminal Package. Similarly, procurement for certain packages in other

transmission projects involved procurement of plant and equipment and goods for 765 kV voltage

level, which was an emerging voltage level in the transmission system in India at that time.

POWERGRID, in association with the Bank, reviewed and suitably incorporated the sections to

facilitate selection of capable contractors to successfully execute such emerging technologies in

India.

22 As part of its compliance to Clause 49 of the Listing Agreement and Department of Public Enterprises’ Code on

Corporate Governance, POWERGRID has implemented an ERM framework. The framework was approved by the

POWERGRID Board on February 8, 2011. The ERM framework identifies 24 major risks. A few KPIs are associated

with each of the risks. Quarterly ERM reports with these KPIs are being prepared and examined by the Risk

Management Committee. The Chief Risk Officer subsequently presents the report to the Audit Committee.

17

49. Further, to increase participation of the vendors, POWERGRID, in association with the

Bank, organized conferences for conductor and insulator vendors in April 2009 and September

2010. Such conferences have resulted in more participation and competitive prices. Further,

POWERGRID, in association with the Bank, also organized the vendor conference regarding

common mistakes/discrepancies during bidding in September 2010. This conference has resulted

in significant improvement in the bids being submitted and helped reduce the delay in bid

evaluation on account of common errors or inconsistencies in the bids.

50. Incorporation of lessons from the Detailed Implementation Review (DIR). This consisted

of a review of all procurement issues that had been flagged by the DIR of projects in other sectors

in India (mainly health) and an agreement between the Bank and POWERGRID on a set of

actions to be taken during the implementation of PSDP IV to avoid and deal with such issues (see

annex 12). During the first mission (appraisal) in January 2008, based on the executive summary

of the DIR, the team prepared a matrix including all the main recommendations of the report.

Subsequently, the team discussed the status of the recommendations with POWERGRID and the

actions to be taken both by the team and POWERGRID.

2.5 Post-completion Operation/Next Phase

51. Investments financed by the loan were successfully and progressively commissioned

between March 2009 and October 2014. These schemes were integrated with the National Grid

and their operation is continuously closely monitored and maintained by POWERGRID.

POSOCO ensures the integrated operation of the grid in a reliable, efficient, and secure manner.

In line with the latest CPS (2013–2017) and through a series of additional loans to POWERGRID

(PSDP V) and other sector entities, the Bank shall continue to support the ongoing sector reform

agenda and further strengthen POWERGRID's institutional and transmission capacities in line

with the standards of global operators.

52. Changes in the regulatory environment/framework of the transmission sector. The

regulatory environment in India is changing rapidly given the fast pace at which new

complexities are being introduced to the system, such as integration of large-scale renewable

energy and smart grids. The tariff regime has changed since appraisal of the loans. On April 1,

2014, CERC introduced new tariff regulations for five years (2014–2019). Further,

POWERGRID was earlier recovering all the costs through cost-plus basis but the GoI introduced

TBCB23

in India in January 2011. Since then, POWERGRID also has to apply for competitive

bidding to get new projects. There are exceptions to this regime wherever POWERGRID is

entrusted by the MoP to carry out the works on a nomination basis depending on the criticality of

the works. As of October 31, 2014, POWERGRID had secured five transmission projects, which

is more than 30 percent of the projects floated under TBCB.

53. Bank’s follow-up on the project’s sustainability. The project KPIs: (a) power exchange

across regions (in MU); (b) transformation capacity (in MVA); and (c) transmission capacity

development (in ckm) are being monitored and updated through implementation of PSDP V that

is in compliance with their respective M&E systems. Given the grid disturbance of July 2012 (for

details refer to annex 2), monitoring of additional indicators was reinstated as part of PSDP V.

23 Under the TBCB norms, developers quoting the lowest average electricity tariffs from a proposed project get to set it

up, as against the erstwhile ‘cost-plus’ model, where projects were set up through pacts with transmission utilities and

were entitled to assured returns.

18

Further, two new additional indicators on safeguards (percentage of project affected people [PAP]

rehabilitated and cumulative transmission capacity [MW] per meter width of RoW within forest

areas) were also added under PSDP V. Since SRSS 13 is expected to be completed after March

2015, supervision of its implementation will be part of PSDP V.

3. Assessment of Outcomes

3.1 Relevance of Objectives, Design, and Implementation

54. The Bank’s support for this project was highly relevant and the PDO reflects the

importance of achieving further expansion and transformation in India’s power sector

infrastructure. The project’s design reflected sector priorities and focused on the need for more

investments in transmission to successfully transmit the power generated (by large-scale

generation capacity infusion planned in the country) from surplus to deficit regions and hence

optimally utilizing the available limited resources. In partnership with POWERGRID, a key

participant in several sector reform initiatives in India, the Bank has been able to design and

implement a project, among many, that ensures the funding of much-needed physical investments

in parallel with institutional transformation. This has become even more important with

synchronization of the Southern Region grid with rest of the grid to make it truly one National

Grid.

55. The framework outlined in the CAS (2004–2007) remains largely pertinent. The

strategic principles and program priorities remain appropriate and the overall approach has

been effective. The priority areas of engagement (infrastructure, human development, rural

development) remain relevant, and the instruments for delivery of the program are functioning

well. On an operational level, this project focused on (a) expanding POWERGRID’s

transmission capacity (interregional and at the state level); (b) sustaining efficient energy

markets and linking demand centers with resource-rich parts of the country (particularly hydro

resources in the north and northeast); and (c) improving electricity access and quality of

services to end consumers both in urban and rural areas. Since the loan had been put in place,

POWERGRID has been able to provide efficient, reliable, and smooth grid operation and

management in the country and deliver on the outcomes of PSDP IV and its additional

financing.

56. The Bank’s current CPS (2013–2017) for India endorses a larger development vision that

will enable the country to launch action programs for ‘faster, sustainable, and more inclusive

growth’ focusing on poverty reduction, group equality, regional balance, empowerment,

environmental management, and employment. Given that an estimated 400 million people are

not connected to the national electrical grid and those who are connected face frequent

disruptions, it is critical to invest in the sustainable development of power infrastructure which is

a strategic pillar of project financing, in tandem with private participation, and best-practice

management in power generation and distribution. Investments in the power sector aim at

building upon the achievements of previous power projects, including those dedicated to energy

generation and transmission. The support for the sector was made clear during PSDP IV MTR

mission as the Bank expressed its support for India’s 12th Five Year Plan (2012–17). The plan

called for a substantial increase in POWERGRID’s investment targets for 2012–17 from the

ongoing plan and it needed mobilization of about US$11 billion for which POWERGRID

expressed interest to continue its collaboration with the Bank. The Bank had informed the

borrower that since funds that can be mobilized directly from the Bank are limited, there is a need

to explore other innovative financing options which will allow leveraging of additional funds to

19

finance the Bank-supported projects. In this context, POWERGRID has planned a capital

investment of more than US$16 billion (or INR 1,000 billion) for the development of an interstate

transmission system during this plan period. In financing PDSP IV, the Bank reaffirmed its

commitment to a long-term partnership to support critical investments in the transmission

segment. In view of the Bank’s assistance to India, POWERGRID has put in place a network of

about 106,804 ckm of transmission lines along with 184 Extra High Voltage (EHV) AC and DC

substations with transformation capacity of 205,923 MVA, spread over the length and breadth of

the country at the end of March 2014. POWERGRID has been consistently maintaining the

availability of this huge transmission network at over 99 percent and ensures the transfer of about

50 percent of total power generated in the country on its network.

3.2 Achievement of Project Development Objectives

57. Disbursements. The disbursements under PSDP IV stood at 96.10 percent and at 100

percent under PSDP IV AF. This reflects that almost all the funding for the project was used. The

undisbursed balance of US$23.14 million represents savings on the loan amount that are to be

returned to the loan account at the Bank. The used/disbursed amount served to finance the

following project schemes: (a) Balia-Bhiwadi HVDC terminal; (b) WRSS II; (c) EWTC; (d)

NWTC; (e) ERSS I; (f) SRSS 13; and (g) System Strengthening of Western Region for Sasan

UMPP.24

For optimal utilization of available resources to POWERGRID, PSDP IV and PSDP IV

AF were restructured on May 23, 2014, as a result of which the last two schemes were added to

the project. In terms of procurement, all 73 packages (39 packages under PSDP IV and 34

packages under PSDP IV AF) were awarded according to the Bank’s procurement procedures.

58. Implementation and completion of transmission schemes. Under PSDP IV, all

transmission project schemes have been completed except for SRSS 13, which has been delayed

due to severe RoW matters that needed to be dealt with at the highest level of state authorities and

the concerns about the compensation were adequately addressed for the Tumkur and Bangalore

rural areas. However, as implementation resumes on the transmission line, issues concerning the

small area in the Bangalore city urban area are being taken up for prompt resolution of RoW

issues with the state government authorities. The amount disbursed for SRSS 13 was about

US$37 million out of the fundable value of US$47 million and no further disbursement is

expected. The scheme will now be completed using POWERGRID funds.

59. Under PSDP IV AF, all transmission project schemes were completed before the loan

closed on July 31, 2014, except one spare transformer at the Indore substation (under system

strengthening for Sasan UMPP), which was commissioned in October 2014.

60. Impact of the completion of project components. It should be noted that all the indicators

have already outperformed their original (as per PAD) targets in FY2013 after which the end-

project targets (FY2014) were revised upwards during the implementation support mission of

September 2013, which was also the mid-term review mission for PSDP V and later recorded

through restructuring of the Project. POWERGRID outperformed not only the original targets (as

per PAD) but also the revised/restructured targets for all indicators except for a marginal gap of

0.18 percent in transmission capacity. POWERGRID’s infrastructure investments have expanded

24 During the restructuring, Northern Region System Strengthening XXIV (NRSS 24) and Southern Region System

Strengthening XVII (SRSS 17) were transferred from PSDP IV to PSDP V while one scheme of PSDP V (System

Strengthening Scheme in WR for Sasan UMPP) was transferred to PSDP IV AF.

20

the network to 106,804 ckm of transmission lines along with 184 EHV AC and DC substations

with transformation capacity of 205,923 MVA, spread over the length and breadth of the country.

As of March 2014, POWERGRID has been consistently maintaining the availability of this huge

transmission network at over 99 percent and wheels about 50 percent of total power generated in

the country on its network. India’s electricity transmission system has been strengthened further

as the following key indicators show:

a. Power exchanges between regions have been enhanced. During FY2014, POWERGRID’s

strong transmission network and modernized RLDCs facilitated about 78,384 MU of power

exchange across regions, reflecting a growth of about 40,634 MU (107.64 percent) in power

exchange across regions in comparison to baseline FY2007 of 37,750 MU. Under the PSDP

IV loan, an interregional line, namely, the 400kV Rourkela-Raigarh-Raipur D/C line, has

been implemented. This line has contributed an addition of about 1,400 MW to the

interregional power transmission capacity of the National Grid.

b. Transmission capacity has significantly increased. As on March 31, 2014, POWERGRID

owns and operates about 106,804 ckm of EHV transmission lines. An addition of about

47,404 ckm (79.80 percent) has been achieved in transmission capacity with respect to

baseline FY2007 of 59,400 ckm. Transmission lines covered under PSDP IV and the

additional financing have contributed about 6,230 ckm 25

of 400 kV lines toward transmission

capacity addition.

c. Growth in transformation capacity has been achieved. As on March 31, 2014, the

transformation capacity of POWERGRID’s network is about 205,923 MVA. An addition of

about 146,523 MVA (or 246.67 percent) has been achieved in transformation capacity with

respect to baseline FY2007 of 59,400 MVA. The infrastructure funded under PSDP IV and

PSDP IV AF has added about 8,000 MVA of transformation capacity.

61. The implementation of the +500 kV HVDC bipole and other 765 kV and 400 kV

transmission lines and components has contributed to the strengthening of the National Grid

through the enhancement of interregional and intraregional power transmission capacity. The

benefits of these elements are the following:

a. apart from extensions of numerous substations, a significant transmission capacity has been

added, which is about 6,230 ckm at 400 kV level and about 8,000 MVA transformation

capacity along with new 400/220 kV substations at Pune, Solapur, and Parli and a 765/400

kV substation at Indore.

b. The interregional transmission line, namely, 400 kV D/C Rourkela-Raigarh-Raipur, under the

EWTC Strengthening Scheme, implemented under the PSDP IV loan has resulted in

enhancing the interregional power transfer capacity by about 1,400 MW.

c. The implementation of grid strengthening schemes under PSDP IV and the additional

financing has resulted in improving the grid security, quality, and reliability of the Indian

power system.

62. It should be noted that the availability of all the Bank-funded lines have been above 99.5

percent (refer to annex 2 for details). However, this does not imply that the lines have to be

loaded to their capacity due to reasons as follows. After commissioning of a transmission system,

25 It excludes about 549 ckm being implemented under the SRSS 13 scheme.

21

sometimes loading on the lines is less during the initial phase due to delays in envisaged

generations and/or the capacity of the state’s transmission network to absorb power. However, the

loading increases with increase in power transfer requirements and materialization of envisaged

generation projects. It is also imperative to mention here that as per technical norms, it is essential

to maintain redundancy in the system so that in case of grid indiscipline, grid security is not

compromised.

3.3 Efficiency

63. At appraisal, the economic and financial analysis for the originally approved schemes

was carried out and they were justified on the ground that their Economic Rates of Return (ERRs)

were higher than the opportunity cost of capital of 12 percent. The ERRs were in the range of

14.8 percent to 22.4 percent in the base case and 10.46 percent to 15.52 percent in the most

adverse case.

64. Analysis at completion. Using actual cost figures and applicable tariffs, the analysis

covers all the schemes. It also takes into account changes in tariffs and return on equity (ROE)

objectives. This has a positive impact on the revenue generated from the schemes and is reflected

accordingly in the ERR and ROE calculated and presented in detail in annex 3.

a. Economic Rate of Return. The same methodology during appraisal was also adopted at

completion to calculate the ERR. The ERR varies between 10.86 percent (for ERSS I) and

23.54 percent (for NWTC). In all the cases, except for ERSS I, the ERR is above the

opportunity cost of the capital at 12 percent.

b. Return on Equity. The ROE has been taken as a proxy for financial rate of return as was taken

during the appraisal. The same methodology as during appraisal was adopted to calculate

ROE at completion. In all the cases, the ROE for the different schemes varies between 14.02

percent (for ERSS I) and 29.08 percent (for NWTC).

65. The financial analysis was also carried out at the entity level and it is observed that all the

financial ratios (presented in annex 3) are robust. POWERGRID also comfortably complied with

all the financial and legal covenants. The debt-equity ratio was always less than 80:20, and the

self-financing ratio was also greater than 20 percent for all the years from FY2008 till FY2014.

Accounts receivable over the project life were also much lower than the 3 months of billing

stipulated in the Legal Covenants. POWERGRID’s receivables as of July 31, 2014, stand at 0.34

months of average billing.

3.4 Justification of Overall Outcome Rating

Rating: Satisfactory

66. The overall rating of the project is Satisfactory on the basis of its high relevance (as

discussed in Section 3.1); satisfactory achievement of all the PDOs; and efficiency in

implementation (as discussed in section 2.2). In addition, owing to the project, POWERGRID’s

performance has significantly improved. It stands today as a stronger company on the technical,

managerial, and institutional fronts and has undergone a tremendous transformation to reach the

coveted status of a corporation with international stature. The Satisfactory rating is also justified

by sustainability of the project components. In the coming years, the role of POSOCO will

become more important with further development of the electricity trading market as the

22

transmission schemes financed by this loan as well as subsequent loans will enable transfer of

large quantities of power across and between the regions of the country.

3.5 Overarching Themes, Other Outcomes, and Impacts

(a) Poverty Impacts, Gender Aspects, and Social Development

67. This project will increase the availability of electricity to the Indian people and contribute

to an increase in consumers’ connection rate to the system, especially in regions where power

availability has been constrained by the lack of adequate transmission systems. Development and

strengthening of the National Grid through reliable and stable operation of regional grids

facilitates the timely transfer of power from surplus regions to deficit regions leading to optimal

utilization of scarce energy resources. Although POWERGRID’s network does not link directly

to the end consumer, it facilitates power evacuation from central sector generating stations and

interregional power exchange, resulting in increased availability to and access to reliable

electricity by the connected consumers.

(b) Institutional Change/Strengthening

68. The two-decade partnership between the Bank and POWERGRID has led to adoption of

good practices by the latter since its inception. POWERGRID’s institutional and managerial

capacity has been strengthened through targeted Bank support and strengthening of internal audit

department, development/implementation of an organization-wide ERM framework and ERP

aimed at improving corporate governance and financial accountability. Consistent improvement

on such aspects has led POWERGRID to successful listing on stock exchanges, both Indian as

well as international.

69. In July 2012, POWERGRID also signed loan agreements with International Finance

Corporation (IFC) and Infrastructure Crisis Facility Debt Pool Limited Liability Partnership (ICF

Debt Pool LLP) for a total amount of US$270 million.

70. In February 2009, POWERGRID established and commissioned the NLDC (funded

under PSDP II and PSDP III loans) as the apex structure for national grid management and

operation. According to POWERGRID, this four-tier system is a complex and globally unique

mode of grid operation. It minimizes grid disturbances and facilitates quick restoration in case of

failure. Further, the NLDC and RLDCs, now being managed by POSOCO, are upgraded and

modernized continuously to establish an effective grid management infrastructure in the country.

71. Aspects linked to the environmental and social safeguards associated with the project

have been addressed in accordance with the corporate ESPP developed by POWERGRID in 1998

along with an active support from the Bank. This ESPP is revised from time to time. The

corporate ESSP is in compliance with the Bank's safeguards policies and its provisions

systematically applied to all POWERGRID projects regardless of the source of financing. The

ESPP outlines POWERGRID's approach and commitment to deal with the environmental and

social issues relating to its transmission schemes and lays out management procedures to address

them. POWERGRID’s ESPP was adopted by the Bank as a pilot under UCS (OP 4.00). This was

formally adopted under PSDP V. POWERGRID developed a CSR policy enabling it to make

contribution to the society at large with emphasis on socioeconomic and integral development of

areas/communities primarily in and around its areas of operations. POWERGRID is the first

among the Bank’s clients in India to have prepared a Sustainability Report in March 2010,

covering its environmental and social performance. The second such report has been published in

23

March 2013, providing all stakeholders a clear picture of POWERGRID’s contributions to

sustainable development through its activities. Further, this ESPP is now being used as a base

document for replication in various state level utilities including the Northeastern states where the

Bank is also engaged.26

72. As mentioned in the earlier sections, under this loan following the Bank’s procedures,

procurement for some of the transmission system schemes were either uniquely positioned or

pertained to emerging transmission technologies in India. For instance, the Balia-Bhiwadi

Transmission System was a unique project given the complexity of procurement of HVDC

Terminal Package. Similarly, procurement for certain packages for 765 kV transmission lines,

which was an emerging voltage level in India, was also carried out under these loans.

POWERGRID, in association with the Bank, reviewed and suitably revised the bid documents to

successfully facilitate execution of this new technology in India.

73. Building on the experience gained from several HVDC transmission links including the

±500 kV Balia-Bhiwadi HVDC line, POWERGRID has now established 500MW HVDC back-

to-back terminal along with Bheramara (Bangladesh) - Baharampur (India) 400kV D/C enabling

a power flow of 500 MW from India to Bangladesh. This line is an important contribution toward

regional integration.

74. Experienced with construction of the 765 kV EHVAC and ±500 kV HVDC transmission

system, POWERGRID has been working on the next higher transmission voltages of ±800 kV

HVDC27

and 1,200 kV UHVAC system to achieve efficient utilization of RoW and increased

power transfer capability for transfer of bulk power over long distances. The 1,200 kV UHVAC

technology, the highest voltage level in the world, is being developed indigenously by

POWERGRID in collaboration with 35 Indian manufacturers under public-private partnership

(PPP). The 1,200 kV UHVAC National Test Station at Bina, Madhya Pradesh, including test-

charge of 1,200 kV single and D/C transmission lines, as a pilot project has been established.

Construction of a 1,200 kV upgradable transmission line from Wardha to Aurangabad

(approximately 350 km in length, to be initially charged at 400 kV level) is also underway and

shall be charged after field trials. This 1,200 kV line is also being funded under one of the Bank

loans (PSDP V).

75. On December 31, 2013, POWERGRID achieved a milestone by interconnecting Southern

Grid synchronously with rest of the National Grid through commissioning of the 765 kV Raichur

(Karnataka)-Solapur (Maharashtra) S/C line (funded under PSDP V). With this ‘One Nation-One

Grid-One Frequency’ has become a reality. This has facilitated augmentation of transmission

capacity by 2,100 MW. After integration of Southern Region with rest of the grid, through the

transmission link funded under the Bank loan, POWERGRID along with POSOCO is handling

one of the largest transmission networks at a single frequency in the world. Such integration will

enable transfer of power to power starved Southern Region.

26 The Bank is preparing a ‘North Eastern Region Power Sector Improvement Project’ to provide assistance of

US$1,500 million of IBRD funding, in three tranches of US$500 million each, for strengthening of the intrastate

transmission and distribution network and for building institutional capacity of six states in the region (Assam, Manipur,

Mizoram, Meghalaya, Tripura, and Nagaland). 27 The HVDC system facilitates bulk power transmission over long distances with power controllability, reduced RoW,

and transmission losses. Implementation of ±800 kV, 6,000 MW multiterminal HVDC system of around 2,000 km

from North Eastern Region (NER) to Northern Region (NR) is under implementation (non-Bank funding). Upon

completion, it shall be one of the largest multi-terminal HVDC systems in the world at this voltage level.

24

(c) Other Unintended Outcomes and Impacts

76. POWERGRID was conferred ‘Navratna’ status by the GoI in May 2008, implying a

greater commercial and financial autonomy for the Company. During the project period,

POWERGRID entered the capital market with an Initial Public Offering (IPO) during FY2008

with 10 percent of fresh issue of existing paid-up capital along with the divestment of 5 percent of

GoI’s shareholding. In FY2011, POWERGRID floated a Follow-on Public Offering (FPO)

comprising fresh issue of 10 percent paid-up capital along with divestment of 10 percent of GoI’s

shareholding. The FPO received overwhelming response and was oversubscribed by 14.84 times,

reflecting sound corporate governance policies of the company. In December 2013,

POWERGRID again issued its second FPO constituting 13 percent of existing paid-up capital

along with simultaneous disinvestment of 4 percent of GoI’s sharing holding and was

oversubscribed 6.7 times. The shares are listed on the National Stock Exchange and Bombay

Stock Exchange. In January 2013, the company made its maiden foray into foreign currency

markets and raised US$500 million through issuance of 10-year foreign currency notes at an

attractive coupon rate of 3.875 percent per year and was oversubscribed nearly 19 times. The

bonds are listed on the Singapore stock exchange. Other achievements by POWERGRID are

listed:

POWERGRID continues to excel over its competitors under TBCB. As on October 31,

2014, the company has secured 5 transmission projects, which is more than 30 percent of

the projects floated under TBCB since January 2011 when the regime was changed from

cost-plus basis to TBCB.

POWERGRID has developed a Smart Grid pilot project in the country through open

collaboration at Puducherry. The company has been appointed as advisor-cum-consultant

for implementation of the Smart Grid project by eight utilities during FY2014.

With the vision of setting up a world class laboratory for carrying out research and

development in power transmission, POWERGRID is establishing a POWERGRID

Advanced Research and Technology Center (PART) at Manesar, Gurgaon, with state-of-

the-art laboratories for power system analysis, advanced equipment diagnostics, smart

grid in transmission and distribution, energy efficiency, power system control and

automation, material science, and engineering design.

Further, POWERGRID is also establishing a transmission line research lab to carry out

validation of transmission line design and subsequent optimization. In the quest to

achieve fully digitized substations, POWERGRID is in the process of introducing process

bus technology for substations.

POWERGRID is also playing a catalyst role in formation of the South Asian Association

for Regional Cooperation (SAARC) grid for effective utilization of resources for mutual

benefits. Transmission links with Bhutan, Nepal, and Bangladesh already exist and are

being further strengthened.

POWERGRID is also in the process of mapping pollution intensity of various regions of

the country on a geographical map. This activity shall enable efficient and effective

transmission line designs, particularly in high pollution and fog affected areas.

25

POWERGRID diversified into the telecom business under the brand name ‘POWERTEL’

to expand its revenue stream by installing overhead optic fiber network using Optical

Ground Wire (OPGW), leveraging its existing countrywide transmission infrastructure.

Since 2009, POWERGRID has spread its global footprint in more than 18 countries and

is emerging as a strong player in the transmission sector in South Asia, the Middle-east,

and Africa. The company has also joined hands with other leading power sector

companies to offer integrated solutions for generation, transmission, and distribution to

international power utilities.

3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops

Not Applicable

4. Assessment of Risk to Development Outcome

Rating: Low or Negligible

77. The overall level of risk to the development outcome is rated Low. This assessment is

based on the sustainability of the physical investments financed by the loan as well as on the

financial, operational, and technical strength of POWERGRID. POWERGRID has an adaptive

technical, operational, and corporate structure that allows it to operate its infrastructure efficiently.

The low risk level is also based on the sustainability of POWERGRID's enhanced institutional

capacity and managerial performance which should enable the company to continue to achieve

high performance levels. The reliability of the grid has been enhanced.

5. Assessment of Bank and Borrower Performance

5.1 Bank Performance

(a) Bank Performance in Ensuring Quality at Entry


78. The Bank’s performance during identification, preparation, and appraisal of the

project is rated Satisfactory. The Bank had acquired valuable experience through PSDP I, II,

and III and its knowledge of the Indian power sector resulted in the formulation of a targeted

PDO in keeping with the strategic transformation of the transmission subsector sustained by

POWERGRID's operational and institutional capabilities. The Bank established a strong

partnership and good working relationship with all the sector’s stakeholders including the CERC,

POSOCO, MoP, MoF, and PTC. This helped the Bank team, POWERGRID, and GoI authorities

define feasible component options and set up an implementation framework in line with the

Bank's procurement and applicable safeguards. The definition of the PDO focused on outcomes

for which POWERGRID was held accountable and risk assessment focused on appropriate risks

while the ratings were realistic.

79. The preparation team also ensured that all required steps were taken by the GoI and

POWERGRID, including the final project implementation plan incorporating details of

investment subprojects. The project ROC review (held in December 2007) ensured that lessons

from previous operations and India’s DIR were taken into account by the project team and the

26

borrower. The Bank team also carried out safeguards and compliance measures assessment.

Tests were carried out during the preparation phase, including a financial management

assessment (refer to annex 7 of the PAD). The Bank also ensured that the borrower had an

established and effective ESPP framework needed for project implementation. In addition, the

ESPP assessment made sure that POWERGRID provided the initial environmental action plan

and Rehabilitation Action Plans (RAPs) for the project. Moreover, a number of required

measures were put in place to ensure quality at entry contributed to successful implementation:

a. Early approval by the Bank of PIPs for all five schemes covered under PSDP IV

b. Advance procurement of all packages to be financed under PSDP IV initiated by

POWERGRID in accordance with the Procurement Guidelines prevailing at the time

c. Timely compliance by POWERGRID with all required actions for ESSP (IEARs, EMP,

FEAR, and RAPs), CSR, recommendations from DIR, and FMR

80. The Bank carried out a total of eleven missions, of which one was the appraisal mission

for PSDP IV held in January 2008, including site visits. The first implementation support

mission for PSDP IV held in August 2008 coincided with the appraisal mission for PSDP IV AF.

The second implementation support mission for PSDP IV held in February 2009 was also the

first implementation support mission for PSDP IV AF and preparation mission for PSDP V. The

first implementation support mission for PSDP V was also the MTR mission for PSDP III,

PSDP IV, and PSDP IV AF. This MTR was held in April 2010, four months after its planned

date at appraisal stage of PSDP IV so as to include PSDP IV AF and also to enable the team to

get a holistic view of implementation of the schemes being financed across these projects

(b) Quality of Supervision


81. The World Bank’s performance during supervision is rated Satisfactory. Since loan

effectiveness, the Bank team carried out nine supervision missions, including field visits over the

six-year implementation period. Adequate budget and staff resources were allocated as the project

was effectively supervised and closely monitored, including through delegation of day-to-day

supervision responsibilities to Delhi-based staff, which proved highly effective. The

Implementation Completion and Review (ICR) mission took place in October 2014. Supervision

of the project's implementation was strengthened by a systematic collaboration between the Bank

and POWERGRID's project teams with a significant skills mix. The Bank team was continuously

involved in all aspects of implementation to ensure that physical investments were carried out and

that disbursements occurred as planned. Submission of progress reports, FMR, and safeguards

compliance reports ensured that supervision provided both parties with indicators to allow them

to track progress and take corrective actions when needed. The Bank's supervision tracking

system (Implementation Status and Result Reports (ISR) and mission aide memoires) provided

much-needed status information about the project and required implementation ratings and

compliance with covenants. Continuous involvement by the Bank's team and POWERGRID were

instrumental in ensuring that the project components were successfully implemented with a

satisfactory disbursement rate.

82. The MTR for PSDP IV and PSDP IV AF was carried out in April 2010, and at that time,

the PDO and implementation progress were rated satisfactory and all KPIs had surpassed their

planned targets. The project’s closing date was postponed to July 31, 2014, to adjust for

implementation and disbursements schedules of the additional financing portion of the loan. The

Bank team was continuously involved with POWERGRID to resolve delays due to forest

27

management and RoW issues. Most of these issues were resolved and project implementation

activities proceeded toward completion according to the planned schedule. The FM was also

closely monitored as the World Bank recommended that POWERGRID strengthen its internal

audit department and take actions to hire consultants for reviewing the company's ERP and

strengthen its ERM.

Overall World Bank Performance Rating: SATISFACTORY

(c) Justification of Rating for Overall Bank Performance


83. The Bank did carry out an objective and well-defined appraisal of the project. In tandem

with the borrower, the Bank team has been able to make the necessary adjustments and take

corrective actions (in all project aspects) so that the project achieves its development objectives in

line with the Bank’s overall objective for the transmission sector.

5.2 Borrower Performance

(a) Government Performance


84. The government’s performance is rated Satisfactory. The GoI has identified the

power sector as being vital for sustained and inclusive economic growth and has made investment

allowances (in the 12th Plan) in line with the growth of the transmission subsector so that

electricity demand is sustained by a reliable network. All sector stakeholders (MoP, MoF

POSOCO, and CERC) were always available to the Bank supervision teams and worked together

to resolve issues during project supervision. Sector governance by the GoI was crucial to the

successful implementation of this project. Institutional support ensured continuous monitoring

and support for loan disbursement and related financial measures such as counterpart funding,

and compliance with loans covenants, including arrears payments. The GoI ensured an adequate

legal and regulatory framework conducive to achieving the objectives of the project and

POWERGRID’s operational sustainability. In addition, the GoI's and CERC's regulatory

framework were designed to provide tariffs to enable the company achieve adequate and

satisfactory ROEs.

(b) Implementing Agency or Agencies Performance


85. POWERGRID was the borrower and the implementing agency and its performance

is rated Satisfactory. This rating is based on POWERGRID's efficiency in implementing the

project as most investment schemes were implemented on time, disbursements reached 96

percent of the PSDP IV first loan, and closing occurred as planned on July 31, 2014. The

undisbursed balance of US$23.14 million represents savings on the loan amount that are to be

returned to the loan account at the Bank. The PSDP IV AF loan was disbursed at 100 percent.

POWERGRID has satisfactorily achieved the PDO and has not only met but outperformed all

KPIs, thus meeting all development outcomes.

28

86. Compliance with financial and legal agreements was also achieved during

implementation as POWERGRID's management and project team were strongly committed to the

project's successful implementation. The use of IPMCS in tandem with its corporate ESPP

ensured adequate mitigation of safeguards risks. POWERGRID continues to improve its

corporate governance, environmental, and social responsibility through strengthening of the ESPP

and CSR, internal audit department, carrying out of operational audits, implementing of the ERM

framework, and the ERP system.

Overall Borrower Performance Rating: Satisfactory

6. Lessons Learned

87. The main lessons learned from the design and implementation of the project are listed:

a. Long-term programmatic engagement results in a successful partnership. The long-term

partnership between the Bank and POWERGRID has not only contributed to the

establishment of a strong transmission system but also supported POWERGRID in

institutional strengthening, enabling it to become one of the largest and best utilities in the

world. Successful implementation has shown the importance of partnership with an efficient

and strong implementing agency over the PSDP series. Using operational and project

management experience, POWERGRID has effectively contributed to the success of the

project. Moreover, this project has shown that continuous reviews and improvements of

POWERGRID’s technical implementation, procurement, and safeguards systems have raised

the standards to be followed by others.

b. Repeater projects contributed toward effective implementation of POWERGRID projects.

Early preparation started during PSDP III provided valuable insights (such as success of

eligibility criteria and implementation of emerging technologies)28

into issues to be resolved

by both the parties in PSDP IV and its additional financing. Furthermore, the continued use of

the eligibility criteria ensured the borrower’s commitment to the project.

c. Retroactive financing enabled an advance preparation of the project. Under the loans, the

provision for retroactive financing for up to 20 percent of the loan amount resulted in

immediate disbursement of about US$57 million under PSDP IV and about US$26 million

under the PSDP IV AF loans.

d. Strong and reliable National Grid is facilitating economic development. With a stronger

National Grid spanned out across the country, integration of renewable energy with the grid

has become easier. This will provide energy security as well as carbon emission reduction.

POWERGRID is engaged with the GoI on this initiative through implementing interstate

transmission system and setting up of Renewable Energy Management centers and control

infrastructure as part of Green Energy Corridors that envisions grid integration of renewable

generation capacity addition of about 33 GW across India during the 12th Five Year Plan.

Further, POWERGRID has installed overhead optic fiber network using OPGW, leveraging

its existing countrywide transmission infrastructure. It has an all-India broadband telecom

network of about 29,640 km, providing connectivity to all metros, major cities, towns, state

capitals, including remote areas of the North-Eastern Region. POWERGRID also has the

necessary licenses to provide a variety of telecom services. As part of a National Knowledge

Network, POWERGRID is connecting selected educational institutions with a unified high-

28 The Balia-Bhiwadi HVDC bipole line was funded under PSDP III and PSDP IV.

29

speed network backbone. POWERGRID is also a member of the Advisory Body and Core

Committee of the ambitious National Optical Fiber Network project, which uses the existing

optical fiber facilities of Bharat Sanchar Nigam Limited (BSNL), POWERGRID, and RailTel

Corporation of India Limited to connect all the 250,000 gram panchayats (GPs).

POWERGRID is working for development and maintenance of this network in four states

(Andhra Pradesh, Himachal Pradesh, Jharkhand, and Odisha) covering about 36,000 GPs.

e. POWERGRID is now a ‘partner of choice’. Over the years, POWERGRID has transformed

into an organization successfully foraying into advanced technologies that it has become a

‘partner of choice’ by Indian states as well as neighboring countries. Building on the

experience gained from several HVDC transmission links including the ±500 kV Balia-

Bhiwadi HVDC line, POWERGRID has now established 400 kV D/C HVDC back-to-back

terminals at Bheramara (Bangladesh), enabling a power flow of 500 MW from India to

Bangladesh. This line is an important contribution toward regional integration.

POWERGRID is also providing technical support through consultancy outside India. Within

India, POWERGRID is partnering with most of the states (such as the North Eastern States)

to help develop their transmission networks.

f. Timely measures required for overcoming RoW issues. It is important to note that given the

scarcity of resources within the country, RoW has become very difficult to obtain. Because of

the linear nature of the transmission projects and traversing through agricultural lands/farms,

and habitation enroute, RoW problems are probable during construction of transmission lines.

Even though POWERGRID is following principles set out in its ESPP, it is increasingly

becoming difficult to obtain RoW. These issues can hamper project execution and, in some

cases, may derail the entire project schedule as in the case of SRSS 13. Since, land is a state

subject, POWERGRID takes necessary assistance of the local government authorities in

resolving the RoW problems as and when they arise.29

Further, POWERGRID has adopted

innovative tower design and deploying transformation technologies30

to reduce width of RoW

and has also taken a policy decision to install D/C or multicircuit towers in forest and other

ecologically sensitive areas. This has resulted in huge saving of trees. POWERGRID is also

adopting higher voltage levels gradually such as 765 kV or 800 kV and increasing the power

carrying capacity of transmission lines (up to 6,000 MW on D/C lines) for optimizing RoW

without much effect on transmission losses.

g. Due focus on safeguards help in obtaining forest clearance with a shorter turnaround time.

Even though processing time of a proposal for forest clearance at the state level has been

prescribed as 210 days according to guidelines issued by MoEF, the time taken normally is

very high, resulting in delay in implementation of projects. This is aggravated if the

transmission line passes through a wildlife sanctuary, national park, or notified eco-sensitive

zone, when permission of the Supreme Court is essential but is a very cumbersome process.

In such cases, the whole process takes 2–3 years and sometimes even more. POWERGRID

has very limited role in processing of forest proposal in the state forest hierarchy due to

involvement of many officials. However, it was experienced that constant persuasion of the

officials expedites the process. Hence, strengthening of the environment and social

department proved to be useful as POWERGRID did in June 2011 to factor in activities

required to comply with MoEF’s notification to the FRA of August 2009. POWERGRID has

29 It should also be noted that the probability of abnormal RoW issues of very high severity as faced in SRSS 13 is very

low and rare. 30 POWERGRID is deploying various technologies such as multi circuits, compact and tall towers, High Surge

Impedance Loading Lines, Fixed and Thyristor Controlled Series Compensation, and High Temperature Low Sag

(HTLS) Conductors.

30

exclusively deputed one officer in each region for regular follow-up and monitoring of forest

proposals at the state level and concerned Regional Ministry of Environment and Forest

(RMoEF) to expedite forest clearance.

h. Adequate handling of land acquisition issues. The land acquisition procedures/laws are too

cumbersome. These might be counterproductive to sector development and to network

expansion (as they create delays) and they might have a negative impact on the sustainability

of POWERGRID’s operations. Considering the ramifications, POWERGRID has already

initiated preemptive measures and has developed a policy for procurement of land on

‘willing-seller willing-buyer’ basis on negotiated rate without enforcing the provisions of

land acquisition laws to smoothen procurement of land without any resistance and delay.

Such measures may come handy in offsetting the delays associated with land acquisition as

has been demonstrated in case of the Aurangabad substation funded under PSDP V. Further,

as land has become a scarce resource, POWERGRID is adopting new technologies like Gas

Insulated Substation (GIS) which requires less land area (about 25 percent) as against

conventional Air Insulated Switchyard (AIS) substations. It is also following the practice of

land management to minimize the land requirement to the barest minimum under which it has

taken a policy decision to have GIS substations in the city area and to install multicircuit

towers around a 1-km radius of all new substations. Wherever possible, POWERGRID tries

to locate substations on government land/waste land/non-fertile land to reduce the impact of

land acquisition on PAP.

i. Review and updating of procurement documents to promote new technologies. As part of this

loan and in line with the Bank’s procedures, procurement for some of the unique and

emerging technologies in India (HVDC for Balia-Bhiwadi and 765 kV technology) was

carried out. The procurement documents were reviewed and suitably updated to promote

scaling up to new technologies as part of the loans.

j. Vendor conferences resulted in higher participation and competitive prices. POWERGRID,

in association with the Bank, organized conferences for conductor and insulator vendors in

April 2009 and September 2010 with the objective of increasing participation. Such

conferences have resulted in more participation and competitive prices as evident from the

bids received for the packages floated after these conferences. Further, a conference on

common mistakes and discrepancies during bidding was also organized with prospective

bidders in September 2010 by POWERGRID in association with the Bank. This conference

resulted in significant improvement in the bids being submitted and helped reduce the delay

in bid evaluation on account of common errors or inconsistencies in the bids.

k. Restructuring of loans to optimize utilization. The restructuring of the project was triggered

by the significant savings/surplus resulting from the combined effects of a highly competitive

market, the continuing devaluation of the Indian rupee (INR) against the U.S. dollar since

loan approval and the regulatory requirements to maintain a debt-equity ratio of 70:30 for all

the schemes financed by POWERGRID. In addition to inclusion of a new scheme, shifting of

one scheme from PSDP V to PSDP IV AF enabled leveraging of flexibility in the

POWERGRID portfolio that had the same PDO and KPIs, resulting in optimal utilization of

the available funds across its various engagements.

l. With large size of package, it is useful to have higher prior review threshold. In view of

POWERGRID’s procurement of large and costly packages, it is recommended that the

US$25 million limit for prior review packages be increased. This change should help

POWERGRID manage the procurement process of large contracts. In January 2014, the

Operational Procurement Review Committee (OPRC) threshold limits were revised upward,

except for high risk packages, from US$50 million to US$200 million for low-risk packages

and to US$115 million for moderate-risk packages that are generally the risk profile of

POWERGRID packages.

31

m. Engagement with a capable borrower results in mutual learning. Both the Bank and

POWERGRID learned from each other during this partnership. The learnings have been in

terms of better project management that includes contract management. For instance, for ease

of reconciliation of the disbursement applications by the Bank and the borrower, it is

suggested that changes in the contract value on account of price variation and amendments to

the contracts should reflect on the Client Connection website. This system will help both the

Bank and the borrower in monitoring and reconciling the funds available against each

contract for disbursement and facilitate optimal utilization of the fund by keeping a tab on the

savings, if any, being envisaged.

7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners

(a) Borrower/implementing agencies

88. All comments have been appropriately incorporated in the final ICR. POWERGRID’s

completion report (refer to annex 9 for summary) reflects most of the evaluation in the Bank’s

ICR and also assesses the achievement of the project’s PDO as Satisfactory. POWERGRID’s

comments, which were mostly of an editorial nature, have been reflected adequately in the report.

The Bank team’s response to each comment is indicated in annex 9.

(b) Co-financiers

Not Applicable

(c) Other partners and stakeholders

Not Applicable

32

Annex 1. Project Costs and Financing

(a) Project Cost by Component (in USD Million equivalent)

Components Appraisal Estimate

(US$, millions)

Actual/Latest

Estimate

(US$, millions)

Percentage of

Appraisal

Transmission System Strengthening 1,838 1,300.72

Total Baseline Cost 1,838 1,300.72

Physical Contingencies 158 n.a.

Price Contingencies 118 n.a.

Total Project Costs 2,114 1,300.72

Front-end fee 0 n.a.

Front-end fee IBRD 0 n.a.

Total Financing Required 1,00031

855.22

(b) Financing

Source of

Funds

Appraisal

Estimate

(US$, millions)

Actual/Latest

Estimate32

(US$, millions)

Remarks

Borrower 811 445.50 Figures are for PSDP IV and PSDP IV AF only.

PSDP IV 600 538.92

New scheme, SRSS 13, was added to use the surplus

funds (available up to US$60 million) available from

the originally approved schemes. Due to severe RoW

issues, this scheme is now expected to be completed not

before March 2015. Disbursement under this new

scheme was about US$37 million, taking the

disbursement under the loan to US$576.86 million. The

undisbursed balance of US$23.14 million represents

savings on the loan amount that are to be returned to

the loan account at the Bank.

PSDP IV AF 400 316.30

A scheme was shifted from PSDP V to gainfully use

the surplus from the original schemes (available up to

US$85 million) and to leverage flexibility across

POWERGRID loans that had the same PDO and KPIs.

Disbursement under the shifted scheme (System

Strengthening in Western Region for Sasan UMPP)

was about US$84 million. Thus, the entire loan stands

disbursed.

IBRD Total33

1,000 855.22

31 As PSDP IV and PSDP IV AF are repeater projects of PSDP III, the estimates were reviewed for the portfolio at

appraisal of PSDP IV. Hence, the table includes details of both PSDP IV and PSDP IV AF. 32 These estimates do not include the project costs of the schemes added through a Letter of Amendment to the Loan

Agreement dated May 23, 2014 (restructuring). 33 This is ‘total financing required’ in table (a) above.

33

(c) Disbursement Graph

34

Annex 2. Outputs by Component

1. The Bank had a programmatic engagement with POWERGRID to the tune of US$1.4

billion provided to it in a phased manner. The first tranche of US$400 million was availed under

the PSDP III loan that closed in July 2011, and ICR Report (No. ICR1862) was disclosed on

January 30, 2012. The following schemes were covered under PSDP III:

Table 2.1: Schemes Funded under PSDP III Sl. No. Project Transmission Elements

1. 765 kV Seoni-Bina

Transmission Line Seoni-Bina 765 kV S/C (initially to be operated at 400 kV) - 293

ckm

2. Seoni-Wardha-Akola-

Aurangabad

Transmission System

Seoni-Wardha 765 kV S/C line (initially to be operated at 400

kV) - 269 ckm

Wardha-Akola (MSETCL) 400 kV D/C line - 324 ckm

Akola (MSETCL)-Aurangabad (MSETCL) 400 kV D/C line -

482 ckm

2x315 MVA, 400/220 kV Wardha (POWERGRID) Substation

(New), with a provision to upgrade it to 765 kV

400 kV Seoni (POWERGRID) Substation (Extension)

400 kV Akola (MSETCL) Substation (Extension)

400 kV Aurangabad (MSETCL) Substation (Extension)

3. ±500 kV, 2,500 MW

Balia and Bhiwadi

HVDC Bipole System

Balia-Bhiwadi 500 kV HVDC bipole line - 1,580 ckm

4. NWTC Strengthening

Scheme Agra-Gwalior 765 kV S/C (initially to be operated at 400 kV) -

128 ckm

Zerda-Kankroli 400 kV D/C - 470 ckm

5. WRSS II Bina-Gwalior 765 kV 2nd S/C line (initially to be operated at 400

kV) - 233 ckm

2. The second and third phases of US$600 million and US$400 million were made available

to POWERGRID under the PSDP IV and PSDP IV AF loans that closed on July 31, 2014. The

original schemes, approved at appraisal and funded under PSDP IV and PSDP IV AF, were

implemented and completed within the project period. One of the new schemes that was shifted

from PSDP V was also completed within the loan closing period. Only one new scheme (SRSS

13) is not complete due to severe RoW issues at the state level (Karnataka). This scheme is now

expected to be completed not before March 2015 and its implementation will be monitored under

PSDP V, which is an active POWERGRID loan with the Bank. The scheme will be completed

using POWERGRID funds. Table 2.2 compares the total project costs at the time of appraisal, the

corresponding Bank funding at that time, final committed value to be financed by the Bank funds

after the award of the contract, and disbursements as on December 19, 2014.

35

Table 2.2: An Overview of Financing (Figures in US$, Millions) PSDP IV PSDP IV AF

Sl.

No.

Project

Total

Project

Cost

as per PAD

Envisaged

Bank Funding

as per PAD

Committed

Value

Disbur-

sement

Envisaged

Bank

Funding as

per PAD

Commit

ted

Value

Disb

urse

ment

1. EWTC 198 56 53 53 7 6 6

2. WRSS II 884 174 153 153 336 259 259

3. ERSS I 241 65 60 60 57 51 51

4. Balia &

Bhiwadi

System

683 295 265 265 – – –

5. NWTC 119 10 8 8 – – –

Schemes added through Restructuring

6. SRSS 1334

– – 48 38 – – –

7. System

Strengthen

ing in

Western

Region for

Sasan

UMPP35

– – – – – 89 84

Total 600 587 577 400 405 400

3. Table 2.3 chalks out all the elements that were financed under the PSDP IV and PSDP IV

AF loans. It also provides the details of the commissioning schedule of each of these elements.

All the above schemes have been completed except the SRSS 13 scheme whose implementation

has been adversely affected due to severe RoW problems.

Table 2.3: Elements under the Schemes Funded under PSDP IV and PSDP IV AF

Commissioning

Date

World Bank

Project

Elements Commissioning Details of the

Elements

a. ±500 kV, 2,500 MW Balia and Bhiwadi HVDC Bipole System

July 2012 PSDP III Balia-Bhiwadi HVDC

bipole line (1,580 ckm)

Line test charged in March 2010

PSDP IV Balia-Bhiwadi HVDC

terminal stations

First pole commissioned & under

commercial operation since September,

2010. Second pole test charged and

commissioned in July 2012.

b. North-West Transmission Corridor Strengthening Scheme

April 2009 PSDP III 765 kV S/C Gwalior-Agra

line (128 ckm)

Commissioned in March 2009

400 kV D/C Zerda-

Kankroli line (470 ckm)

Commissioned in April 2009

34 According to the PIP, the estimated completion cost was US$76 million of which envisaged Bank funding was

US$47 million. 35 According to the PIP, the estimated completion cost was US$200 million of which envisaged Bank funding was

US$134 million.

36

Commissioning

Date

World Bank

Project


Elements

PSDP IV Extension of Agra,

Kankroli, Gwalior, and

Zerda substations

Agra and Gwalior substations

commissioned in March 2009. Zerda

and Kankroli substations commissioned

in April 2009.

c. Western Region System Strengthening Scheme II36

December 2012 PSDP IV 400 kV D/C Korba-

Birsinghpur line (454 ckm)

Line commission in February 2012

400 kV D/C Birsinghpur-

Damoh line (508 ckm)

Line commissioned on February 2011

400 kV D/C Damoh-

Bhopal line (432 ckm)

Line commissioned in March 2010

New 400/220 kV Pune &

Solapur substations and

extension of Aurangabad,

Parli, Kolhapur, Damoh,

Gwalior, Bina, Korba, and

Bhopal substations

Pune substation: Completed in

October 2010

Solapur substation: Completed in

March 2010

Bina and Gwalior substation

extension: Commissioned in

February 2010

Damoh and Bhopal substation

extension: Commissioned in

February 2011 and March 2011,

respectively

Kolhapur substation extension:

Completed in February 2011

Parli substation extension:

Completed in August 2011

Korba extension: Commissioned in

February 2012

PSDP IV AF 400 kV D/C Wardha-Parli

quad line (674 ckm

Line commissioned in July 2011

400 kV D/C Bhadrawati-

Parli line (776 ckm)

Line charged in March 2011

400 kV D/C Raipur-

Wardha line (741 ckm)

Line commissioned in December 2012

400 kV Parli (MSETCL)-

Parli (POWERGRID) line

(10 ckm)

Line commissioned in February 2011

400 kV Parli (New)

substation and extension of

400 kV Bhadrawati, Seoni,

Parli (MSETCL), Wardha,

and Raipur substations

Parli (New) substation and

Bhadrawati substation extension:

Commissioned in March 2011.

Parli (MSETCL) substation

extension: Completed in March

2011.

Wardha and Raipur substation

extension: Commissioned matching

with the line in December 2012.

36 Part financed under PSDP III also.

37

Commissioning

Date

World Bank

Project


Elements

Extension of 400 kV

Rajgarh, Karamsad,

Limbdi, Zerda,

Ranchodpura, and

Birsinghpur substations

Birsinghpur substation extension:

Commissioned in February 2011.

Ranchodpura substation extension:

Completed in March 2011.

Works for extension of other

substation completed progressively

by September 2011.

FSC package at Rajgarh

substation for 400 kV

Rajgarh-Karamsad D/C

line

Completed in November 2011

FSC package at Wardha


Wardha-Raipur D/C line

Commissioned in December 2012

d. East-West Transmission Corridor Strengthening Scheme

June 2011 PSDP IV 400 kV D/C Ranchi-

Rourkela line (290 ckm)

Commissioned in November 2010

400 kV D/C Rourkela-

Raigarh line (420 ckm)

Commissioned in June 2011

400 kV D/C Raigarh-

Raipur line (440 ckm)

Commissioned in September 2010

Extension of Ranchi,

Rourkela, Raipur, and

Raigarh substations

Extension of Raigarh and Raipur

substations commissioned in

September 2010

Extension of Ranchi and Rourkela

substations commissioned in

November 2010

PSDP IV AF FSC at Raipur substation

for 400 kV D/C Rajgarh-

Raipur line

Test charged in March 2011

e. Eastern Region System Strengthening Scheme I

March 2014 PSDP IV 400 kV D/C Durgapur-

Jamshedpur line (314 ckm

Line short terminated and

commissioned in April 2012

400 kV D/C Jamshedpur-

Baripada line (282 ckm)

Line commissioned in May 2013

400 kV D/C Baripada-

Mendhasal line (544 ckm)

Line commissioned in August 2011

Extension of Durgapur,

Jamshedpur, Baripada, and

Mendhasal substations

Commissioned by May 2013

PSDP IV AF Re-conductoring of

Purnea-Siliguri 400 kV

D/C line (346 ckm)

Commissioned in March 2014

Schemes Added Through Restructuring

f. System Strengthening in Southern Regional XIII

March 2015

(anticipated)

PSDP IV 400 kV D/C Gooty-

Madhugiri line (417 ckm)

Under implementation. Implementation

of the elements affected since February

2013 due to severe RoW issues in the

state of Karnataka. 400 kV D/C (Quad)

Madhugiri-Yelahanka line

(132 ckm)

400/200 kV Madhugiri

38

Commissioning

Date

World Bank

Project


Elements

substation and 400 kV Bay

extension at Gooty

g. System Strengthening in Western Region for Sasan UMPP

October 2014 PSDP IV AF 765/400 kV Indore

substation and extension of

400 kV Indore (MPPTCL)

substation

Completed in June 2013

765 kV & extension of 400

kV Gwalior substation

Completed in March 2013

7x333 MVA, 765/√3 /

400/√3 kV Single Phase

Transformers at Bina

substation


7x500 MVA, 765/√3 /

400/√3 kV Single Phase

Transformers at Gwalior

substation and 7x500

MVA, 765/√3 / 400/√3 kV

Single Phase Transformers

at Indore substation

Completed in October 2014

(one spare transformer was test charged

in October 2014)

765 kV Bus Reactor &

Shunt Reactors at Gwalior,

Bina, and Indore

substations


4. The following section elaborates further on the various schemes and their components

funded under PSDP IV and PSDP IV AF.


5. The objective of the scheme was to transfer power to the Northern and Western regions

from the Balia Pooling Point (in Uttar Pradesh), which gets power from surplus generated in the

Eastern region. A 2,500 MW HVDC bipole system between Balia and Bhiwadi was required to

meet the power demand for the states of Punjab, Haryana, Rajasthan, and Delhi in the western

part of the Northern Grid. The HVDC system has some inherent features which help in

maintaining grid stability and reliability efficiently:

The HVDC system allows controlled power flow.

Control features of the HVDC system helps in damping system oscillation after any

disturbance.

The HVDC system does not contribute any additional short circuit current to Balia

whereas AC systems do.

The HVDC system provides flexibility of operation.

6. Further, it was anticipated that the Northern region would be importing a large quantum

of power from the Eastern region and accordingly a number of interregional links are envisaged

to be established between the Eastern and Northern regions. It was felt prudent to develop a

hybrid system comprising high-capacity transmission links. Keeping this in view, a pooling

station at Balia in the Northern region is envisaged where power will be pooled from various

projects in the Eastern region and thereafter 400 kV AC and HVDC lines are envisaged to be

established for dispersal of power to various constituents of the Northern region.

39

7. Pole I of the HVDC line along with the terminal station was commissioned in September

2010. The 500 kV HVDC bipole line of this project was covered under the PSPD III loan from

the Bank. The second HVDC terminal was covered under the PSDP IV loan. Pole II of the

scheme was originally scheduled for completion in December 2009 but could only be

commissioned in July 2012 due to delays in supply of converter transformers at the Biwadi

terminal station by the contractor. According to the contract, eight (8) converter transformers

were to be manufactured and supplied by M/s BHEL in technical collaboration with M/s Siemens

AG, Germany, which were the Joint Venture (JV) partners for the package, from July 2008 to

March 2009, whereas it could only be supplied from October 2011 to March 2012.

8. Both Pole I and Pole II of the Balia-Bhiwadi HVDC project were successfully

commissioned and tested for rated power of 1,250 MW each and overload power of 1,500 MW

each. Presently, the ±500 kV, 2,500 MW Balia-Bhiwadi HVDC bipole project is in successful

operation and maximum power flow was of the order of 2,500 MW. It will be operated at full

capacity progressively with commissioning of the Barh generation units. The ±500 kV Balia-

Bhiwadi HVDC link is facilitating bulk power exchange between the Northern and Eastern

regions and has become an important HVDC link in strengthening the Northern Grid.

9. Under PSDP III, the works consisted of transmission lines:

• Balia-Bhiwadi 500 kV HVDC bipole line (1,580 ckm)

10. Under PSDP IV, the works consisted of substations (initially proposed to be funded under

PSDP III but to match the commissioning of the associated generation projects it was later

financed under PSDP IV):

• HVDC Terminal Station for 2,500 MW at Balia and Bhiwadi along with associated

works


11. Synchronous operation of Western Region (WR) and Northern Region (NR) was

envisaged through a 765 kV line between Agra (NR) and Gwalior (WR) as a part of transmission

system of Kahalgaon-II (1,500 MW) generation project in the Eastern Region. With more

generation projects coming in the Eastern Region (ER) with beneficiaries in the NR and WR, the

power flow on lines connecting Northern and Western Regions was envisaged to increase. Thus,

a need was felt to enhance the power transfer capacity between the Northern and Western regions.

Accordingly, the second circuit of the Agra-Gwalior 765 kV line (initially to be operated at 400

kV) was envisaged under the project.

12. With the completion of the Agra-Gwalior 765 kV first circuit, the Eastern, Western, and

Northern regions are operating as a single unit having large capacity. The common geographical

boundary of the Western and Northern regions is spread longitudinally. Therefore, to maintain

system stability as well as security of the single grid under all operating conditions, it was felt

necessary to connect both the regions through interconnection at different locations along the

boundary. Accordingly, another interconnection between the two regions was envisaged by

connecting Kankroli (NR) and Zerda (WR) through a 400 kV D/c line.

13. Under the project, two interregional lines (between the Northern and Western regions),

namely Agra-Gwalior 765 kV S/C line and Zerda-Kankroli 400 kV D/C line, were implemented

(funding under the PSDP III loan). Extension works of bays for termination of these lines were

40

covered under the PSDP IV loan. Extension of substations covered under the PSDP IV loan was

commissioned matching with the associated transmission lines, that is, Agra-Gwalior 2nd 765 kV

S/C and Zerda-Kankroli 400 kV D/C lines covered under the PSDP III loan. These lines have

added about 2,100 MW in interregional power transfer capacity.

14. Under PSDP III, the works consisted of transmission lines:

• Agra-Gwalior 765 kV S/C (initially to be operated at 400 kV) (128 ckm)

• Zerda-Kankroli 400 kV D/C (470 ckm)

15. Under PSDP IV, the works consisted of substations:

• 400/220 kV Agra (POWERGRID) Substation Extension

• 400/220 kV Gwalior (POWERGRID) Substation Extension

• 400/220 kV Kankroli (POWERGRID) Substation Extension

• 400/220 kV Zerda (GEB) Substation Extension

c. Western Region System Strengthening Scheme II

16. In India, major energy resources are concentrated in a few pockets like the large belt of

coal deposit confined to the eastern part, while most of the hydro potential is located in the

northeastern and upper northern parts of the country. Therefore, to meet the power requirement of

deficit regions like the Western region, bulk power transfer over long distances from the

generation resources to the load centers located across the country is required. Further, major

generation sources in the Western region are located in its eastern part while load centers are in

the western and central part of the region. Therefore, to transfer power from major generation

plants in the eastern part to load centers like Wardha, Pune, Aurangabad, Gwalior, Bhopal, Indore,

and Karamsad, there was a need to develop transmission corridors of adequate capacity.

Accordingly, the WRSS II was designed to strengthen various parts of the WR. The scheme was

evolved consisting of four sets (A, B, C, and D). While transmission lines under sets A and D

along with all the substations were implemented by POWERGRID, transmission lines under sets

B and C were to be implemented through private participation.

17. Out of this, POWERGRID implemented the Bina-Gwalior 765 kV second S/C

transmission line (initially to be operated at 400 kV) under PSDP III funding. The line was

commissioned in February 2010. It may be mentioned that other important lines, such as Seoni-

Wardha were also implemented through Bank financing under the PSPD III loan. The Seoni-Bina

765 kV S/C line is under commercial operation since April 1, 2010, and has helped to connect the

major load center (Bina) in the northern part of the state of Madhya Pradesh to a power pooling

point in the south-eastern part of the state (Seoni) as well as to complete the 765 kV ring

interconnecting the Eastern, Western, and Northern regions of India as part of the development of

the National Grid. The Seoni-Wardha transmission system has been commissioned progressively

from April 2009 to November 2009 and has provided adequate transmission arrangements to

enable the state of Maharashtra to draw power reliably from a pooling point in the central part of

the WR, where power imported from the ER and other sources are being pooled.

18. Major components of the balance scheme were covered for financing under the PSPD IV

and PSDP IV AF. Various elements of the project have been commissioned progressively from

February 2010 to December 2012 and are under commercial operation.

19. Under PSDP IV, the works consisted of the following components:

41

Transmission Lines • From Korba to Birsinghpur 400 kV D/C (454 ckm)

• From Birsinghpur to Damoh 400 kV D/C line (508 ckm)

• From Damoh to Bhopal (MP transco) 400 kV D/C line (432 ckm)

Substations

• New 400/220 kV substations at Pune and Solapur

• Extension of 400/220 kV substations at Aurangabad, Parli, Kolhapur, Damoh,

Gwalior, Bina, Korba, and Bhopal

20. Under PSDP IV AF, the works consisted of the following components:

Transmission Lines

• From Wardha to Parli 400 kV D/C line (674 ckm)

• From Bhadrawati to Parli 400 kV D/C line (776 ckm)

• From Raipur to Wardha 400 kV D/C line (741 ckm)

• From Parli (MSETCL) to Parli (POWERGRID) 400 kV D/C (10 ckm)

Substations

• A new 400/220 kV substation at Parli

• Extension of 400/220 kV substations at Bhadrawati, Parli (MSETCL), Wardha, and

Raipur

• Extension of 400/220 kV substations at Rajgarh, Karamsad, Limbdi, Zerda,

Ranchhodpura, and Birsinghpur

• FSC at Rajgarh substation for 400 kV D/C Rajgarh-Karamsad line

• FSC at Wardha substation for 400 kV D/C Wardha-Raipur line


21. In the Eastern region, a large number of generation schemes like Kahalgaon Stage-II

(1,500 MW), Barh (1,980 MW), North Karanpura (1,980 MW), Maithon (1,000 MW), and

Nabinagar (1,000 MW) were planned with beneficiaries located in Western and other regions.

According to the projected load-generation scenario of the Western region, it was envisaged that

a large quantum of power needed to be imported from the Eastern region to the Western region.

Accordingly, 400 kV Rourkela-Raigarh-Raipur D/C line was proposed to strengthen the existing

Rourkela-Raipur interregional transmission corridor between the Eastern and Western regions

and to enable increase in the level of power transfer to the Western region. However, to pool

surplus power from various generation projects in the Eastern region for onward transmission to

Rourkela, a 400 kV D/C line between Ranchi, a pooling point in the Eastern region, and Rourkela

were also proposed to provide a parallel Transmission Corridor from the central part of the region

toward Rourkela.

22. Further, to enhance power transfer capacity over the proposed 400 kV Rourkela-Raigarh-

Raipur interregional link, 40 percent FSC along with 5–15 percent Thyristor Controlled Series

Capacitor (TCSC) on both the circuits of the Raigarh-Raipur 400 kV D/C line at the Raipur end

was made part of this scheme.

23. The scheme was originally scheduled for completion in June 2009 but could only be

completed and commissioned in July 2011 due to delays in obtaining forest clearances. Details

are as below:

24. Forest clearance proposal for diversion of forest land of about 18.8 ha (3.94 ha in Ranchi,

8.89 ha in Khunti, and 6.007 ha in Simdega) was submitted to the nodal officer on January 3,

42

2006. The nodal officer forwarded the proposal to the concerned three district forest officers

(DFOs). During joint site inspection, forest officials advised a change in alignment in forest area.

Accordingly, realignment was done. While carrying out a survey for realignment, identification

of khasra plots, and tree enumeration of the revised route, stiff resistance and disturbances were

faced from the extremists since the entire line route passes through extremist-prone areas.

Therefore, this process of survey for realignment and khasra plot identification, including tree

enumeration, took considerable time. The proposal was revised after getting the plot identification

report for the revised route from concerned six circle officers and enumeration of forest trees. The

process for the No Objection Certificate (NOC) for jungle-jhari land from the concerned deputy

collectors was done in parallel, which took considerable time. Finally, the proposal reached the

Principal Secretary (Forest) on October 24, 2008, through the proper channels, that is, the DFO to

the Conservator of Forest (CF), CF to the Regional Chief Conservator of Forest (RCCF), RCCF

to the Nodal Officer, the Nodal Officer to the Principal Chief Conservator of Forests (PCCF), and

the PCCF to the Principal Secretary (Forest), who forwarded it to the Minister (Forest),

government of Jharkhand on November 13, 2008. The proposal was approved by the ministry and

returned to the Principal Secretary (Forest) on February 23, 2009, and it was forwarded to the

CCF (C), Bhubaneshwar on February 28, 2009. A meeting of the State Advisory Group (SAG) at

Ranchi was held on July 17, 2009. The CCF (C), Bhubaneshwar forwarded the proposal with

SAG recommendations to the MoEF, New Delhi on August 3, 2009. The MoEF in turn advised

the CCF (C), Bhubaneswar for submission of the wildlife mitigation plan duly vetted by the

Director, Elephant Project, New Delhi by the state government. The Director, Elephant Project,

approved the plan and communicated to the PCCF, Ranchi with a copy to the Principal Secretary

(Forest), Jharkhand on February 1, 2010. Stage-I approval was issued on March 23, 2010, with a

new condition for compliance of FRA, 2006. This was processed from the village level and

completed by July 2010 from all the three districts. Then, the Principal Secretary (Forest),

Jharkhand forwarded the Stage-I compliance report to the CCF (C), Bhubaneswar on July 19,

2010, and Stage-II approval was issued on August 4, 2010. Only upon receipt of the final

clearance, the works on the scheme could be taken forward.


Transmission Lines

• From Ranchi to Rourkela 400 kV D/c line (290 ckm)

• From Rourkela to Raigarh 400 kV D/c line (420 ckm)

• From Raigarh to Raipur 400 kV D/c line (440 ckm)

Substations

• Extension of 400/220 kV substation at Ranchi

• Extension of 400/220 kV substation at Rourkela

• Extension of 400/220 kV substation at Raipur37

• Extension of 400/220 kV substation at Raigarh

26. Under PSDP IV AF, the works consisted of substations:

• FSC at Raipur substation for 400 kV D/C Rajgarh-Raipur line


37 Provision of 40 percent FSC along with 5–15 percent TCSC on both the circuits of the Raigarh-Raipur 400 kV D/C

line at the Raipur end.

43

27. Many new generation projects were envisaged to come up under the Central and State

sector in the eastern part of the Eastern region. Such generation projects included Sagardighi (600

MW), Bakreshwar Extn (420 MW) and Santaldih Extn (250 MW) of WBPDCL, Purulia PSP

(900 MW) of WBSEB, DPL Extn (1,200 MW), Mejia Extn (500 MW), and Chandrapura Extn

(500 MW) of DVC. Accordingly, it was necessary to strengthen the transmission grid of the

Eastern region to facilitate transmission of additional surplus power, which would be available

due to addition of these generation projects. In view of this, implementation of ERSS I was

proposed to facilitate evacuation of surplus power from the eastern part of the Eastern Region

Grid to the central areas from where it was designed to get further transmitted through the

existing transmission system. Further, in order to transfer additional power in a reliable manner

from the planned generation projects in Sikkim, Bhutan, and the North-Eastern Region (through

the chicken neck area), strengthening of the Siliguri-Purnea corridor has also been carried out.

28. The scheme was originally scheduled for completion in October 2009 but could

progressively be completed from August 2011 to March 2014. The delay in commissioning is due

to delays in obtaining forest clearances and severe RoW issues being faced on the various

transmission lines under the funding. Re-conductoring of the Purnea-Siliguri 400 kV D/C line

was affected due to delays in conductor supply and the devastating earthquake and tsunami in

Japan and could be completed by March 2014. After commissioning, the scheme has been

successfully transmitting power across the regions. Further, strengthening of the Siliguri-Purnea

line has resulted in transferring additional power from the planned generation projects in Sikkim,

Bhutan, and North-Eastern Region through the chicken neck area with reliability. It was already

evacuating hydel power from Tala and Teesta projects.


Transmission Lines

• From Durgapur to Jamshedpur 400 kV D/c line (314 ckm)

• From Jamshedpur to Baripada 400 kV D/c line (282 ckm)

• From Baripada to Chandaka (Mendhasal) 400 kV D/c line (544 ckm)

Substations

• Extension of 400/220 kV substation at Jamshedpur

• Extension of 400/220 kV substation at Durgapur

• Extension of 400/220/132 kV substation at Baripada

• Extension of 400/220 kV substation at Mendhasal (Chandaka) (GRIDCO)

• Renovation of 400/220 kV substation at Siliguri38

• Renovation of 400/220 kV substation at Purnea39

30. Under PSDP IV AF, the works consisted of:

Transmission Lines

• Re-conductoring of the Siliguri-Purnea 400 kV D/c line with twin INVAR moose

conductor (346 ckm)

38 Re-conductoring of 400 kV bays, including dismantling and replacement of equipment and associated works.

Dismantled equipment of the Siliguri and Purnea substations shall be used at the Jamshedpur and Durgapur substations. 39 Re-conductoring of 400 kV bays, including dismantling and replacement of equipment and associated works.

Dismantled equipment of the Siliguri and Purnea substations shall be used at the Jamshedpur and Durgapur substations.

44

f. Southern Region System Strengthening – XIII (New Scheme Added Through Restructuring)

31. In the Southern region, a number of generation projects under the Central Sector such as

Neyveli TS-II Expansion (500 MW), Kalpakkam PFBR (500 MW), and Krishnapatnam UMPP

(4,000 MW) are envisaged for commissioning during the 12th Plan period. All the regional

constituents will have shares from these new generating projects, which will result in

enhancement of shares of beneficiaries, including Karnataka. The power from some of these

generating stations is available at Raichur/Gooty through various transmission lines and the

power is required to be supplied to the major load centers in the state of Karnataka like Bangalore.

32. Presently, the load of the Bangalore area is being supplied through three 400/220 kV

substations, namely, Hoody, Somanhalli, and Neelamangla. These substations are fully utilized

and do not have adequate capacity to accommodate additional transmission line strengthening or

transformer augmentations. To enable delivery of enhanced share of power as well as to meet

growing load demand, augmentation of the transmission system, including establishment of a new

400/220 kV substation shall be required. Madhugiri, near Bangalore in Karnataka State, is one

such location that is identified for establishing a new 400/220 kV substation, which is to be

connected to Gooty and Yelahanka to feed the growing power demand in and around the

Bangalore area, as a regional strengthening scheme.

33. However, implementation of the transmission lines covered under SRSS 13 has been

affected due to severe RoW issues faced since February 2013 in the state of Karnataka. Since the

start of the detailed survey/field work, there was severe resistance and protests by the landowners

and villagers on the Gooty-Madhugiri transmission line route.

34. Foundation work on the Madhugiri-Yelahanka transmission line commenced in August

2012 and progressed smoothly in the beginning. Tower erection work also commenced in

February 2013 although works at many locations were frequently obstructed by landowners under

the influence of the Karnataka Rajya Raitha Sangha (Karnataka State Farmers Forum [KRRS]).

The protests from the landowners were consolidated once the KRRS started the campaign among

the landowners by distributing pamphlets and organizing meetings in every village along the line

route, and foundation work came to a standstill by January 2014 due to the organized protests.

35. POWERGRID approached the Assistant Commissioner of Madhugiri and District

Collector of Tumkur in June 2013 and a number of petitions were filed before the District

Magistrate of Tumkur for resolving the RoW problems. In October 2013, a series of meetings

were conducted by the revenue authorities at the district, division, and taluk levels between the

farmers and landowners, represented by the KRRS, and POWERGRID to address their

grievances and resolve the issue. However, no consensus was arrived at in these meetings.

Subsequent to this, location-specific hearings were also conducted with specific landowners for

select locations and orders were passed on January 7, 2014, by the District Magistrate for one

location with a directive to POWERGRID to make an ex gratia payment of INR 50,000 to the

landowners. However, the landowners collectively stopped the work at the above location,

demanding higher compensation. POWERGRID again approached the district administration to

resolve the issue and a senior level meeting was held at the District Collector’s office on February

22, 2014, between officials of POWERGRID and the Revenue and Police departments.

Subsequently, the District Magistrate, Tumkur passed an order on February 28, 2014, directing

POWERGRID to pay the landowners an ex gratia amount ranging from INR 0.15 million to 0.3

million (according to the type of tower) per tower location in addition to tree and crop

compensation. Landowners were generally satisfied with the compensation package, including

45

the ex gratia amount, and therefore work at some locations in the Katenahalli and Kora-Hobli

villages started in March 2014 with the consent of the respective landowners, after notices were

served. However, the work was again stopped after severe protest by a certain group of people.

POWERGRID tried to start work at another location with consent from the landowner in

Honnenahalli village in the first week of April 2014. However, a similar group of people gathered

and work was stopped at this location also. The group even prevented the landowner from

accepting the compensation check for cutting of trees. These incidents were reported to the

District Collector, Tumkur, who in turn called the state leader of the KRRS for a meeting on

April 26, 2014. However, the meeting could not take place as the state leader failed to come for

the meeting and the stalemate continued. The matter regarding compensation was decided in the

meetings held on June 3 and June 26, 2014, and the Deputy Commissioner, Tumkur issued an

order dated July 8, 2014, in respect of compensation, which includes special compensation for

tower locations and compensation toward temporary damages for the Tumkur portion of the 400

kV D/C Gooty-Madhugiri-Yelahanka line. On July 18, 2014, Taluk Committee(s) were

constituted for conducting of Panchnama of the tower footing, landowner identification, and

enumeration of trees and crops in the tower footing area. Committees were constituted in the

taluks of Pavagada, Madhugiri, Koratagere, and Tumkur rural. On August 8, 2014, orders were

passed by the DC, Bangalore Rural toward enhanced compensation in the Bangalore Rural

portion of the 400 kV D/C Madhugiri-Yelahanka line. However, orders from the District

Collector, Bangalore Urban was yet to be issued. Further, on August 10, 2014, the District

Collector, Tumkur reviewed the progress of the Gooty-Madhugiri and Madhugiri-Yelahanka lines.

A meeting was conducted with the DCs and POWERGRID by the Honorable Secretary, MoP,

GoI at New Delhi on August 26, 2014. During November to December 2014, Panchnamas were

carried out in the Pavagada Taluk area. The Taluk Committee visited the locations, both in

Tumkur and Bangalore Rural, and after completion of assessment it will give their

recommendations to POWERGRID for compensation payment. POWERGRID is making all

efforts, with the support of state government authorities, to resolve the RoW constraints.

36. POWERGRID has assured that completion of the project is top priority. As soon as

resolution is achieved, mobilization through contractors for commencing the work will be

undertaken. Implementation of this scheme will be monitored under PSDP V, which is an

ongoing lending investment with POWERGRID.


Transmission Lines

• From Gooty to Madhugiri 400 kV D/C line (417 ckm)

• From Madhugiri to Yelahanka 400 kV D/C (Quad) line (132 ckm)

Substations

• New 400/220 kV substation at Madhugiri

• Extension of 400/220 kV substation at Gooty

Note: Extension of bays at the Yelahanka substation is being funded through domestic

sources.

g. System Strengthening in Western Region for Sasan UMPP (Scheme Shifted from PSDP V

Through Restructuring)

38. In the WR, a number of generation projects including the Sasan and Mundra UMPPs

(4,000 MW capacity each) in Madhya Pradesh and Gujarat, respectively, were being set up.

Power from these projects is to be transferred to various beneficiaries in the Western and

Northern regions. For evacuation of power from these projects, separate transmission systems

46

are/were implemented (not funded by the Bank). For dispersal of power to major load centers in

the WR with reliability and security, strengthening of the regional transmission system in the WR

were to be implemented to match with the time frame of these UMPPs.

39. For transfer of power from the Sasan UMPP, the transmission corridor from Sasan to

Bina via Satna has been implemented. However, system strengthening was also required beyond

Bina in Madhya Pradesh for transfer of power to the load centers of the WR for which a separate

high-capacity 765 kV transmission corridor from Bina to Indore and a major load center in

Madhya Pradesh along with establishment of a new 765/400 kV substation at Indore, was taken

up. Establishment of 765/400 kV substations at Bina and Gwalior were also taken up as part of

this scheme to facilitate charging of 765 kV lines interconnecting the Bina and Gwalior

substations. The transmission system has been completed and the new 765/400 kV substation at

Indore and upgrade of the Bina and Gwalior substations have been carried out under PSDP IV AF.

40. The scheme was originally scheduled for completion in December 2012 (as per PAD of

PSDP V) but it could only be commissioned progressively from March 2013 to October 2014 due

to multiple reasons such as nonperforming contractor at the Indore substation, leading to

termination and re-award of the site levelling works contract and repairs and maintenance facility

for the 765 kV transformers and reactors and its suitable incorporation in qualification

requirement and in contract. With successful commissioning of the transmission scheme, a total

transformation capacity of 8,000 MVA has been added to cater to the load demand of major load

centers in Madhya Pradesh.

41. Under PSDP IV AF, the works consisted of the following substations:

• A new 765/400 kV substation at Indore and extension of the 400/220 kV substation at

Indore (MPPTCL)

• Establishment of a 765 kV and extension of the 400/220 kV substation at Gwalior

• 7x333 MVA, 765/√3 / 400/√3 kV Single Phase Transformers at Bina substation

• 7x500 MVA, 765/√3 / 400/√3 kV Single Phase Transformers at Gwalior substation

and 7x500 MVA, 765/√3 / 400/√3 kV Single Phase Transformers at Indore substation

• 765 kV Bus Reactor and Shunt Reactors at the Gwalior, Bina, and Indore substations

Overview of the Operations of the Bank-funded Transmission Lines

42. Table 2.4 provides details in respect of capacity, actual maximum power flow that took

place over the link and availability of transmission lines over a specified period, covered under

the Bank funding. As noted, availability of all the Bank-funded lines has been above 99.5 percent.

However, this does not imply that the lines have to be loaded to the full capacity due to reasons

mentioned in the following paragraphs.

43. It is to be noted that planning of transmission systems is done based on envisaged

generation and peak load demand and system requirements to transfer the same is based on

CEA’s planning criteria (guided by factor of reliability/contingency margin) after considering the

margins available in the existing network, if any, to evolve an optimal system.

44. After commissioning of a transmission system, sometimes the load on the lines is less

during the initial phase due to delay in envisaged generation and/or the capacity of the state’s

transmission network to absorb power. However, the load increases with increase in power

transfer requirements and materialization of envisaged generation projects. It is also imperative to

47

mention here that according to technical norms, it is essential to maintain redundancy in the

system so that in case of grid indiscipline, grid security is not compromised.

45. Further, the transfer capability in any system is determined by the capacity of the weakest

link in the system during system contingencies, voltage profile, status of parallel transmission

network, and availability of envisaged generation. The gap between total transfer capacity and

loading of the system narrows down with sufficiency of planned generation and load demand and

is guided only by the factor of reliability/contingency margin as prescribed in the CEA’s planning

criteria.

Table 2.4: Maximum Power Flow and Availability of the Bank-funded Transmission Lines

Project Transmission Line Capacity

(MW)

Maximum

Power Flow

(MW)

% Availability

±500 kV, 2,500

MW Balia and

Bhiwadi HVDC

Bipole System

Balia-Bhiwadi 500 kV

HVDC bipole line 2,500 2,500 99.53 FY2013/14

NWTC

Strengthening

Scheme

765 kV S/C Agra-Gwalior

(Ckt-II) 2,100 983 99.99

Average -

Jan–Nov

2014

400 kV D/C Zerda-

Kankroli 1,200 466 99.99 FY2013/14

EWTC

Strengthening

Scheme

400 kV D/C Ranchi-

Rourkela Line 1,200 438 99.99 FY2013/14


Raigarh Line (Line-I)

1,200

261 98.52 –


Raigarh Line (Line-II) 610 89.52 –

400 kV D/C Raigarh-

Raipur Line (Line-I)

1,200

532 99.90

Average -

Apr–Aug

2014

400 kV D/C Raigarh-

Raipur Line (Line-II) 363 99.98

Average -

Apr–Aug

2014

WRSS II

Bina (POWERGRID) –

Gwalior (POWERGRID)

765 kV 2nd S/C line 2,100 874 99.32

Average -

Jan–Nov

2014

400 kV D/C Korba-Balco

Line 1,200 430 100.00

Average -

Apr–Aug

2014

400 kV D/C Balco-

Birsinghpur Line 1,200 390 100.00

Average -

Apr–Aug

2014

400 kV D/C Birsinghpur -

Damoh Line (Line-I) 1,200 525 99.77

Average -

Jan–Nov

2014

48

Project Transmission Line Capacity

(MW)

Maximum

Power Flow

(MW)

% Availability

400 kV D/C Birsinghpur -

Damoh Line (Line-II) 524 99.80

Average -

Jan–Nov

2014

400 kV D/C Damoh-

Bhopal Line (Line-I)

1,200

405 100.00

Average -

Jan–Nov

2014

400 kV D/C Damoh-

Bhopal Line (Line-II) 432 100.00

Average -

Jan–Nov

2014

400 kV D/C Wardha-Parli

Quad Line (Line-I)

1,600

883 99.86

Average -

Apr–Aug

2014

400 kV D/C Wardha-Parli

Quad Line (Line-II) – 99.85

Average -

Apr–Aug

2014


Parli Line (Line-I)

1,200

557 99.87

Average -

Apr–Aug

2014


Parli Line (Line-II) 530 99.98

Average -

Apr–Aug

2014

400 kV D/C Parli

(MSETCL)-Parli

(POWERGRID) line

(Line-I) 1,200

720 99.94

Average -

Apr–Aug

2014

400 kV D/C Parli

(MSETCL)-Parli

(POWERGRID) line

(Line-II)

– 99.96

Average -

Apr–Aug

2014

400 kV D/C Raipur-

Wardha Line (Line-I)

1,200

919 99.77

Average -

Apr–Aug

2014

400 kV D/C Raipur-

Wardha Line (Line-II) – 99.91

Average -

Apr–Aug

2014

ERSS I

400 kV D/C Durgapur-

Jamshedpur Line 1,200 308 99.50 –

400 kV D/C Jamshedpur-

Baripada Line 1,200 514 99.99 FY2013/14

400 kV D/C Baripada-

Mendhasal Line 1,200 223 99.98 –

OUTCOME

Growth in Power Exchanges between the Regions

46. The completion of interregional lines, namely, the 400 kV Rourkela-Raigarh-Raipur D/C

line, funded under PSDP IV, has contributed to an addition of about 1,400 MW to the

interregional power transmission capacity of the National Grid. Together with works on

49

associated bays (funded under PSDP IV) under NWTC strengthening, completion of the

interregional lines, namely, the Agra-Gwalior 765 kV S/C line and the Zerda-Kankroli 400 kV

D/C (lines funded under PSDP III), has resulted in an increase of interregional power transfer

capacity by about 2,100 MW. Completion of these schemes has contributed to an increase in

interregional power transfer capacity of the grid to 44,250 MW (as on September 30, 2014),

significantly up from 14,000 GW in FY2007. Further, the rest of the schemes have also

contributed significantly toward improved grid stability and security.

47. During FY2014, POWERGRID’s strong transmission network and modernized RLDCs

have facilitated about 78,384 MU of power exchange across regions. Power exchange between

the regions has increased by about 40,634 MU, which is more than double in comparison to the

baseline of 37,750 MU (FY2007).

48. Figure x shows the performance since the start of PSDP III (with baseline as FY2005). It

also reflects the baseline for PSDP IV and PSDP IV AF, that is, FY2007. The indicator

outperformed targets for all the years, as set in the PAD. During project appraisal, it was

envisaged that growth in power exchange between the regions will increase from 37,752 MU by

about 54 percent to reach 58,000 MU but the actual addition was about 108 percent and touched

78,384 MU. The targets for this indicator were never revised except for FY2014 for which it was

revised upward (PAD target: 58,000 MU; revised target: 68,000 MU) during the midterm review

of PSDP V, which was also the implementation support mission for PSDP IV and PSDP IV AF.

OUTPUT

49. The implementation of any transmission scheme has a direct impact on the addition to the

transmission capacity measured in ckm and in the transformation capacity measured in MVA of

the transmission utility. Once the lines are commissioned, they contribute to the company’s

transmission and transformation capacity. The same holds true for POWERGRID, the CTU in the

Indian power sector. Thus, these two measures were adopted as result indicators for the project.

This also ensured consistency across the various repeater projects with POWERGRID (PSDP III,

PSDP IV, and PSDP IV AF) as PDO and KPIs were kept the same.

50. Growth in transformation capacity (MVA). This indicator also outperformed all targets

set in the PAD. The chart below shows the performance since start of PSDP III (with baseline as

FY2005) and of PSDP IV and PSDP IV AF (with baseline of FY2007). The indicator

outperformed by almost 2.5 times the targets as set in the PAD for the project end year. During

project appraisal, it was envisaged that growth in transformation capacity will increase from

59,417 MVA by about 55 percent to reach 92,000 MVA, but the actual addition was about 247

percent and touched 205,923 MVA. The targets for this indicator were never revised except for

FY2014 for which it was revised upward (PAD target: 92,000 MVA; revised target: 185,000

MVA) during the midterm review of PSDP V, which was also the implementation support

mission for PSDP IV and PSDP IV AF.

50

Figure 2.1. Transformation Capacity

Source: POWERGRID

51. Growth in transmission capacity (ckm). Figure 2.2 shows the performance since start of

PSDP III (with baseline as FY2005) and of PSDP IV and PSDP IV AF (with baseline of FY2007).

This indicator also outperformed all targets set in the PAD except for FY2010 and FY2011 due to

factors that impacted progress and were outside POWERGRID’s control.

Figure 2.2. Growth in Power Exchange

Source: POWERGRID

52. In FY2010, the actual was lower than the target by almost 6 percent (PAD target: 80,000

ckm; actual: 75,291 ckm). Consequently, KPI targets for transmission capacity were revised

downward (compared to PAD targets) for FY2011 and FY2012 by 4.7 percent (from 84,000 ckm

to 80,000 ckm) and by 3.4 percent (from 88,000 ckm to 85,000 ckm), respectively during MTR in

April 2010 as the main reason for such underperformance was external factors: RoW issues and

delays in obtaining forest clearances, especially after the GoI’s notification regarding FRA in

August 2009 under which the project implementing authority (here, POWERGRID) had to take a

no objection certificate from every gram sabha (at the village level) for all proposals involving

diversion of forest land under the Forest (Conservation) Act. POWERGRID was able to

51

successfully achieve the revised targets for both the years. This FRA requirement was later

waived off for linear projects40

(including transmission projects) in February 2013.

Figure 2.3. Transmission Capacity (ckm)

Source: POWERGRID

53. However, it is noted that all the indicators already outperformed their original (as per the

PAD) targets in FY2013 after which the end-project targets (FY2014) were revised upward

during the implementation support mission in September 2013, which was also the midterm

review mission for PSDP V. POWERGRID outperformed all the revised targets except for a

marginal gap of 0.18 percent in transmission capacity for FY2014 (PAD target: 95,000 ckm;

revised target: 107,000 ckm; actual: 106,804 ckm). Overall, the indicator was expected to attain a

growth of about 60 percent over the project period (PSDP IV and PSDP IV AF) but added almost

80 percent of the targets set in PAD for the project end year.

54. The following table contains the details about the figures against various indicators

agreed during appraisal.

Table 2.5: Data on KPI

40 Transmission lines usually need narrow, long strips of land and hence, these are considered linear projects. Roads,

canals, and optical fiber lines are other examples of linear projects.

Outcome

Indicator Values

Baseline

FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14

Growth in

power

exchange

across regions

and state (MU)

Actual

37,750

42,932 46,027 52,000 56,747 58,999 65,860 78,384

Target 42,000 46,000 50,000 52,000 54,000 56,000 68,000**

Growth in

transmission

capacity (ckm)

Actual 59,400

66,809 71,440 75,291 82,355 92,950 100,200 106,804

Target 65,000 71,000 80,000 80,000* 85,000* 90,000* 107,000**

Transformation

capacity (MVA) Actual 59,400 73,122 79,522 83,402 93,050 124,525 164,763 205,923

52

Note: FY07 means April 2006–March 2007.

* Revised during the MTR mission in April 2010 in view of the FRA notification in August 2009 under which no-

objection was to be taken from every gram sabha (at the village level) for all the proposals involving diversion of forest

land under the Forest (Conservation) Act, which resulted in delay in obtaining forest clearance.

** As all the indicators have outperformed their original targets (as per the PAD), the targets were revised upward for

FY2014 after restructuring of the loans through amendments dated May 23, 2014, to Loan Agreements.

Grid Disturbance of July 2012

55. In July 2012, a nationwide grid failure occurred in India. The Northern Grid failed on

July 30, 2012, whereas the Northern, Eastern and Northern-Eastern grids failed on July 31, 2012.

The grid failures resulted in multiple outages for many hours and affected the load of about

48,000 MW.41

This prompted an enquiry committee constituted by the MoP, GoI to take several

measures to stabilize the system and thereby ensure grid discipline. In the report on grid

disturbance in August 2012, Enquiry Committee constituted by MoP concluded that the grid

failure was linked to a series of events like multiple forced outages leading to weak interregional

corridors, transmission line overloading due to overdrawing by some of the Northern Region

constituents, inadequate response by the SLDCs to the instructions of the RLDCs, and loss of the

400 kV Bina-Gwalior link. The report brought out the following underlying causes of the

aforesaid grid disturbances:

a. Skewed load generation balance across the regional grids

b. Grid indiscipline

c. Depleted reliability margins

d. Failure or inadequate response of defense mechanism/protection system

e. Insufficient visibility and situational awareness at load despatch centers

f. Inadequate appreciation of transfer capability compared to transmission capacity

g. Institutional issues

56. One of the major reasons for the grid failure was the weak interregional corridor between

WR and NR due to multiple outages including the 400 kV Bina-Gwalior-Agra line, which was

the only main AC circuit available between the two regions before grid disturbance. Even though

outage of the 400 kV Bina-Gwalior-Agra line was planned in advance, the works on the line

could not be completed within the stipulated time frame due to heavy rains. The 400 kV Bina-

Gwalior-Agra line was to be upgraded from 400 kV to 765 kV and included some construction

activities. Meanwhile, the first circuit of the Bina-Gwalior line tripped on July 29, 2012, and

available manpower and material from the other circuit (under planned outage) was diverted

urgently to this circuit to restore the line at the earliest. Since the resources (manpower and

material) were diverted to restore the other circuit, the works on the planned outage circuit could

not be finished in time. Under outage of the Bina-Gwalior line, low voltage at Gwalior is a

limiting constraint. Hence, availability of this line is a critical factor for determining transfer

capability for the WR-NR corridor.

57. These were the steps taken by POWERGRID for grid restoration during the July 2012

disturbances:

41 Report of the Enquiry Committee on Grid Disturbance, CEA, August 2012.

Target 68,000 75,000 82,000 85,000 88,000 90,000 185,000**

53

a. The first system disturbance took place at 0233 hours on July 30, 2012, which resulted in

power supply failure in the Northern Region and a small pocket of Madhya Pradesh in the

Western Region. The rest of the system was normal. Within the Northern Region, Badarpur

thermal power stations survived with a portion of Delhi’s load; however, this portion suffered

a blackout at 0648 hours. Supply was provided to all emergency loads such as railways,

metros, and airports by about 0800 hours. By 1000 hours, all thermal power stations were

provided startup supply. The Northern Regional system was restored by 1600 hours with the

normal scheduling process commencing from then.

b. The second system disturbance affecting the Northern, Eastern, and North-Eastern electricity

grids and a small pocket in Madhya Pradesh occurred at 1300 hours of July 31, 2012, leading

to loss of power supply in these areas. Nearly 55,000 MW of consumer load was affected in

the disturbance. The areas which survived included the Western Region, Narora atomic

power station on house load, and system comprising Sterlite/IB TPS, Bokaro Steel, TISCO,

and CESC Kolkata systems in the Eastern Region (ER). Immediate steps were initiated for

restoration of the areas affected in the incident. Start-up supply was extended from the

Western Region and the Southern Region, which were intact. Hydro units in the Northern

Region, Eastern Region, and North-Eastern Region were self-started. Supply was extended to

emergency loads such as railways, metros, mines, and airports by about 1530 hours. The

system was restored by 2400 hours on July 31, 2012, when the normal scheduling process

commenced.

58. Some of the key actions as proposed by the enquiry committee were:

a. third-party protection audits;

b. formulation of islanding schemes in different states;

c. review of the UI mechanism; and

d. further tightening of frequency band.42

59. Table 2.6 provides details about the key recommendations to the CTU and POSOCO and

the implementation status as on October 10, 2014:43

Table 2.6: Status of Recommendations of Enquiry Committee as on October 10, 2014 Sl.

No.

Recommendations Implementing

Agencies

Status

1. There is a need to review protection

schemes. This committee concurs with

the recommendation of previous

enquiry committees that a thorough

RPCs, CTU,

STUs Activity in Progress

Third-party protection audit in all the

states of the country was completed by

April 2013. Corrective action

42 “…the frequency band of the Northern Grid has been tightened to 49.7 Hz7Hz to 50.5 Hz5Hz. This will make

dependence on the Grid for meeting peak load an expensive proposition. Central Electricity Regulatory Commission

(CERC) has done this mainly to increase grid security and encourage distribution companies (discoms) to look at other

options for arranging power supply. There have been several instances of grid indiscipline in the past with states

continuing to overdraw despite low frequency. With the new regulations in force, city discoms are exploring all options

to ensure they are able to meet the peak summer demand. Power sector officials said the only way discoms can provide

smooth power supply is by contracting assured agreements in the organized market.””. (Source: The Times of India,

2012, 04-03). 43 Status of action taken on implementation of recommendations of the Grid Disturbance Enquiry Committee, CEA,

October 2014.

54

Sl.

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Status

third-party protection audit needs to be

carried out in a time-bound manner.

This exercise should be repeated

periodically and monitored by the

Regional Power Committees (RPC).

according to the observations of the

audit has been initiated and is likely to

be completed by March 2015.

2. The application of synchrophasor

measurements from Phasor

Measurement Units (PMU) should be

explored for protection systems. There

is also an urgent need to deploy Special

Protection System (SPS) in critical

transmission elements. Also, there is a

need to make already approved SPS

operational.

RPCs, CTU Partly Completed

As per international practice, the use

of PMUs for protection system is still

being tested. However, the status of

deployment of PMU and SPS in the

various regions is given below.

PMU

Functional: NR - 14; SR -13; WR

- 10; and NER - 8

Under implementation: ER - 12;

WR - 7

SPS

Implemented: NR - 9; SR - 4; ER

- 3; and WR - 8

Under implementation: NER - 1

3. Frequency band needs to be further

tightened and brought close to 50 Hz.

POSOCO may file an urgency

application in the Supreme Court for

early resolution of the issue in view of

the recent grid disturbances. NLDC has

separately filed a petition for further

tightening of frequency from 49.9 to

50.1 Hz.

POSOCO Completed

Frequency band has been further

tightened to 49.90 to 50.05 Hz with

effect from 02/17/2014 by CERC.

4. A review of the UI mechanism should

be carried out in view of its impact on

recent grid disturbances.

Frequency control through UI may be

phased out in a time-bound manner and

generation reserves/ancillary services

may be used for frequency control.

Appropriate regulatory mechanism

needs to be put in place for this

purpose. POSOCO should take up the

matter with CERC.

POSOCO Completed

Subsequent to review of the UI

mechanism, CERC (Deviation

Settlement Mechanism and related

matters) regulations have been

implemented with effect from

02/17/2014.

Activity in Progress

Regarding the generation

reserves/ancillary services, the petition

for introducing these services in the

country was filed by NLDC with

CERC on 11/29/2010. CERC

circulated the staff paper on the matter

in April 2013 to invite comments from

stakeholders up to May 15, 2013. The

matter is under the consideration of

CERC.

5. POSOCO should take up with CERC

the issue of inconsistency between

congestion regulation and the detailed

procedure framed thereunder so that

congestion due to forced outages and

POSOCO Completed

CERC, vide order dated April 22,

2013, approved the revised procedure

submitted by POSOCO for relieving

the congestion in real time. This has

55

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Agencies

Status

UI can be handled effectively. been implemented by NLDC/RLDCs.

6. NLDC and each RLDC should have

one real-time security desk in all the

shifts to be manned by an engineer

capable of carrying out total transfer

capability (TTC) calculations. To

facilitate this, manpower at NLDC and

RLDCs needs to be enhanced, with

regulatory support to take care of

financial aspects. Till this arrangement

can be firmed up, various scenarios of

outages could be built, which then can

be used by the despatcher in real time.

Faster algorithm for calculation of TTC

may be adopted by the load.

POSOCO Completed

Real-time security desk has been

installed in NLDC. In case of planned

outages, simulation studies are being

conducted by RLDCs/NLDC for

revision of TTC and results are being

shared by operators. Updated PSS/E

version 33.2 is installed in control

rooms for carrying out simulation

studies.

7. Installation of adequate static and

dynamic reactive power compensators

should be planned to avoid frequent

outages/opening of lines under over-

voltages and provide voltage support

under steady-state and dynamic

conditions.

CEA, CTU,

STUs Ongoing Continuous Activity

Installation of fixed reactors as

planned by CEA and CTU and

approved by the Standing Committee

on Transmission Planning of the

concerned Region and in the RPCs is

already being done. Further study on

dynamic reactive compensation is in

progress by CTU and POSOCO in

consultation with CEA.

8. The regulatory provisions regarding

absorption of reactive power by

generating units needs to be

implemented.

POSOCO Ongoing Continuous Activity

As per system requirement the

generators are being advised to absorb

reactive power to control voltage. All

RLDCs have issued communication to

the Generators in this regard. The

matter is also being discussed

regularly in the Operation Co-

ordination Sub-committee meetings of

RPCs.

9. Functioning of existing PMUs and

availability of their output to RLDCs

and accuracy of time synchronization

should be monitored on daily basis and,

if required, corrective actions should be

taken on priority basis.

CTU,

POSOCO Completed

POWERGRID has time synchronized

all the existing PMUs that have been

installed under pilot project in

identified substations in the country

and made them fully functional. The

real time output displays of the PMUs

are now being accordingly made

available to the respective system

operators in the concerned RLDC. The

PMU data from various locations is

also available at the NLDC Control

Room.

10. The synchrophasor based Wide Area

Measurement Technology (WAMS)

employing PMUs offer wide

applications for real time monitoring

and control of the system, especially

under the dynamic conditions.

CTU Activity in Progress

Unified Real Time Dynamic State

Measurement (URTDSM) system

with large scale deployment of PMUs

has been approved by CERC vide its

Order dated 06-09-2013.

56

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Status

Adequate number of PMUs should be

installed to improve the visibility and

real time monitoring of the system.

Further the applications related to the

synchrophasor based wide area

monitoring, protection and control

should be embedded in the system.

POWERGRID has been directed to

implement the scheme in consultation

with CEA and POSOCO. Broadly the

scope under the scheme involves

installation of PMUs at 400 kV and

above substations, HVDC substations

and 220 kV and above Power Plants.

The said scheme is to be implemented

in two phases. ERPC has agreed to

implement URTDSM.

11. Efforts should be made to design

islanding scheme based on frequency

sensing relays so that in case of

imminent grid failure, electrical islands

can be formed. These electrical islands

can not only help in maintaining supply

to essential services but would also

help in faster restoration of the grid.

CEA, RPCs,

POWERGRID

,

STUs, SLDCs

and

Generators

Partly Completed/Activity in

Progress

12. The communication network should be

strengthened by putting in place a fiber

optic communication system. Further,

the communication network should be

maintained properly to ensure

reliability of data at Load Despatch

Centers.

CTU and

STUs Activity in Progress

The fiber optic link for effective

communication is being worked out

by POWERGRID with STUs through

different RPCs and its implementation

is being done in a progressive manner.

The work of laying fiber optic cables

in all the regions is being awarded

progressively from December 2012

and is likely to be completed by 2014.

13. RTUs and communication equipment

should have uninterrupted power

supply with proper battery backup so

that in case of total power failure,

supervisory control and data acquisition

channels do not fail.

CTU and

STUs Partly Completed/Activity in

Progress

Batteries at all locations have been

replaced except 6 locations in NR

where it is to be done by Delhi

Transmission Company Limited,

which will also be replaced by 2014.

14. For existing generating stations or

transmission elements without

telemetry facility, the same should be

put in place at the earliest. If prolonged

operation without telemetry continues,

POSOCO should approach CERC.

RPCs,

POSOCO Activity in Progress

The status of availability of Telemetry

from various stations is being

monitored closely by the

RLDCs/NLDC. In case of non-

availability of data from any location,

the matter is being taken up with the

concerned agency.

15. There is a need to reinforce system

study groups in power sector

organizations to analyze the system

behavior under different network

statuses/tripping of lines/outage of

generators. Where these system study

groups do not exist, they should be

created.

CEA, CTU,

and STU Completed

The CTU has procured system study

software for distributing to various

utilities. Training on system studies

has been completed in all regions by

the CTU.

16. For smooth operation of grid systems, CTU, STUs Activity in Progress

57

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it is absolutely important that all the

power generating and distributing

stations are connected on a very

reliable telecom network.

(i) A proper network may be built up

preferably using Multi Protocol Label

Switching (MPLS), which is simple,

cost effective, and reliable. In remote

places where connectivity is a problem,

the stations can use dedicated fiber

cables from the nearest node.

(ii) Since POWERGRID has its own

fiber optic cables covering all major

nodes and power stations, a proper

communication/IT network may be

built using dedicated cables to avoid

any cyber-attack on the power system.

The CTU already has a dedicated

independent communication network

in place. Further, it is in the process of

developing a Grid Security Expert

System (GSES), which involves

laying of optical fiber network for

reliable communication as well as

control of under-frequency and df/dt

relay based load shedding. System

will include substations of 132 kV

level and above.

60. It is to be noted that grid disturbances, mainly triggered by faults at critical system

locations, occur from time to time in all large transmission systems across the world. Since no

system design is capable of removing all constraints (to attempt this would in any event be

prohibitively costly), in power system operation, a specific emphasis needs to be put on robust

planning, efficiency, and speed of service restoration, all of which POWERGRID is practicing in

a collaborative manner with key stakeholders. Using POWERGRID’s robust transmission system,

POSOCO was able to wheel hydropower from Bhutan to restore supply to emergency loads such

as hospitals, railways, and other critical functions within 5.5 hours on July 30 and within 2.5

hours on July 31. It was able to restore the entire system within 13.5 hours on July 30, 2012, and

8.5 hours on July 31, 2012. These restoration times compare extremely favorably with restoration

times in major power system disruptions in other countries. In addition, POSOCO, in consultation

with the CEA, made several adjustments to operational power flow limits on interregional power

transmission links and is in the process of buying specific monitoring and protection equipment to

avert the reoccurrence of any such incident as explained in detail in the above table.

Performance Indicator Pertaining to Environment

61. In addition to the above KPIs, ‘cumulative forest area impacted/cumulative line length in

ckm’ was selected as a performance indicator with reference to environment. Subsequently,

during the ICR Mission of PSDP III in October 2011, it was decided to use ‘cumulative

transmission capacity (MW) per meter width of right of way within the forest area’ as a

performance indicator on environment (for consistency with the performance indicator being

followed under the ongoing PSDP V loan). Accordingly, the indicator has been calculated for the

PSDP IV and PSDP IV AF loans considering 2004–05 as the base year (as mentioned in the PAD

of PSDP III).

Table 2.7: Performance Indicator on Environment

Sl.

No. Year KPI (MW/m/No. of TL) in Forest Area

1 2004–05 (Base) 17.39

58

Sl.

No. Year KPI (MW/m/No. of TL) in Forest Area

2 2005–06 17.64

3 2006–07 19.62

4 2007–08 19.92

5 2008–09 19.78*

6 2009–10 20.05

7 2010–11 20.16

8 2011–12 20.51

9 2012–13 21.01

10 2013–14 22.15 Note: * There is a dip during 2008–09 as more low-capacity lines (220 kV and 400 kV) were implemented,

which has dragged the bar down.

62. In addition to the KPIs as elaborated above, POWERGRID was monitored on indicators

additional to these KPIs and covenanted targets. These additional indicators were also agreed

upon with the Bank to objectively measure improvements in power sector performance as well as

POWERGRID's corporate performance. Given the satisfactory performance of POWERGRID in

achieving and reporting such indicators, it was decided that these would be discontinued during

the MTR of PSDP IV and its AF. Later, during the MTR of PSDP V in September 2013, the

monitoring of these additional indicators was reinstated to allay concerns linked to the slower

disbursement of PSDP V, reversing the decision taken at the MTR of PSDP IV and PSDP IV AF.

63. As indicated in table 2.8, the corporate level indicators depict a strong performance of

POWERGRID across several metrics. The availability of POWERGRID’s transmission network

has also improved from 99.2 percent in FY2007 to 99.9 percent in FY2014. Strengthened

transmission network is also reflected through decrease in the number of trippings per line due to

factors attributable to POWERGRID over the loan period.

64. Further, the sectoral indicators reflect that private sector participation has increased by

more than 4.5 times in terms of ckm of line constructed. Power traded as a percentage of total

power generated in the country has shown an upward trend from 3.6 percent in FY2007 to 11

percent in FY2014. This implies an improved utilization of existing capacities as the power trade

ensures that surplus regions/states can easily transfer generated power to deficit regions/states

when needed. After July 2012 grid failure, CERC has tightened the grid frequency band44

to put a

check on overdrawing by various constituents and hence, ensuring grid security and encouraging

distribution utilities to procure power through contracts in organized markets. Further, the

southern region was also connected synchronously with rest of the National Grid in December

2013. Given these factors, the grid frequency has shown a downward trend but all measures are

being adopted to bring back frequency within the prescribed band. POWERGRID along with

POSOCO are now handling one of the largest transmission networks at a single frequency in the

world.

65. The following table presents the additional indicators that were monitored at corporate

and sectoral level:

44 IEGC Range: Till September 16, 2012: 49.5 Hz to 50.2 Hz and from September 17, 2012 onwards: 49.7 Hz to 50.2

Hz

59

Table 2.8: Selected Technical/Operational Performance Indicators

Additional Indicators FY2007 FY2014

Indicators for Entity Performance

Cumulative transmission capacity (ckm) 59,461 106,804

Cumulative transformation capacity (MVA) 59,417 205,923

Interregional transmission capacity (MW) 14,100 37,950

Availability of transmission system (%) 99.20 99.92

Trippings per line attributable to POWERGRID 3.64 0.56

Interregional power exchange

Northern Region (MW) 18,740 42,774

Western Region (MW) 14,193 40,331

Southern Region (MW) 11,338 36,048

Eastern Region & North Eastern Region (MW) 10,577 17,646

Total power exchange between regions (BU) 38 78

O&M cost per ckm (INR/ckm) 91,653 104,025

Indicators for Sector Performance

Private sector participation in central transmission sector

(Cumulative ckm of lines in private sector) 2,332 13,385

Efficient utilization of generation capacity

(Peak demand met as a percentage of installed capacity at

national level)

67.71% 53%

Transmission grid stability and grid discipline

(Percentage of time frequency is within the IEGC band) #

Northern Region 78.83% 86.2% (till Jan

2014)

89.3% (from Jan–

mid-Feb 2014, after

SR sync)

43.3% (in Feb

2014)

53.8% (in Mar

2014)

Western Region

89.52%

Eastern Region

North Eastern Region

Southern Region

93.96%

87.9% (till Jan

2014)

89.3% (from Jan–

Feb 2014, after SR

sync)

43.3% (in Feb

2014)

53.8% (in Mar

2014)

Development of power markets including intraregional trading45

(Power traded as a percentage of total power generated in the

country)

3.6% 11%

Note: # Indian Electricity Grid Code (IEGC) Range: Till September 16, 2012: 49.5 Hz to 50.2 Hz and from September

17, 2012 onwards: 49.7 Hz to 50.2 Hz. Further, the SR grid was synchronized with rest of the grid on December 31,

45 Source: Report on short-term Power Market in India, 2013-14, CERC.

60

2013. Further, stipulated frequency range according to Amended IEGC is 49.9 to 50.05 Hz. with effect from 02/17/2014.

Other Key Developments at Entity Level 66. Some other key developments that took place at the entity level during the

implementation of the project are listed:

a. POWERGRID was conferred the ‘Navratna’ status by the GoI in May 2008, implying a

greater commercial and financial autonomy for the company.

b. POWERGRID entered the capital market with an IPO during FY2008 with 10 percent of

fresh issue of existing paid-up capital along with the divestment of 5 percent of GoI’s

shareholding. In the post issue scenario, GoI’s holding stood at 86.36 percent with the

balance held by the public.

c. In FY2011, POWERGRID floated an FPO comprising fresh issue of 10 percent paid-up

capital along with divestment of 10 percent of GoI’s shareholding. The FPO received an

overwhelming response and was oversubscribed by 14.84 times, reflecting the sound

corporate governance policies of the company. In the post issue scenario, GoI’s holding

stands at 69.42 percent, with the balance being held by the public.

d. In December 2013, POWERGRID again issued its second FPO constituting 17 percent of

existing paid-up capital and was oversubscribed 6.7 times. The shares are listed on the

National Stock Exchange and Bombay Stock Exchange.

e. In February 2009, POWERGRID established and commissioned the NLDC as the apex

structure for national grid management and operation. According to POWERGRID, this four-

tier system is a complex and globally unique mode of grid operation. It minimizes grid

disturbances and facilitates quick restoration in case of failure. Further, NLDC & RLDCs,

now being managed by POSOCO, are upgraded and modernized continuously to establish an

effective grid management infrastructure in the country.

f. POSOCO was constituted as a fully owned subsidiary of POWERGRID in March 2009. This

step represented the beginning of the separation of the role of the system operator from that

of the CTU, as the owner of transmission assets.

g. POWERGRID’s ESPP were adopted by the World Bank as a pilot under UCS (OP 4.00).

This was formally adopted under PSDP V.

h. POWERGRID developed a CSR policy enabling it to contribute to the society at large with

emphasis on socioeconomic and integral development of areas/communities primarily in and

around its areas of operations. They have carried out various community development

activities such as skill development and capacity building, livelihood generation, health care,

education, plantation, sanitation, drinking water, besides infrastructure developments like

classrooms, roads, and community center.

i. POWERGRID is the first among the Bank’s clients in India to have prepared a Sustainability

Report in 2009, covering its environmental and social performance. The second such report

was published in March 2013, providing all stakeholders a clear picture of POWERGRID’s

contributions to sustainable development through its activities.

j. During FY2013, POWERGRID also obtained its international credit ratings for the first time

and were initially rated by S&P Rating Services and Fitch Ratings at ‘BBB - (outlook

negative)’ consistent with India’s sovereign rating. Fitch Ratings was later upgraded to ‘BBB

- (outlook stable)’ and stands true for FY2014.

k. In July 2012, POWERGRID also signed loan agreements with International Finance

Corporation (IFC) and Infrastructure Crisis Facility Debt Pool Limited Liability Partnership

(ICF Debt Pool LLP) for a total amount of US$270 million.

l. In January 2013, the company made its maiden foray into foreign currency markets and

raised US$500 million through issuance of 10-year foreign currency notes at an attractive

61

coupon rate of 3.875 percent per year and was over-subscribed nearly 19 times. The bonds

are listed in Singapore stock exchange.

m. On December 31, 2013, POWERGRID achieved a milestone by interconnecting the Southern

Grid synchronously with the rest of the National Grid through commissioning of the 765 kV

Raichur (Karnataka)-Solapur (Maharashtra) S/C line. With this, ‘One Nation-One Grid-One

Frequency’ has become a reality. This has facilitated not only in augmentation of

transmission capacity by 2,100 MW.

n. Experienced with construction of 765 kV Extra-High-Voltage AC (EHVAC) and ±500 kV

HVDC transmission system, POWERGRID has been working on next higher transmission

voltages of ±800 kV HVDC and 1,200 kV Ultra-High-Voltage AC (UHVAC) system to

achieve efficient utilization of RoW and increased power transfer capability for transfer of

bulk power over long distances. In this direction, ±800 kV, 6,000 MW HVDC lines, one from

Biswanath Chariyali (Assam) to Agra (Uttar Pradesh) of about 1,750 km length and another

from Champa (Chhattisgarh) to Kurukshetra (Haryana) of about 1,400 km length (latter

funded under PSDP V) are under construction. Further, POWERGRID has successfully

established 1,200 kV Test Station at Bina including test-charge of 1,200 kV single and D/C

transmission lines as a pilot project. Construction of 1,200 kV upgradable transmission line

from Wardha to Aurangabad (approximately 350 km length, to be initially charged at 400 kV

level) is also underway and shall be charged after field trials.

o. POWERGRID is also playing a catalyst role in formation of the SAARC grid for effective

utilization of resources for mutual benefits. Transmission links with Bhutan and Nepal

already exist and are being further strengthened. Interconnection between India and

Bangladesh through 500 MW HVDC back-to-back terminals along with Bheramara

(Bangladesh)-Baharampur (India) 400 kV D/C line was commissioned in September 2013,

enabling power flow of the order of 500 MW from India to Bangladesh.

p. Recognizing the importance of integrating renewable energy resources with the grid,

POWERGRID took the lead and developed a comprehensive master plan for grid integration

of renewable generation capacity addition of about 33 GW envisaged during the 12th Five

Year Plan through Green Energy Corridors across India. The company has also evolved an

integrated plan (under review) for desert power development (Desert Power India – 2050),

for harnessing the huge renewable energy potential of about 300 GW, primarily solar and

wind at desert/cold desert waste land in Kutch, Thar, Lahaul and Spiti, and Ladakh areas by

2050. The plan includes establishment and grid integration of renewables through hybrid

transmission corridors utilizing HVDC (including voltage-source converter [VSC] based) as

well as 1,200 kV UHV AC/ High temperature superconductor technologies.

q. POWERGRID has developed a Smart Grid pilot project in the country through open

collaboration at Puducherry. The company has been appointed as advisor-cum-consultant for

implementation of the Smart Grid project by eight utilities during FY2013/14. In addition,

POWERGRID has been indigenously developing smart products like smart meter, data

concentrator unit, home energy management system, micro grid controller, smart cap

utilizing solar energy, and active filter for varied applications.

r. The company continues to excel over its competitors under TBCB. As on October 31, 2014,

the company has secured 5 transmission projects, which is more than 30 percent of the

projects floated under TBCB since January 2011 when the regime was changed from cost-

plus basis to TBCB.

s. POWERGRID diversified into the telecom business under the brand name ‘POWERTEL’ to

expand its revenue stream by installing overhead optic fiber network using OPGW,

leveraging its existing countrywide transmission infrastructure. The company has an all-India

broadband telecom network of about 29,640 km, providing connectivity to all metros, major

cities, towns, and state capitals, including remote areas of the North-Eastern Region and

62

covering about 317 Points of Presence (PoP) across the country from where services are

being rendered.

t. POWERGRID was one of the implementing partners of the NKN, a scheme devised by the

GoI to provide a unified high-speed network backbone for educational institutions in India

such as the Indian Institutes of Technology (IITs) and the Indian Institute of Science (IISc),

and the scheme is operational.

u. POWERGRID is also a member of the Advisory Body and Core Committee of the National

Optical Fiber Network (NOFN) project, envisaged by the GoI for providing connectivity to

all the 250,000 GPs in the country through utilizing existing optical fiber facilities of Bharat

Sanchar Nigam Limited (BSNL), POWERGRID, and RailTel Corporation of India Limited to

connect the GPs.

v. During past decade, POWERGRID has spread its global footprint in more than 18 countries

and is emerging as a strong player in the transmission sector in South Asia, the Middle-east,

and Africa. The company has also joined hands with other leading power sector companies to

offer integrated solutions for generation, transmission, and distribution to international power

utilities.

Table 2.9: Major Ongoing Offshore Assignments

EPC Consultant: CASA 1000 Project Capacity-building program for SAARC and

Central Asian and African countries

Management Contract - Ethiopia Design and engineering consultancy and Project

Management in Nepal, Afghanistan, and Bhutan

Feasibility Studies, Engineering &

Project Management - Kenya

O&M of transmission lines- Bhutan

Engineering, Design Services& Project Management of 2nd Block of HVDC Station-

Bangladesh

w. POWERGRID have featured in the Platts list of Top 250 Energy Companies of the World

since 2009, a study conducted by Platts, a division of the McGraw-Hill Companies. The

company was mentioned as being number 18 on the list of fastest growing Asian energy

companies, according to the Platts Top 250 Energy Company Rankings for 2010. In the list of

fastest growing energy companies by Platts in 2014, POWERGRID ranked as the fastest

growing electric utility in the world, on the basis of last three years compounded growth rate

for revenues. The company is featured in the Forbes Global 2000 list.

x. The company was also awarded the ‘Scope Award for Excellence and Outstanding

Contribution to the Public Sector Management (2008–09) in the Large Scale Public sector

Enterprise (PSE) Category’ by the Standing Conference of Public Enterprises and the

Department of Public Enterprises (DPE) and the ‘Environmental Excellence & Sustainable

Development Award-2011’ by the Indian Chamber of Commerce.

y. As per Public Enterprises (PE) Survey 2013 (by Department of Public Enterprises (DPE),

GoI), POWERGRID is the fifth largest Central Public Sector Enterprises (CPSE) in terms of

Gross Block

63

Annex 3. Economic and Financial Analysis

1. As in the appraisal methodology (see PAD annex 9), investment schemes for PSDP IV

are also considered as stand-alone projects with their own technical parameters, financing, and

implementation arrangements. The ex post economic and financial justification consisted of the

determination the ERR and RoE. Since PSDP IV AF funded part of the schemes already funded

under PSDP IV, no separate analysis was run at its appraisal. For schemes included through

restructuring, especially SRSS 13, such analysis was carried out during review and approval of

the PIP. For the scheme shifted from PSDP V (System Strengthening in Western Region for

Sasan UMPP), the analysis was run at its appraisal.

2. ERR and RoE for the investment schemes at completion. These were calculated using

actual costs and revenues based on applicable tariffs. The sections below provide details on all the

schemes (original and additional schemes) funded under PSDP IV and PSDP IV AF but it is

important to take note of the following:

a. There was a change in the regulatory regime since appraisal of the project. The CERC

has announced new tariff regulations applicable from 2014 to 2019.

b. Since the SRSS 13 scheme is still under implementation, its ERR and RoE at completion

could not be calculated and hence are not included below.

c. The actual project cost for the economic and financial analysis covers the funds spent

under PSDP III, PSDP IV, and PSDP IV AF for the schemes which were partly funded

under more than one project.

Economic Analysis

3. As mentioned above, during appraisal, the economic analysis of only five core schemes

(Balia-Bhiwadi, EWTC, WRSS II, ERSS I, and NWTC) was carried out. The economic analysis

below also presents the analysis for one additional scheme (System Strengthening in Western

Region for Sasan UMPP).

4. The same methodology as used during the appraisal was adopted to carry out the

economic analysis at completion as well. During the project implementation period, the tariff

norms as issued by the CERC were revised in 2014 effective over a period of five years (2014–

19). Any scheme of a centrally owned utility that is to be commissioned during this period has to

apply CERC tariff norms. Revenue from tariff as calculated under CERC tariff norms 2014 (at

completion) are almost at par with CERC tariff norms 2009 (at appraisal).

5. Since all schemes under the project are system strengthening schemes, benefits from

them have been calculated as the value of the reduction in system losses. Based on load flow

studies, at appraisal, POWERGRID had estimated the total reduction in transmission losses that

would accrue from all the five schemes to be about 1,138 MW under peak load conditions. To

obtain the average loss reduction, a loss load factor46

of 0.53 is applied to the loss reduction under

peak load conditions. Since the load flow studies for each line are carried out during transmission

planning, the MW of power saved by implementing these lines was assumed at the same level as

46 Loss load factor is defined as the ratio of actual losses over a period to the losses obtained under peak loading

conditions for the entire period. It is used to convert peak energy losses into average energy losses. It is calculated

using the following empirical formula: Loss Load Factor = 0.2 x Load Factor + 0.8 x (Load Factor)2.

64

at the time of appraisal or at the time of PIP approval. For valuing these (physical) benefits, an

economic price/value of electricity has been derived based on the opportunity cost of the energy

saved, for which average cost of alternate supply (here, from thermal generation plants) in

respective regions of the scheme was considered. At the time of appraisal this cost was found to

be INR 3.62/kWh whereas at ICR, the average cost of generation projects is between INR 3.3 per

unit to INR 3.7 per unit.

6. ERR calculations were based on certain assumptions (discussed later) and their values

were compared with the opportunity cost of the capital of 12 percent for projects to be financed in

India. The ERR, after completion of the schemes, was calculated using the same methodology

that was adopted during the appraisal. The scheme-wise ERR at the time of appraisal is compared

with that at completion; two cases: (a) base case and (b) extreme case where cost escalation by 20

percent, delay in project commissioning by two years, RoE is lower by 1 percent, and foreign

exchange rate is lower by 10 percent.

Table 3.1: Economic Analysis of Schemes Name of the

Scheme

ERR as in

PAD/PIP

(Base Case)

ERR as in PAD/PIP

(Cost Escalation by

20%, Delay of 2

Years)

ERR at

ICR

Remarks

Bali-Bhiwadi 14.83% 10.46% 15.05% Outperformed

NWTC 21.98% 15.52% 23.54% Outperformed

EWTC 17.83% 12.77% 19.39% Outperformed

WRSS II 22.44% 17.57% 15.51% ERR is low as the project was

delayed by almost 2.5 years.

ERSS I 15.82% 11.69% 10.86% ERR is low as the project was

delayed by more than 3.5 years,

adversely impacting the revenue

stream (the scheme was

commissioned in March 2014 when

the loan repayment of the project

also started).

System

strengthening

in WR for

Sasan UMPP

21.1% 14.6% 12.96% ERR is low as the scheme was

delayed by 22 months due to land

acquisition and as qualification

requirements for repairs and

maintenance (R&M) facility for 765

kV transformer and reactor took

some time to be finalized.

7. As can be observed from the table, three of the six schemes outperformed the base case

scenario. Also, the ERR for all schemes is higher than the opportunity cost of capital (12 percent),

except for ERSS I that got delayed by more than 3.5 years due to severe RoW issues.

8. The Balia-Bhiwadi HVDC bipole transmission system has facilitated the transfer of bulk

power across the regions. Even though the commissioning of the entire scheme (HVDC line, Pole

I, and Pole II) was deferred due to a delay in the manufacturing of converter transformers by the

contractor at the Bhiwadi terminal, commissioning of the HVDC line along with the poles has

facilitated exchange of bulk power between the Northern and Eastern Regions. Most generation

projects were/are planned in the Eastern Region whereas the load centers are located in the

Western Region. Bridging the demand-supply gap through this line has resulted in an ERR of

65

15.05 percent compared to 14.83 percent estimated during appraisal for this scheme. The

calculations included the elements funded under PSDP III also.

9. Regarding the NWTC, the ERR of 23.54 percent is higher than the 21.98 percent

estimated under the base case during appraisal. The two interregional lines under this scheme,

funded under PSDP III, have enhanced the interregional power transfer capacity of the National

Grid by almost 2,100 MW. These lines along with the extension of the substations have also

brought stability and reliability to the Indian power system. The importance of this scheme is thus

reflected in a very robust ERR. The calculations included the elements funded under PSDP III

also.

10. The ERR for the EWTC scheme at appraisal was 17.83 percent at appraisal compared to

19.39 percent at completion, hence outperforming the former estimates. The scheme has

strengthened the existing Rourkela-Raipur interregional transmission corridor, facilitating more

reliable and secure power transfer from the Eastern to Western Region. The interregional link

along with installation of FSC has augmented the interregional transmission capacity of the

National Grid by 1,400 MW.

11. The WRSS II scheme is a cluster of four sets of transmission lines of which two sets were

to be implemented by POWERGRID and the other two sets by 100 percent private players. All

substations under all sets were to be implemented by POWERGRID. The ERR at completion

(15.51 percent) is lower than at appraisal because the scheme was delayed by almost 2.5 years

due to delays in forest clearance. This line is also being charged at 400 kV, later to be upgraded to

765 kV.

12. The ERSS I scheme had an ERR of 15.82 percent at appraisal but could only touch 10.86

percent at completion. This is lower than the hurdle rate of 12 percent. The reason was delay in

completion of project by more than 3.5 years. This was due to delays in obtaining forest clearance

for various lines under the project from April 2009–April 2011 (varied from 22 to 42 months).

The longest was taken by the Baripada-Mendhasal line, for which the proposal for forest

clearance was submitted on February 28, 2008. However, the final clearance was received almost

after 3.5 years (on August 25, 2011).

13. System Strengthening for Western Region for Sasan UMPP had an ERR of 21.1 percent

at appraisal but has only 12.96 percent ERR at completion due to delay in implementation of the

scheme by 22 months. The reasons for this delay were (a) delays in land acquisition at the Indore

substation and (b) the Shunt Reactor Package, which could be awarded in February 2012 after 23

months from initiation of procurement process (Notice to Invite Tender [NIT] issued in March

2010) as it took time for formulation of suitable qualification requirements in the contracts for

setting up R&M facilities for 765 kV transformers and reactors by the vendors, especially foreign

bidders.

14. The above schemes enabled higher exchange of power from surplus to deficit regions and

strengthened the transmission network making it reliable

15. Detailed calculations for the various schemes are presented in Table 3.2:

66

Table 3.2: Detailed Economic Analysis of the Schemes

Balia-Bhiwadi HVDC Bipole System

(Rs. Million)

INFLOW

0 2007 - 671.62 - - 671.62 (671.62)

1 2008 - 3388.37 - - 3,388.37 (3,388.37)

2 2009 - 7928.74 - - 7,928.74 (7,928.74)

3 2010 - 7654.07 - - 7,654.07 (7,654.07)

4 2011 - 570.43 - - 570.43 (570.43)

5 2012 - 1765.79 - - 1,765.79 (1,765.79)

6 2013 4,190.12 1036.21 43.90 180.15 1,260.26 2,929.86

7 2014 5,586.82 8.96 61.86 240.20 311.02 5,275.81

8 2015 5,586.82 201.57 240.20 441.77 5,145.06

9 2016 5,586.82 216.13 240.20 456.33 5,130.50

10 2017 5,586.82 231.61 240.20 471.81 5,115.02

11 2018 5,586.82 248.35 240.20 488.55 5,098.28

12 2019 5,586.82 266.49 240.20 506.68 5,080.14

13 2020 5,586.82 266.49 240.20 506.68 5,080.14

14 2021 5,586.82 266.49 240.20 506.68 5,080.14

15 2022 5,586.82 266.49 240.20 506.68 5,080.14

16 2023 5,586.82 266.49 240.20 506.68 5,080.14

17 2024 5,586.82 266.49 240.20 506.68 5,080.14

18 2025 5,586.82 266.49 240.20 506.68 5,080.14

19 2026 5,586.82 266.49 240.20 506.68 5,080.14

20 2027 5,586.82 266.49 240.20 506.68 5,080.14

21 2028 5,586.82 266.49 240.20 506.68 5,080.14

22 2029 5,586.82 266.49 240.20 506.68 5,080.14

23 2030 5,586.82 266.49 240.20 506.68 5,080.14

24 2031 5,586.82 266.49 240.20 506.68 5,080.14

25 2032 5,586.82 266.49 240.20 506.68 5,080.14

26 2033 5,586.82 266.49 240.20 506.68 5,080.14

27 2034 5,586.82 266.49 240.20 506.68 5,080.14

28 2035 5,586.82 266.49 240.20 506.68 5,080.14

29 2036 5,586.82 266.49 240.20 506.68 5,080.14

30 2037 5,586.82 266.49 240.20 506.68 5,080.14

31 2038 5,586.82 266.49 240.20 506.68 5,080.14

32 2039 5,586.82 266.49 240.20 506.68 5,080.14

33 2040 5,586.82 266.49 240.20 506.68 5,080.14

34 2041 5,586.82 266.49 240.20 506.68 5,080.14

35 2042 5,586.82 266.49 240.20 506.68 5,080.14

36 2043 5,586.82 266.49 240.20 506.68 5,080.14

37 2044 5,586.82 266.49 240.20 506.68 5,080.14

38 2045 5,586.82 266.49 240.20 506.68 5,080.14

39 2046 5,586.82 266.49 240.20 506.68 5,080.14

40 2047 5,586.82 266.49 240.20 506.68 5,080.14

41 2048 5,586.82 266.49 240.20 506.68 5,080.14

Rate Of Return 15.05%

Note : Year 2012 means Financial Year 2011-12 and so on.

Interest on

W.C.Total Outflow

Costs Associated With the Scheme

OUTFLOW

Capital Cost O&M Cost

Sl. No. Year Net Benefit* Revenue due to reduction

in losses in the system

67

North West Transmission Corridor

(Rs. Million)

INFLOW

0 2007 - 185.08 - - 185.08 (185.08)

1 2008 - 2338.91 - - 2,338.91 (2,338.91)

2 2009 - 748.63 - - 748.63 (748.63)

3 2010 1,234.84 365.75 74.01 73.10 512.86 721.98

4 2011 1,234.84 532.87 78.25 73.10 684.22 550.62

5 2012 1,234.84 15.29 82.72 73.10 171.11 1,063.73

6 2013 1,234.84 0.00 87.46 73.10 160.56 1,074.28

7 2014 1,234.84 0.00 92.45 73.10 165.55 1,069.29

8 2015 1,234.84 84.67 73.10 157.77 1,077.07

9 2016 1,234.84 87.50 73.10 160.60 1,074.24

10 2017 1,234.84 90.39 73.10 163.49 1,071.35

11 2018 1,234.84 93.40 73.10 166.50 1,068.34

12 2019 1,234.84 96.50 73.10 169.59 1,065.25

13 2020 1,234.84 96.50 73.10 169.59 1,065.25

14 2021 1,234.84 96.50 73.10 169.59 1,065.25

15 2022 1,234.84 96.50 73.10 169.59 1,065.25

16 2023 1,234.84 96.50 73.10 169.59 1,065.25

17 2024 1,234.84 96.50 73.10 169.59 1,065.25

18 2025 1,234.84 96.50 73.10 169.59 1,065.25

19 2026 1,234.84 96.50 73.10 169.59 1,065.25

20 2027 1,234.84 96.50 73.10 169.59 1,065.25

21 2028 1,234.84 96.50 73.10 169.59 1,065.25

22 2029 1,234.84 96.50 73.10 169.59 1,065.25

23 2030 1,234.84 96.50 73.10 169.59 1,065.25

24 2031 1,234.84 96.50 73.10 169.59 1,065.25

25 2032 1,234.84 96.50 73.10 169.59 1,065.25

26 2033 1,234.84 96.50 73.10 169.59 1,065.25

27 2034 1,234.84 96.50 73.10 169.59 1,065.25

28 2035 1,234.84 96.50 73.10 169.59 1,065.25

29 2036 1,234.84 96.50 73.10 169.59 1,065.25

30 2037 1,234.84 96.50 73.10 169.59 1,065.25

31 2038 1,234.84 96.50 73.10 169.59 1,065.25

32 2039 1,234.84 96.50 73.10 169.59 1,065.25

33 2040 1,234.84 96.50 73.10 169.59 1,065.25

34 2041 1,234.84 96.50 73.10 169.59 1,065.25

35 2042 1,234.84 96.50 73.10 169.59 1,065.25

36 2043 1,234.84 96.50 73.10 169.59 1,065.25

37 2044 1,234.84 96.50 73.10 169.59 1,065.25

38 2045 1,234.84 96.50 73.10 169.59 1,065.25

39 2046 1,234.84 96.50 73.10 169.59 1,065.25

40 2047 1,234.84 96.50 73.10 169.59 1,065.25

41 2048 1,234.84 96.50 73.10 169.59 1,065.25



Interest on

W.C.Total Outflow


OUTFLOW




68

East West Transmission Corridor

(Rs. Million)

INFLOW

0 2007 - 0.00 - - - -

1 2008 - 0.00 - - - -

2 2009 - 1952.03 - - 1,952.03 (1,952.03)

3 2010 - 2367.60 - - 2,367.60 (2,367.60)

4 2011 - 660.09 - - 660.09 (660.09)

5 2012 1,170.55 189.67 91.73 83.09 364.49 806.05

6 2013 1,560.73 80.14 129.30 110.79 320.22 1,240.51

7 2014 1,560.73 32.68 136.67 110.79 280.13 1,280.59

8 2015 1,560.73 125.07 110.79 235.86 1,324.86

9 2016 1,560.73 129.25 110.79 240.04 1,320.68

10 2017 1,560.73 133.53 110.79 244.32 1,316.41

11 2018 1,560.73 137.96 110.79 248.75 1,311.97

12 2019 1,560.73 142.54 110.79 253.33 1,307.40

13 2020 1,560.73 142.54 110.79 253.33 1,307.40

14 2021 1,560.73 142.54 110.79 253.33 1,307.40

15 2022 1,560.73 142.54 110.79 253.33 1,307.40

16 2023 1,560.73 142.54 110.79 253.33 1,307.40

17 2024 1,560.73 142.54 110.79 253.33 1,307.40

18 2025 1,560.73 142.54 110.79 253.33 1,307.40

19 2026 1,560.73 142.54 110.79 253.33 1,307.40

20 2027 1,560.73 142.54 110.79 253.33 1,307.40

21 2028 1,560.73 142.54 110.79 253.33 1,307.40

22 2029 1,560.73 142.54 110.79 253.33 1,307.40

23 2030 1,560.73 142.54 110.79 253.33 1,307.40

24 2031 1,560.73 142.54 110.79 253.33 1,307.40

25 2032 1,560.73 142.54 110.79 253.33 1,307.40

26 2033 1,560.73 142.54 110.79 253.33 1,307.40

27 2034 1,560.73 142.54 110.79 253.33 1,307.40

28 2035 1,560.73 142.54 110.79 253.33 1,307.40

29 2036 1,560.73 142.54 110.79 253.33 1,307.40

30 2037 1,560.73 142.54 110.79 253.33 1,307.40

31 2038 1,560.73 142.54 110.79 253.33 1,307.40

32 2039 1,560.73 142.54 110.79 253.33 1,307.40

33 2040 1,560.73 142.54 110.79 253.33 1,307.40

34 2041 1,560.73 142.54 110.79 253.33 1,307.40

35 2042 1,560.73 142.54 110.79 253.33 1,307.40

36 2043 1,560.73 142.54 110.79 253.33 1,307.40

37 2044 1,560.73 142.54 110.79 253.33 1,307.40

38 2045 1,560.73 142.54 110.79 253.33 1,307.40

39 2046 1,560.73 142.54 110.79 253.33 1,307.40

40 2047 1,560.73 142.54 110.79 253.33 1,307.40

41 2048 1,560.73 142.54 110.79 253.33 1,307.40



Interest on

W.C.Total Outflow


OUTFLOW




69

Western Region System Strengthening II

(Rs. Million)

INFLOW

0 2007 - 0.00 - - - -

1 2008 - 345.91 - - 345.91 (345.91)

2 2009 - 4814.21 - - 4,814.21 (4,814.21)

3 2010 - 13246.37 - - 13,246.37 (13,246.37)

4 2011 - 5585.92 - - 5,585.92 (5,585.92)

5 2012 - 993.49 - - 993.49 (993.49)

6 2013 1,661.18 458.69 176.32 138.76 773.78 887.40

7 2014 6,644.72 88.07 745.55 555.05 1,388.67 5,256.05

8 2015 6,644.72 143.59 555.05 698.64 5,946.07

9 2016 6,644.72 148.47 555.05 703.52 5,941.20

10 2017 6,644.72 153.34 555.05 708.39 5,936.33

11 2018 6,644.72 158.42 555.05 713.47 5,931.25

12 2019 6,644.72 163.70 555.05 718.75 5,925.97

13 2020 6,644.72 163.70 555.05 718.75 5,925.97

14 2021 6,644.72 163.70 555.05 718.75 5,925.97

15 2022 6,644.72 163.70 555.05 718.75 5,925.97

16 2023 6,644.72 163.70 555.05 718.75 5,925.97

17 2024 6,644.72 163.70 555.05 718.75 5,925.97

18 2025 6,644.72 163.70 555.05 718.75 5,925.97

19 2026 6,644.72 163.70 555.05 718.75 5,925.97

20 2027 6,644.72 163.70 555.05 718.75 5,925.97

21 2028 6,644.72 163.70 555.05 718.75 5,925.97

22 2029 6,644.72 163.70 555.05 718.75 5,925.97

23 2030 6,644.72 163.70 555.05 718.75 5,925.97

24 2031 6,644.72 163.70 555.05 718.75 5,925.97

25 2032 6,644.72 163.70 555.05 718.75 5,925.97

26 2033 6,644.72 163.70 555.05 718.75 5,925.97

27 2034 6,644.72 163.70 555.05 718.75 5,925.97

28 2035 6,644.72 163.70 555.05 718.75 5,925.97

29 2036 6,644.72 163.70 555.05 718.75 5,925.97

30 2037 6,644.72 163.70 555.05 718.75 5,925.97

31 2038 6,644.72 163.70 555.05 718.75 5,925.97

32 2039 6,644.72 163.70 555.05 718.75 5,925.97

33 2040 6,644.72 163.70 555.05 718.75 5,925.97

34 2041 6,644.72 163.70 555.05 718.75 5,925.97

35 2042 6,644.72 163.70 555.05 718.75 5,925.97

36 2043 6,644.72 163.70 555.05 718.75 5,925.97

37 2044 6,644.72 163.70 555.05 718.75 5,925.97

38 2045 6,644.72 163.70 555.05 718.75 5,925.97

39 2046 6,644.72 163.70 555.05 718.75 5,925.97

40 2047 6,644.72 163.70 555.05 718.75 5,925.97

41 2048 6,644.72 163.70 555.05 718.75 5,925.97



Interest on

W.C.Total Outflow


OUTFLOW




70

Eastern Region System Strengthening II

(Rs. Million)

INFLOW

0 2007 - 0.00 - - - -

1 2008 - 0.00 - - - -

2 2009 - 2282.53 - - 2,282.53 (2,282.53)

3 2010 - 2425.90 - - 2,425.90 (2,425.90)

4 2011 - 1146.11 - - 1,146.11 (1,146.11)

5 2012 - 1033.40 - - 1,033.40 (1,033.40)

6 2013 - 1156.00 - - 1,156.00 (1,156.00)

7 2014 - 36.96 - - 36.96 (36.96)

8 2015 1,557.99 124.89 117.34 242.23 1,315.76

9 2016 1,557.99 129.07 117.34 246.41 1,311.58

10 2017 1,557.99 133.34 117.34 250.68 1,307.31

11 2018 1,557.99 137.77 117.34 255.10 1,302.89

12 2019 1,557.99 142.34 117.34 259.68 1,298.31

13 2020 1,557.99 142.34 117.34 259.68 1,298.31

14 2021 1,557.99 142.34 117.34 259.68 1,298.31

15 2022 1,557.99 142.34 117.34 259.68 1,298.31

16 2023 1,557.99 142.34 117.34 259.68 1,298.31

17 2024 1,557.99 142.34 117.34 259.68 1,298.31

18 2025 1,557.99 142.34 117.34 259.68 1,298.31

19 2026 1,557.99 142.34 117.34 259.68 1,298.31

20 2027 1,557.99 142.34 117.34 259.68 1,298.31

21 2028 1,557.99 142.34 117.34 259.68 1,298.31

22 2029 1,557.99 142.34 117.34 259.68 1,298.31

23 2030 1,557.99 142.34 117.34 259.68 1,298.31

24 2031 1,557.99 142.34 117.34 259.68 1,298.31

25 2032 1,557.99 142.34 117.34 259.68 1,298.31

26 2033 1,557.99 142.34 117.34 259.68 1,298.31

27 2034 1,557.99 142.34 117.34 259.68 1,298.31

28 2035 1,557.99 142.34 117.34 259.68 1,298.31

29 2036 1,557.99 142.34 117.34 259.68 1,298.31

30 2037 1,557.99 142.34 117.34 259.68 1,298.31

31 2038 1,557.99 142.34 117.34 259.68 1,298.31

32 2039 1,557.99 142.34 117.34 259.68 1,298.31

33 2040 1,557.99 142.34 117.34 259.68 1,298.31

34 2041 1,557.99 142.34 117.34 259.68 1,298.31

35 2042 1,557.99 142.34 117.34 259.68 1,298.31

36 2043 1,557.99 142.34 117.34 259.68 1,298.31

37 2044 1,557.99 142.34 117.34 259.68 1,298.31

38 2045 1,557.99 142.34 117.34 259.68 1,298.31

39 2046 1,557.99 142.34 117.34 259.68 1,298.31

40 2047 1,557.99 142.34 117.34 259.68 1,298.31

41 2048 1,557.99 142.34 117.34 259.68 1,298.31



Interest on

W.C.Total Outflow


OUTFLOW




71

System Strengthening in Western Region for Sasan UMPP

Financial Analysis of Schemes

16. The financial analysis is presented for all the schemes except for SRSS 13. The rate of

RoE was considered as a proxy for financial analysis of the schemes. The same proxy was used

during the appraisal as well. The RoE of the schemes has been calculated using the same

methodology as during the appraisal. The scheme-wise RoE at the time of appraisal is compared

with that at completion across two cases: (a) base case and (b) extreme case where cost escalation

by 20 percent, delay in project commissioning by two years, RoE is lower by 1 percent, and

foreign exchange rate is lower by 10 percent.

(Rs. Million)

INFLOW

0 2007 - 0.00 - - - -

1 2008 - 0.00 - - - -

2 2009 - 0.00 - - - -

3 2010 - 0.00 - - - -

4 2011 - 114.55 - - 114.55 (114.55)

5 2012 - 649.96 - - 649.96 (649.96)

6 2013 - 2685.56 - - 2,685.56 (2,685.56)

7 2014 - 2161.41 - - 2,161.41 (2,161.41)

8 2015 586.30 79.60 65.29 144.89 441.41

9 2016 1,172.60 164.47 130.58 295.05 877.54

10 2017 1,172.60 169.94 130.58 300.52 872.08

11 2018 1,172.60 175.58 130.58 306.16 866.43

12 2019 1,172.60 181.40 130.58 311.98 860.61

13 2020 1,172.60 181.40 130.58 311.98 860.61

14 2021 1,172.60 181.40 130.58 311.98 860.61

15 2022 1,172.60 181.40 130.58 311.98 860.61

16 2023 1,172.60 181.40 130.58 311.98 860.61

17 2024 1,172.60 181.40 130.58 311.98 860.61

18 2025 1,172.60 181.40 130.58 311.98 860.61

19 2026 1,172.60 181.40 130.58 311.98 860.61

20 2027 1,172.60 181.40 130.58 311.98 860.61

21 2028 1,172.60 181.40 130.58 311.98 860.61

22 2029 1,172.60 181.40 130.58 311.98 860.61

23 2030 1,172.60 181.40 130.58 311.98 860.61

24 2031 1,172.60 181.40 130.58 311.98 860.61

25 2032 1,172.60 181.40 130.58 311.98 860.61

26 2033 1,172.60 181.40 130.58 311.98 860.61

27 2034 1,172.60 181.40 130.58 311.98 860.61

28 2035 1,172.60 181.40 130.58 311.98 860.61

29 2036 1,172.60 181.40 130.58 311.98 860.61

30 2037 1,172.60 181.40 130.58 311.98 860.61

31 2038 1,172.60 181.40 130.58 311.98 860.61

32 2039 1,172.60 181.40 130.58 311.98 860.61

33 2040 1,172.60 181.40 130.58 311.98 860.61

34 2041 1,172.60 181.40 130.58 311.98 860.61

35 2042 1,172.60 181.40 130.58 311.98 860.61

36 2043 1,172.60 181.40 130.58 311.98 860.61

37 2044 1,172.60 181.40 130.58 311.98 860.61

38 2045 1,172.60 181.40 130.58 311.98 860.61

39 2046 1,172.60 181.40 130.58 311.98 860.61

40 2047 1,172.60 181.40 130.58 311.98 860.61

41 2048 1,172.60 181.40 130.58 311.98 860.61



Interest on

W.C.Total Outflow


OUTFLOW




72

Table 3.3: Financial Analysis of Schemes

Name of the Scheme RoE as in

PAD/PIP

(Base Case)

RoE as in PAD/PIP

(Cost Escalation by

20%, Delay of 2

years, RoE Lower

by 1%)

RoE at ICR Remarks

Bali-Bhiwadi 12.37% 10.19% 16.27% Outperformed

in all the cases

as these funded

some important

interregional

links.

NWTC 13.70% 11.25% 29.08% EWTC 13.31% 10.80% 24.84% WRSS II 13.19% 10.76% 15.38% ERSS I 13.90% 11.78% 14.02% System strengthening in

WR for Sasan UMPP

20.80% 16.70% 16.65%

17. In all the cases, the RoE was much higher than the base case. Among others, the main

reason for this is the revision in CERC tariff norms, as mentioned in the section above. Under the

revised tariff norms, RoE has been increased from 14 percent (at appraisal) to 15.5 percent

(current tariff regulations). All the schemes have an RoE that is higher than 15.5 percent. Thus,

the schemes are financially robust.

18. Detailed calculations for the various schemes are provided in Table 3.4:

73

Table 3.4: Detailed RoE Analysis of the Schemes

Balia Bhiwadi HVDC Bipole System

(Rs. Million)

INFLOW

0 2007 - 225.66 - - - - 225.66 (225.66)

1 2008 - 1142.03 - - - - 1,142.03 (1,142.03)

2 2009 - 2684.35 - - - - 2,684.35 (2,684.35)

3 2010 - 2628.05 - - - - 2,628.05 (2,628.05)

4 2011 - 288.70 - - - - 288.70 (288.70)

5 2012 - 693.37 - - - - 693.37 (693.37)

6 2013 1,982.35 457.62 43.90 180.15 - - 681.67 1,300.68

7 2014 3,412.07 117.98 61.86 240.20 - - 420.03 2,992.03

8 2015 3,533.39 201.57 240.20 364.93 716.31 1,523.00 2,010.39

9 2016 3,532.75 216.13 240.20 349.72 716.31 1,522.36 2,010.39

10 2017 3,533.02 231.61 240.20 334.52 716.31 1,522.63 2,010.39

11 2018 3,534.56 248.35 240.20 319.31 716.31 1,524.16 2,010.39

12 2019 3,537.49 266.49 240.20 304.10 716.31 1,527.10 2,010.39

13 2020 3,522.28 266.49 240.20 288.90 716.31 1,511.89 2,010.39

14 2021 3,507.08 266.49 240.20 273.69 716.31 1,496.69 2,010.39

15 2022 3,491.87 266.49 240.20 258.49 716.31 1,481.48 2,010.39

16 2023 3,476.67 266.49 240.20 243.28 716.31 1,466.28 2,010.39

17 2024 3,461.46 266.49 240.20 228.08 716.31 1,451.07 2,010.39

18 2025 2,314.46 266.49 240.20 212.87 716.31 1,435.87 878.59

19 2026 2,299.25 266.49 240.20 197.67 716.31 1,420.66 878.59

20 2027 2,284.05 266.49 240.20 182.46 716.31 1,405.46 878.59

21 2028 2,268.84 266.49 240.20 167.26 716.31 1,390.25 878.59

22 2029 2,253.64 266.49 240.20 152.05 716.31 1,375.04 878.59

23 2030 2,238.43 266.49 240.20 136.85 716.31 1,359.84 878.59

24 2031 2,223.23 266.49 240.20 121.64 716.31 1,344.63 878.59

25 2032 2,208.02 266.49 240.20 106.44 716.31 1,329.43 878.59

26 2033 2,192.82 266.49 240.20 91.23 716.31 1,314.22 878.59

27 2034 2,177.61 266.49 240.20 76.03 716.31 1,299.02 878.59

28 2035 2,162.41 266.49 240.20 60.82 716.31 1,283.81 878.59

29 2036 2,147.20 266.49 240.20 45.62 716.31 1,268.61 878.59

30 2037 2,132.00 266.49 240.20 30.41 716.31 1,253.40 878.59

31 2038 2,116.79 266.49 240.20 15.21 716.31 1,238.20 878.59

32 2039 2,101.59 266.49 240.20 (0.00) 716.31 1,222.99 878.59

33 2040 2,101.59 266.49 240.20 (0.00) - 506.68 1,594.90

34 2041 2,101.59 266.49 240.20 (0.00) - 506.68 1,594.90

35 2042 2,101.59 266.49 240.20 (0.00) - 506.68 1,594.90

36 2043 2,101.59 266.49 240.20 (0.00) - 506.68 1,594.90

37 2044 2,101.59 266.49 240.20 (0.00) - 506.68 1,594.90

38 2045 2,101.59 266.49 240.20 (0.00) - 506.68 1,594.90

39 2046 2,101.59 266.49 240.20 (0.00) - 506.68 1,594.90

40 2047 2,101.59 266.49 240.20 (0.00) - 506.68 1,594.90

41 2048 2,101.59 266.49 240.20 (0.00) - 506.68 1,594.90

7662.16 Rate Of Return 16.27%


Total Outflow Net BenefitInterest

Charges

Debt

Repayment

Sl. No. Year


OUTFLOW

Revenue (Yearly

Transmission

Charges)

Equity O&M CostInterest on

W.C.

74

North West Transmission Corridor

(Rs. Million)

INFLOW

0 2007 - 62.33 - - - - 62.33 (62.33)

1 2008 - 788.95 - - - - 788.95 (788.95)

2 2009 - 268.78 - - - - 268.78 (268.78)

3 2010 683.70 136.33 74.01 73.10 - - 283.44 400.27

4 2011 698.24 195.13 78.25 73.10 - - 346.47 351.77

5 2012 709.00 24.48 82.72 73.10 - - 180.30 528.69

6 2013 739.82 0.00 87.46 73.10 90.71 - 251.27 488.56

7 2014 744.81 0.00 92.45 73.10 90.71 - 256.26 488.56

8 2015 733.41 84.67 73.10 87.08 130.25 375.10 358.31

9 2016 732.61 87.50 73.10 83.45 130.25 374.30 358.31

10 2017 731.87 90.39 73.10 79.82 130.25 373.56 358.31

11 2018 731.25 93.40 73.10 76.19 130.25 372.94 358.31

12 2019 730.72 96.50 73.10 72.57 130.25 372.41 358.31

13 2020 727.09 96.50 73.10 68.94 130.25 368.78 358.31

14 2021 723.46 96.50 73.10 65.31 130.25 365.15 358.31

15 2022 517.04 96.50 73.10 61.68 130.25 361.52 155.52

16 2023 513.41 96.50 73.10 58.05 130.25 357.90 155.52

17 2024 509.79 96.50 73.10 54.42 130.25 354.27 155.52

18 2025 506.16 96.50 73.10 50.80 130.25 350.64 155.52

19 2026 502.53 96.50 73.10 47.17 130.25 347.01 155.52

20 2027 498.90 96.50 73.10 43.54 130.25 343.38 155.52

21 2028 495.27 96.50 73.10 39.91 130.25 339.75 155.52

22 2029 491.64 96.50 73.10 36.28 130.25 336.13 155.52

23 2030 488.02 96.50 73.10 32.65 130.25 332.50 155.52

24 2031 484.39 96.50 73.10 29.03 130.25 328.87 155.52

25 2032 480.76 96.50 73.10 25.40 130.25 325.24 155.52

26 2033 477.13 96.50 73.10 21.77 130.25 321.61 155.52

27 2034 473.50 96.50 73.10 18.14 130.25 317.98 155.52

28 2035 469.87 96.50 73.10 14.51 130.25 314.36 155.52

29 2036 466.25 96.50 73.10 10.88 130.25 310.73 155.52

30 2037 462.62 96.50 73.10 7.26 130.25 307.10 155.52

31 2038 458.99 96.50 73.10 3.63 130.25 303.47 155.52

32 2039 455.36 96.50 73.10 0.00 130.25 299.84 155.52

33 2040 455.36 96.50 73.10 0.00 - 169.59 285.77

34 2041 455.36 96.50 73.10 0.00 - 169.59 285.77

35 2042 455.36 96.50 73.10 0.00 - 169.59 285.77

36 2043 455.36 96.50 73.10 0.00 - 169.59 285.77

37 2044 455.36 96.50 73.10 0.00 - 169.59 285.77

38 2045 398.37 96.50 73.10 0.00 - 169.59 228.78

39 2046 398.37 96.50 73.10 0.00 - 169.59 228.78

40 2047 398.37 96.50 73.10 0.00 - 169.59 228.78

41 2048 398.37 96.50 73.10 0.00 - 169.59 228.78




Charges

Debt

Repayment

Sl. No. Year


OUTFLOW

Revenue (Yearly

Transmission

Charges)


W.C.

75

East West Transmission Corridor

(Rs. Million)

INFLOW

0 2007 - 0.00 - - - - - -

1 2008 - 0.00 - - - - - -

2 2009 - 665.60 - - - - 665.60 (665.60)

3 2010 - 837.14 - - - - 837.14 (837.14)

4 2011 - 291.11 - - - - 291.11 (291.11)

5 2012 722.09 140.80 91.73 83.09 - - 315.63 406.46

6 2013 1,211.38 106.35 129.30 110.79 - - 346.44 864.94

7 2014 1,221.63 91.40 136.67 110.79 - - 338.85 882.77

8 2015 1,155.06 125.07 110.79 213.37 164.33 613.57 541.49

9 2016 1,150.35 129.25 110.79 204.48 164.33 608.86 541.49

10 2017 1,145.74 133.53 110.79 195.59 164.33 604.25 541.49

11 2018 1,141.28 137.96 110.79 186.70 164.33 599.79 541.49

12 2019 1,136.96 142.54 110.79 177.81 164.33 595.47 541.49

13 2020 1,128.07 142.54 110.79 168.92 164.33 586.58 541.49

14 2021 1,119.18 142.54 110.79 160.03 164.33 577.69 541.49

15 2022 1,110.29 142.54 110.79 151.14 164.33 568.80 541.49

16 2023 1,101.40 142.54 110.79 142.25 164.33 559.91 541.49

17 2024 799.54 142.54 110.79 133.36 164.33 551.02 248.52

18 2025 790.65 142.54 110.79 124.47 164.33 542.13 248.52

19 2026 781.76 142.54 110.79 115.58 164.33 533.24 248.52

20 2027 772.87 142.54 110.79 106.69 164.33 524.35 248.52

21 2028 763.98 142.54 110.79 97.80 164.33 515.46 248.52

22 2029 755.09 142.54 110.79 88.90 164.33 506.57 248.52

23 2030 746.19 142.54 110.79 80.01 164.33 497.68 248.52

24 2031 737.30 142.54 110.79 71.12 164.33 488.79 248.52

25 2032 728.41 142.54 110.79 62.23 164.33 479.90 248.52

26 2033 719.52 142.54 110.79 53.34 164.33 471.01 248.52

27 2034 710.63 142.54 110.79 44.45 164.33 462.12 248.52

28 2035 701.74 142.54 110.79 35.56 164.33 453.23 248.52

29 2036 692.85 142.54 110.79 26.67 164.33 444.34 248.52

30 2037 683.96 142.54 110.79 17.78 164.33 435.45 248.52

31 2038 675.07 142.54 110.79 8.89 164.33 426.55 248.52

32 2039 666.18 142.54 110.79 0.00 164.33 417.66 248.52

33 2040 666.18 142.54 110.79 0.00 - 253.33 412.85

34 2041 666.18 142.54 110.79 0.00 - 253.33 412.85

35 2042 666.18 142.54 110.79 0.00 - 253.33 412.85

36 2043 666.18 142.54 110.79 0.00 - 253.33 412.85

37 2044 666.18 142.54 110.79 0.00 - 253.33 412.85

38 2045 666.18 142.54 110.79 0.00 - 253.33 412.85

39 2046 666.18 142.54 110.79 0.00 - 253.33 412.85

40 2047 666.18 142.54 110.79 0.00 - 253.33 412.85

41 2048 595.35 142.54 110.79 0.00 - 253.33 342.02




Charges

Debt

Repayment

Sl. No. Year


OUTFLOW

Revenue (Yearly

Transmission

Charges)


W.C.

76

Western Region System Strengthening II

(Rs. Million)

INFLOW

0 2007 - 0.00 - - - - - -

1 2008 - 116.02 - - - - 116.02 (116.02)

2 2009 - 1616.08 - - - - 1,616.08 (1,616.08)

3 2010 - 4463.83 - - - - 4,463.83 (4,463.83)

4 2011 - 1949.15 - - - - 1,949.15 (1,949.15)

5 2012 - 431.89 - - - - 431.89 (431.89)

6 2013 349.25 256.61 176.32 138.76 - - 571.70 (222.45)

7 2014 4,594.79 134.20 745.55 555.05 - - 1,434.80 3,159.99

8 2015 3,962.85 143.59 555.05 319.49 794.35 1,812.48 2,150.37

9 2016 3,954.41 148.47 555.05 306.18 794.35 1,804.04 2,150.37

10 2017 3,945.97 153.34 555.05 292.86 794.35 1,795.61 2,150.37

11 2018 3,937.74 158.42 555.05 279.55 794.35 1,787.37 2,150.37

12 2019 3,929.71 163.70 555.05 266.24 794.35 1,779.34 2,150.37

13 2020 3,916.39 163.70 555.05 252.93 794.35 1,766.03 2,150.37

14 2021 3,903.08 163.70 555.05 239.62 794.35 1,752.72 2,150.37

15 2022 3,889.77 163.70 555.05 226.30 794.35 1,739.40 2,150.37

16 2023 3,876.46 163.70 555.05 212.99 794.35 1,726.09 2,150.37

17 2024 3,863.15 163.70 555.05 199.68 794.35 1,712.78 2,150.37

18 2025 2,636.18 163.70 555.05 186.37 794.35 1,699.47 936.71

19 2026 2,622.86 163.70 555.05 173.06 794.35 1,686.16 936.71

20 2027 2,609.55 163.70 555.05 159.74 794.35 1,672.84 936.71

21 2028 2,596.24 163.70 555.05 146.43 794.35 1,659.53 936.71

22 2029 2,582.93 163.70 555.05 133.12 794.35 1,646.22 936.71

23 2030 2,569.62 163.70 555.05 119.81 794.35 1,632.91 936.71

24 2031 2,556.30 163.70 555.05 106.50 794.35 1,619.60 936.71

25 2032 2,542.99 163.70 555.05 93.18 794.35 1,606.28 936.71

26 2033 2,529.68 163.70 555.05 79.87 794.35 1,592.97 936.71

27 2034 2,516.37 163.70 555.05 66.56 794.35 1,579.66 936.71

28 2035 2,503.06 163.70 555.05 53.25 794.35 1,566.35 936.71

29 2036 2,489.74 163.70 555.05 39.94 794.35 1,553.04 936.71

30 2037 2,476.43 163.70 555.05 26.62 794.35 1,539.72 936.71

31 2038 2,463.12 163.70 555.05 13.31 794.35 1,526.41 936.71

32 2039 2,449.81 163.70 555.05 - 794.35 1,513.10 936.71

33 2040 2,449.81 163.70 555.05 - - 718.75 1,731.06

34 2041 2,449.81 163.70 555.05 - - 718.75 1,731.06

35 2042 2,449.81 163.70 555.05 - - 718.75 1,731.06

36 2043 2,449.81 163.70 555.05 - - 718.75 1,731.06

37 2044 2,449.81 163.70 555.05 - - 718.75 1,731.06

38 2045 2,449.81 163.70 555.05 - - 718.75 1,731.06

39 2046 2,449.81 163.70 555.05 - - 718.75 1,731.06

40 2047 2,449.81 163.70 555.05 - - 718.75 1,731.06

41 2048 2,449.81 163.70 555.05 - - 718.75 1,731.06




Charges

Debt

Repayment

Sl. No. Year


OUTFLOW

Revenue (Yearly

Transmission

Charges)


W.C.

77

Eastern Region System Strengthening I

(Rs. Million)

INFLOW

0 2007 - 0.00 - - - - - -

1 2008 - 0.00 - - - - - -

2 2009 - 771.44 - - - - 771.44 (771.44)

3 2010 - 841.10 - - - - 841.10 (841.10)

4 2011 - 431.10 - - - - 431.10 (431.10)

5 2012 - 403.65 - - - - 403.65 (403.65)

6 2013 - 454.69 - - - - 454.69 (454.69)

7 2014 - 87.22 - - - - 87.22 (87.22)

8 2015 1,448.12 124.89 117.34 216.46 251.41 710.10 738.02

9 2016 1,443.28 129.07 117.34 207.44 251.41 705.26 738.02

10 2017 1,438.53 133.34 117.34 198.42 251.41 700.51 738.02

11 2018 1,433.93 137.77 117.34 189.40 251.41 695.91 738.02

12 2019 1,429.49 142.34 117.34 180.39 251.41 691.47 738.02

13 2020 1,420.47 142.34 117.34 171.37 251.41 682.45 738.02

14 2021 1,411.45 142.34 117.34 162.35 251.41 673.43 738.02

15 2022 1,402.43 142.34 117.34 153.33 251.41 664.41 738.02

16 2023 1,393.41 142.34 117.34 144.31 251.41 655.39 738.02

17 2024 1,384.39 142.34 117.34 135.29 251.41 646.37 738.02

18 2025 1,375.37 142.34 117.34 126.27 251.41 637.35 738.02

19 2026 1,366.35 142.34 117.34 117.25 251.41 628.33 738.02

20 2027 946.64 142.34 117.34 108.23 251.41 619.31 327.33

21 2028 937.62 142.34 117.34 99.21 251.41 610.29 327.33

22 2029 928.60 142.34 117.34 90.19 251.41 601.27 327.33

23 2030 919.59 142.34 117.34 81.17 251.41 592.26 327.33

24 2031 910.57 142.34 117.34 72.15 251.41 583.24 327.33

25 2032 901.55 142.34 117.34 63.13 251.41 574.22 327.33

26 2033 892.53 142.34 117.34 54.12 251.41 565.20 327.33

27 2034 883.51 142.34 117.34 45.10 251.41 556.18 327.33

28 2035 874.49 142.34 117.34 36.08 251.41 547.16 327.33

29 2036 865.47 142.34 117.34 27.06 251.41 538.14 327.33

30 2037 856.45 142.34 117.34 18.04 251.41 529.12 327.33

31 2038 847.43 142.34 117.34 9.02 251.41 520.10 327.33

32 2039 838.41 142.34 117.34 (0.00) 251.41 511.08 327.33

33 2040 838.41 142.34 117.34 (0.00) - 259.68 578.74

34 2041 838.41 142.34 117.34 (0.00) - 259.68 578.74

35 2042 838.41 142.34 117.34 (0.00) - 259.68 578.74

36 2043 838.41 142.34 117.34 (0.00) - 259.68 578.74

37 2044 838.41 142.34 117.34 (0.00) - 259.68 578.74

38 2045 838.41 142.34 117.34 (0.00) - 259.68 578.74

39 2046 838.41 142.34 117.34 (0.00) - 259.68 578.74

40 2047 838.41 142.34 117.34 (0.00) - 259.68 578.74

41 2048 838.41 142.34 117.34 (0.00) - 259.68 578.74




Charges

Debt

Repayment

Sl. No. Year


OUTFLOW

Revenue (Yearly

Transmission

Charges)


W.C.

78

System Strengthening in Western Region for Sasan UMPP

(Rs. Million)

INFLOW

0 2007 - 0.00 - - - - - -

1 2008 - 0.00 - - - - - -

2 2009 - 0.00 - - - - - -

3 2010 - 0.00 - - - - - -

4 2011 - 38.47 - - - - 38.47 (38.47)

5 2012 - 218.89 - - - - 218.89 (218.89)

6 2013 - 905.93 - - - - 905.93 (905.93)

7 2014 - 743.57 - - - - 743.57 (743.57)

8 2015 303.19 268.74 79.60 65.29 - 196.82 610.44 (307.26)

9 2016 1,111.04 0.00 164.47 130.58 95.87 196.82 587.74 523.30

10 2017 1,112.34 169.94 130.58 91.70 196.82 589.04 523.30

11 2018 1,113.82 175.58 130.58 87.53 196.82 590.51 523.30

12 2019 1,115.47 181.40 130.58 83.36 196.82 592.17 523.30

13 2020 1,111.30 181.40 130.58 79.19 196.82 588.00 523.30

14 2021 1,107.13 181.40 130.58 75.02 196.82 583.83 523.30

15 2022 1,102.96 181.40 130.58 70.86 196.82 579.66 523.30

16 2023 1,098.80 181.40 130.58 66.69 196.82 575.49 523.30

17 2024 1,094.63 181.40 130.58 62.52 196.82 571.33 523.30

18 2025 1,090.46 181.40 130.58 58.35 196.82 567.16 523.30

19 2026 1,086.29 181.40 130.58 54.18 196.82 562.99 523.30

20 2027 783.22 181.40 130.58 50.02 196.82 558.82 224.39

21 2028 779.05 181.40 130.58 45.85 196.82 554.65 224.39

22 2029 774.88 181.40 130.58 41.68 196.82 550.49 224.39

23 2030 770.71 181.40 130.58 37.51 196.82 546.32 224.39

24 2031 766.54 181.40 130.58 33.34 196.82 542.15 224.39

25 2032 762.37 181.40 130.58 29.18 196.82 537.98 224.39

26 2033 758.21 181.40 130.58 25.01 196.82 533.81 224.39

27 2034 754.04 181.40 130.58 20.84 196.82 529.65 224.39

28 2035 749.87 181.40 130.58 16.67 196.82 525.48 224.39

29 2036 745.70 181.40 130.58 12.50 196.82 521.31 224.39

30 2037 741.53 181.40 130.58 8.34 196.82 517.14 224.39

31 2038 737.37 181.40 130.58 4.17 196.82 512.97 224.39

32 2039 733.20 181.40 130.58 - 196.82 508.80 224.39

33 2040 733.20 181.40 130.58 - - 311.98 421.22

34 2041 733.20 181.40 130.58 - - 311.98 421.22

35 2042 733.20 181.40 130.58 - - 311.98 421.22

36 2043 733.20 181.40 130.58 - - 311.98 421.22

37 2044 733.20 181.40 130.58 - - 311.98 421.22

38 2045 733.20 181.40 130.58 - - 311.98 421.22

39 2046 733.20 181.40 130.58 - - 311.98 421.22

40 2047 733.20 181.40 130.58 - - 311.98 421.22

41 2048 733.20 181.40 130.58 - - 311.98 421.22




Charges

Debt

Repayment

Sl. No. Year


OUTFLOW

Revenue (Yearly

Transmission

Charges)


W.C.

79

Financial Analysis of Entity

19. The financial analysis at the entity level was carried out at the appraisal and completion

stages using the same principles. Table 3.5 lays out the actual financial details at the entity level.

POWERGRID has been a profit-making entity since its inception and the legacy carried over

during the PSDP IV and PSDP IV AF II implementation period as well. Net profit increased from

US$202 million in 2007 by more than 3.5 times to US$737 million in 2014. The main financial

risk to POWERGRID is the risk of nonpayment by off-taking utilities. The risk of recovering past

debts has been mitigated through the signing of tripartite agreements between the Reserve Bank

of India (RBI), state governments, and the GoI. Under this securitization scheme, past debts were

securitized against the tax free bonds valid up to 2016. In addition, POWERGRID has adopted

the Letter of Credit mechanism to ensure payment of current monthly bills by the off-taking

utilities.

20. Even though the regulated RoE has increased from 14 to 15.5 percent, the RoE at entity

level was at 13 percent in 2014. This is mainly due to the huge capital expenditure that stood at

US$4,324 million in 2014 in response to an increasing demand and need for supporting the

transmission network to transfer power between power surplus and power deficit regions.

Table 3.5: Financial Summary

Description

Year 2007 2008 2009 2010 2011 2012 2013 2014

PROFIT AND LOSSES

Operating Revenues 672 833 1,006 1,230 1,492 1,768 2,185 2,577

Operating Expenses 242 330 372 547 581 677 831 1,012

Profit before Tax 243 284 365 431 627 754 925 1,027

Net profit 202 237 277 335 442 534 694 737

CASH FLOW

Operating Cash flow post tax 712 490 1,089 1,085 912 1,050 1,850 2,502

Capital Expenditure 1,104 876 1,501 1,584 2,152 2,596 3,598 4,324

Pre-financing cash flow (392) (386) (412) (499) (1,240) (1,546) (1,748) (1,823)

Financing 919 997 1,097 1,205 2,167 2,355 2,958 3,810

Cash Available for Debt Service 527 612 684 706 927 808 1,210 1,987

debt service 366 413 495 470 737 848 1,063 1,307

dividend paid 62 89 97 97 125 181 257 228

Increase in cash balances 100 110 92 139 66 (220) (111) 452

Cash C/F 196 306 398 537 603 383 272 724

BALANCE SHEET ITEMS

Net Block 3,576 4,484 5,103 5,256 6,102 7,813 10,066 11,992

WIP 1,548 1,436 2,178 3,348 4,365 5,455 6,582 8,743

Total Fixed Assets 5,124 5,920 7,281 8,604 10,467 13,268 16,648 20,735

Investments 322 285 261 238 229 211 188 164

Total Current asset 575 881 1,363 1,578 1,719 1,309 1,382 1,985

Total Assets 6,022 7,086 8,905 10,420 12,415 14,788 18,219 22,883

Total Equity 1,795 2,254 2,433 2,645 3,530 3,873 4,321 5,665

Borrowings 3,168 3,650 4,666 5,437 6,464 8,484 10,850 13,192

Current Liabilities 990 1,102 1,717 2,222 2,232 2,169 2,726 3,626

Total Debt 4,158 4,752 6,383 7,660 8,696 10,653 13,577 16,818

Total Equity and Liability 6,022 7,086 8,905 10,420 12,415 14,788 18,219 22,883

FINANCIAL RATIOS

Operating Ratio 36% 40% 37% 44% 39% 38% 38% 39%

Net income as % of Revenue 30% 29% 28% 27% 30% 30% 32% 29%

Return on Equity 11% 11% 11% 13% 13% 14% 16% 13%

<-------Actual----------->

POWER SYSTEMS DEVELOPMENT PROJECT IV and ITS ADDITIONAL FINANCING

Financial Summary (Figures in million USD)

80

21. POWERGRID’s financial performance has been satisfactory as it has exceeded the

targeted financial covenants under the loans.

Table 3.6. Financial Covenants

Covenants as per Loan

Agreement 2008 2009 2010 2011 2012 2013 2014

Internal cash generation

equivalent to not less than 20%

of its capital expenditures

(three-year moving average)

43.11% 35.34% 25.27% 29.93% 36.78% 22.50% 26.92%

The ratio of debt to equity shall

be greater than 4 to 1 (80:20) 65:35 68:32 71:29 68:32 68:32 71:29 70:30

Accounts receivable should not

exceed an amount equivalent to

its billing for transmission and

other regulated services for the

preceding three months

0.19 0.15 0.13 0.15 0.91 0.67 0.27

81

Annex 4. Bank Lending and Implementation Support/Supervision Processes

(a) Task Team Members

Names Title Unit

Lending

Pedro E. Sanchez Senior Energy Specialist ECSSD

Sushil Kumar Bahl Senior Procurement Specialist SARPS

Mikul Bhatia Senior Energy Specialist SASDE

Minerva S. Espinosa-Apurada Program Assistant SASDO

Julia M. Fraser Senior Financial Analyst EASTS

Surbhi Goyal Energy Specialist SASDE

Mohammed Hasan Senior Social Development Specialist SASDS

Fowzia Hassan Operations Analyst MNSEG

Manoj Jain Senior Financial Management Specialist SARFM

Gaurav D. Joshi Environmental Specialist SASDI

Neelima Kapur Temporary SASDA

Sanjay Srivastava Regional Safeguards Adviser SARDE

Gennady Pilch Sr. Counsel LEGES

Supervision/ICR

Kwawu Mensan Gaba Lead Energy Specialist GEEDR

Surbhi Goyal Energy Specialist GEEDR

Kavita Saraswat Senior Power Engineer SASDE

Manoj Jain Senior Financial Management Specialist GGODR

Savinay Grover Financial Management Specialist GGODR

Sushil Kumar Bahl Senior Procurement Specialist SARPS

Debabrata Chakraborti Senior Procurement Specialist GGODR

Arun Kumar Kolsur Procurement Specialist GGODR

Yash Gupta Procurement Specialist GGODR

Mohammed Hasan Senior Social Development Specialist GURDR

Surbhi Dhingra Singh Social Development Specialist GURDR

Parthapriya Ghosh Senior Social Development Specialist GURDR

Gaurav D. Joshi Environmental Specialist GURDR

Sanjay Srivastava Regional Safeguards Adviser SARDE

Francis V. Fragano Regional Safeguards Adviser OPSOR

Sameena Dost Senior Counsel LEGES

Christopher L. Rytel Power Engineer (Consultant) SASDE

Nitika Surie Program Assistant GEEDR

Boonsri Prasartwaree Kim Program Assistant GEEDR

Minerva S. Espinosa-Apurada Program Assistant GEEDR

Vinod Ghosh Program Assistant SASDE

Julia M. Fraser Senior Financial Analyst EASTS

Raghuveer Y. Sharma Chief Investment Officer CN1S5

G. Ayse Cansiz Senior Power Engineer (Consultant) AFTEG

82

Names Title Unit

Pedro E. Sanchez Senior Energy Specialist ECSSD

(b) Staff Time and Cost

Cost Object Fiscal

Year

Staff

Weeks

Labor

(US$)

Travel

(US$)

Total

(US$)

PSDP IV

Lending 2008 22.26 75,795.49 28,435.13 104,339.93

Supervision/ICR 2008 6.28 15,526.54 – 15,526.54

2009 19.14 49,762.07 15,848.92 68,524.29

2010 10.85 22,411.80 4,081.55 26,859.28

2011 13.78 15,546.46 5,528.62 24,161.57

2012 17.23 44,341.67 9,869.87 66,342.73

2013 13.28 36,829.83 4,837.50 41,831.36

2014 16.37 62,746.07 14,396.73 78,983.42

2015 1.15 1,133.62 2,922.47 18,482.34

PSDP IV AF

Lending 2009 8.27 41,812.77 5,650.90 48,400.72

Supervision/ICR 2009 – – – –

Grand Total

128.61 365,906.32 91,571.69 493,452.18

83

Annex 5. Beneficiary Survey Results

Not Applicable

84

Annex 6. Stakeholder Workshop Report and Results Not Applicable

85

Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR

Introduction

1. POWERGRID, the CTU of India and a ‘Navratna’ Public Sector Enterprise (PSE)

operating under MoP, plays a strategic role in the Indian power sector. POWERGRID continues

to contribute directly to economic development of the country by strengthening and establishing

the National Grid comprising interstate and interregional transmission network for reliable and

secure transfer of power from the generating stations to the load centers.

2. POWERGRID has been a profit-making company since its inception. In FY2014,

POWERGRID achieved a turnover of about INR 157.21 billion (US$2.6 billion), net profit of

INR 44.97 billion (US$737 million) and fixed assets of INR 965.04 billion (US$15.8 billion)47

.

POWERGRID is a listed company, with institutional investors and public holding of 42.10

percent and the balance 57.90 percent by the GoI.

3. POWERGRID has planned a capital investment of more than INR 1,000 billion for

development of interstate transmission system during XII Plan (2012–17). The company has an

excellent credit rating with financial institutions and is thereby placed in a comfortable position in

terms of resource mobilization. As at the end of March 2014, POWERGRID had established a

transmission network of about 106,804 ckm of transmission lines along with 184 EHV AC and

DC substations with transformation capacity of 205,923 MVA spread across the country. The

company has been consistently maintaining the availability of this huge transmission network at

over 99 percent and wheels about 50 percent of total power generated in the country on its

network.

4. The company has established a strong and reliable National Grid in phased manner to

facilitate optimum utilization of generating resources, conservation of eco-sensitive ‘right of way’,

and for having flexibility to accommodate uncertainty of generation plans. On December 31,

2013, POWERGRID achieved a landmark by interconnecting the Southern grid synchronously

with rest of the National Grid making ‘One Nation-One Grid-One Frequency’ a reality.

5. POWERGRID has been instrumental in providing efficient, reliable, and smooth grid

operation and management in the country. Since 2009, the grid management and operation has

been entrusted to POSOCO, a fully owned subsidiary of POWERGRID. POSOCO with its state-

of-the-art ULDC facilities carries out proficient, consistent, and transparent grid operation and

management in the country. During FY2014, to meet the demands in the country, about 78.38 BU

of interregional energy transfer was facilitated, across the nation using pan-India interregional

transmission links and modernized RLDCs.

Association with the World Bank

6. Since its inception, POWERGRID has been associating with the Bank and undertaken

many critical transmission projects in its association, which have become the major backbone for

the Indian power sector. With the Bank’s support, POWERGRID successfully established the

National Grid, open access in transmission, modernization of Load Despatch and Communication

facilities, and establishment of the NLDC. An important landmark—synchronous interconnection

47 At an exchange rate of US$1 = INR 61.

86

of the National Grid—has been achieved by commissioning of the Bank-funded (PSDP V)

Raichur (Karnataka)-Sholapur (Maharashtra) 765 kV S/C line in December 2013, thereby

achieving the mission of ‘One Nation-One Grid-One Frequency’.

7. During the company’s formative years, the Bank was the first multilateral lending agency

to support it with funding of transmission projects. Since then, POWERGRID has availed the

following loans from the Bank:

a. Northern Region Transmission Project (NRTP): US$475 million, closed in

September 2000;

b. First Power Sector Development Project (PSDP I): US$350 million, closed in

December 2000;

c. Second Power Sector Development Project (PSDP II): US$450 million, closed in

June 2006;

d. Third Power Sector Development Project (PSDP III): US$400 million, closed in July

2011;

e. Fourth Power Sector Development Project (PSDP IV): US$600 million, closed in

July 2014;

f. Additional Financing for PSDP IV (PSDP IV AF): US$400 million, closed in July

2014; and

g. Fifth Power Sector Development Project (PSDP-V): US$1,000 million, loan closing

scheduled in May 2017.

8. Association with the Bank has led to marked improvement in the business process of

POWERGRID, especially in the field of environment sustainability, institutional development,

procurement, and financial management.

9. The PSDP IV and PSDP IV AF loans closed in July 2014 and the following sections

cover various details about the loans.

PSDP IV and PSDP IV AF Loans – An Introduction

10. A loan of US$1.4 billion from the Bank was availed by POWERGRID in three tranches

for funding its various transmission system projects. The first tranche of US$400 million was

availed under the PSDP III loan which closed in July 2011. ICR Report (No. ICR1862) was

finalized and disclosed on January 30, 2012. The second and third tranches of US$600 million

and US$400 million have been availed under the PSDP IV and PSDP IV AF loans, both of which

closed on July 31, 2014.

11. All the schemes funded under PSDP IV and PSDP IV AF are complete except the SRSS

13 scheme, whose implementation has been adversely affected due to severe RoW problems.

Project Development Objective

12. The objective of the loans was to strengthen India’s electricity transmission system in

order to increase reliable power exchanges between the regions and the states. ‘Growth in Power

Exchanges between Regions’ was agreed as the key indicator for measuring performance against

the PDO. Further, growth in transmission capacity (in ckm) and growth in transformation

capacity (in MVA) were also agreed to be monitored to achieve the objective. The progress of the

funded elements was continuously monitored through POWERGRID’s own internal mechanism

87

and also through periodic reviews by the Bank missions. The Performance Monitoring Indicators

together with their achievement are as listed in the table:

Table 7.1: Status of Outcome Indicators

Note: FY07 means April 2006–March 2007.

* Revised during the MTR mission in April 2010 in view of the FRA notification in August 2009 under which no-

objection was to be taken from every gram sabha (at the village level) for all the proposals involving diversion of forest

land under the Forest (Conservation) Act, which resulted in delay in obtaining forest clearance.

** As all the indicators have outperformed their original targets (as per the PAD), the targets were revised upward for

FY2014 after restructuring of the loans through Amendments dated May 23, 2014, to Loan Agreements.

Growth in Power Exchanges between

the Regions (Outcome Indicator)

13. During FY2014,

POWERGRID’s strong transmission

network and modernized RLDCs have

facilitated about 78,384 MU of power

exchange across regions. A growth of

about 40,634 MU (107.64 percent) in

power exchange across regions has

been observed in comparison to

baseline FY2006/07 of 37,750 MU.

14. Under the PSDP IV loan, an interregional line, the 400 kV Rourkela-Raigarh-Raipur D/C

line has been implemented. This line has contributed an addition of about 1,400 MW to the

interregional power transmission capacity of the National Grid.

Development of National Grid Leading to Formation of an All-India Grid

15. The process of setting up the National Grid was initiated with the formation of

POWERGRID. Development of the National Grid started with the establishment of limited

capacity asynchronous links (through HVDC systems) between the regions for transfer of

operational surplus power from one region to other. With the establishment of large capacity pit

head power plants having beneficiaries in other regions, AC and HVDC bipole links were

implemented between regions.

Outcome

Indicator

Baseline

FY07

FY08 FY09 FY10 FY11 FY12 FY13 FY14

Growth in

power exchange

across regions

(MU)

Actual

Values 37,750

42,932 46,027 52,000 56747 58,999 65,860 78,384

Target

Values 42,000 46,000 50,000 52000 54,000 56,000 68,000**

Growth in

transmission

capacity (ckm)

Actual

Values 59,400

66,809 71,440 75,291 82355 92,950 100,200 106,804

Target

Values 65,000 71,000 80,000 80000* 85,000* 90,000*

107,000*

*

Transformation

capacity (MVA)

Actual

Values 59,400

73,122 79,522 83,402 93050 124,525 164,763 205,923

Target

Values 68,000 75,000 82,000 85,000 88000 90,000

185,000*

*

Figure 7. 1: Growth in Power Exchange

88

16. In March 2003, the NER and

ER grids were synchronously connected

with the WR grid through

commissioning of the 400 kV Raipur-

Rourkela transmission line, with

cumulative capacity of 50,000 MW. In

August 2006, these three regional grids

were interconnected with the NR grid

with the commissioning of the 400 kV

Muzaffarpur-Gorakhpur line under

‘Transmission System associated with

Tala HEP and East-North

Interconnector’, the first transmission

project implemented under PPP. The

Muzaffarpur-Gorakhpur 400 kV D/C quad line with fixed series capacitor and TCSC has added

2,000 MW to the ER-NR interregional transmission capacity. By the end of the 10th Plan, with

the commissioning of one circuit of the Patna-Balia 400 kV D/C line between ER and NR and

commissioning of the Agra-Gwalior 765 kV S/C line (initially charged at 400 kV) between NR

and WR, the interregional capacity was enhanced by about 2,200 MW. Another 765 kV S/C line

between Agra-Gwalior (initially charged at 400 kV) and the 400 kV Kankroli-Zerda D/C line,

funded under PSPD III, were commissioned during March to April 2009. Commissioning of these

links resulted in a direct high-capacity synchronous interconnection between NR and WR while

providing parallel paths interconnecting two regional grids. The interregional power transmission

capacity of the National Grid was augmented to 27,750 MW by the end of the 11th Plan (March

31, 2012).

17. Before December 31, 2013, four regional grids were operating in synchronous mode as a

single system whereas the SR grid was interconnected asynchronously through HVDC links. On

December 31, 2013, the SR grid was also synchronously connected with the rest of the National

Grid through commissioning of the 765 kV Raichur-Solapur S/C line by POWERGRID, funded

under PSDP V.

18. With the setting up of IPP plants in resource rich areas, the focus of planning the

generation and the transmission system in the country has shifted from regional self-sufficiency

toward optimization of utilization of resources on a nationwide basis. Thus a number of 765 kV

D/C and ±800 kV HVDC interregional links are being implemented as a part of high-capacity

transmission corridors associated with IPPs in the country.

19. As on September 30, 2014, the cumulative interregional power transmission capacity of

the National Grid stands at about

44,250 MW, which is planned to be

further augmented to more than

76,000 MW by end of the 12th Plan

period.

20. Growth in transmission

capacity. As on March 31, 2014,

POWERGRID owns and operates

about 106,804 ckm of EHV

transmission lines. An addition of

Figure 7. 2: Inter-Regional Power Transmission Capacity

(MW)

Figure 7. 3: Growth in Transmission Capacity

89

about 47,404 ckm (79.80 percent) has been achieved in transmission capacity with respect to

baseline FY2007 of 59,400 ckm. Transmission lines covered under these loans have contributed

about 6,23048

ckm of 400 kV lines

toward transmission capacity

addition.

21. Growth in transformation

capacity. As on March 31, 2014,

transformation capacity of

POWERGRID’s network is about

205,923 MVA. An addition of

about 146,523 MVA (246.67

percent) has been achieved in

transformation capacity with respect

to baseline FY2007 of 59,400 MVA.

Under these loans, about 8,000

MVA transformation capacity has

been added.

22. It should be noted that the PDO has been achieved successfully, and all indicators

exceeded their targets as agreed in the PAD. All the transmission elements covered , the loans

except the elements covered under SRSS 13 have been completed progressively well before the

loan closing date of July 31, 2014. Implementation of SRSS 13 has been adversely affected due to

RoW issues along the transmission lines, which is beyond the control of the executing agency,

namely, POWERGRID. Further, POWERGRID has already achieved disbursement of 96.10

percent under PSDP IV and has fully used the PSDP IV AF loan.

Financial Covenants under the Loans

23. POWERGRID has comfortably met all the financial covenants under the loans; the year-

wise details are given in the table:

Table 7.2: Status of Financial Covenants

Covenant FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014

POWERGRID shall take all

necessary measures to produce,

each year, funds from internal cash

generation equivalent to not less

than 20 percent of its capital

expenditures (three-year moving

average).

43.11% 35.34% 25.27% 29.93% 36.78% 22.50% 26.92%

POWERGRID shall not incur any

debt, if after the incurrence of such

debt, the ratio of debt to equity

shall be greater than 4 to 1.

65:35 68:32 71:29 68:32 68:32 71:29 70:30

POWERGRID shall take all

necessary steps to maintain its 0.19 0.15 0.13 0.15 0.91 0.67 0.27

48 Excludes about 549 ckm being implemented under the SRSS 13 scheme.

Figure 7. 4: Growth in Transformation Capacity

90

Covenant FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014

accounts receivable at a level not

exceeding an amount equivalent to

its billing for transmission and

other regulated services for the

preceding three months.

24. Thus, POWERGRID has satisfactorily completed these loans by successfully achieving

the PDO, meeting all the financial covenants, and adequately addressing social and environment

aspects while implementing the projects under the loans.

Project Design

25. The project design was well-aligned with the underlying objectives and focused on

addressing capacity building for increased exchange of power across the regions. To achieve this,

the +500 kV, 2,500 MW Balia-Bhiwadi HVDC Bipole link, 765/400 kV level high-capacity

transmission systems, and interregional/intraregional grid strengthening schemes were planned

under the loans.

26. To achieve the required objectives under the loan, various pre-implementation activities,

such as site selection, survey and soil investigation, initiation for forest clearance, procurement

process, and funding tie-up, were initiated concurrently so that sufficient time would be available

for executing the project. Procurement being one of the vital parts of project design, the entire

scope of various project(s) was broken down into suitable contract packages keeping in mind the

sources, competitiveness, and ultimate dovetailing of all the contract packages for their proper

integration to achieve the project objectives.

Procurement Summary

27. Procurement for the packages (number as in table 7.3) under these loans were carried out

in accordance with Bank guidelines and provisions stipulated in the Loan Agreements. Further,

bidding documents for all type of packages were standardized, resulting in a smoother

procurement process and leading to streamlined implementation of the project. In fact,

POWERGRID has harmonized its bidding documents across packages, irrespective of the source

of funding.

Table 7.3: Details of Packages Awarded

Loan Prior Review Post Review Total

PSDP IV 16 23 39

PSDP IV AF 24 10 34

Total 40 33 73

Project Implementation

28. The schemes under the loans were designed, engineered, and implemented by

POWERGRID. All the schemes covered under the loans have been completed except the SRSS

13 scheme, implementation of which has been adversely affected due to RoW problems in

Madhugiri and Yelahanka areas (Karnataka State) along the transmission lines, which is beyond

the control of POWERGRID. The detailed status of implementation of projects is given at the end

of this annex.

91

Loan Utilization

29. As a result of rigorous monitoring of the project implementation, expeditious resolution

of various issues, timely submission of disbursement claims, and continuous guidance and

support from the Bank, POWERGRID has fully use PSDP IV AF and about 96.10 percent

utilization under PSDP IV has been achieved till date. Project-wise details are given in the table

7.4 below:

Table 7.4: Loan Utilization Details (Figures in US$, millions) PSDP-IV PSDP-IV AF

Sl.

No. Project

Total

Project

Cost

As per

PAD

Envisaged

Bank

Funding

as per PAD

Committ

ed Value

Disburs

ement

Envisaged

Bank

Funding as

per PAD

Committ

ed Value

Disbur

sement

1. EWTC 198 56 52.91 52.91 7 6.24 6.24

2. WRSS II 884 174 152.73 152.73 336 258.98 258.98

3. ERSS I 241 65 59.83 59.83 57 51.08 51.08

4. Balia-Bhiwadi

HVDC Bipole

System

683 295 265.00 265.00 – – –

5. NWTC 119 10 8.45 8.45 – – –

6. SRSS 13@

@ @ 48.0 37.96 – – –

7. System

Strengthening in

Western Region

for Sasan UMPP@

@ @ – – @ 89 83.70

Total 600 586.92 576.86 400 405.30 400

Note: @ These additional projects were included under the respective loans through a Letter of Amendment to the

Loan Agreement(s) dated May 23, 2014. As per the PIP, funding envisaged under SRSS 13 and System Strengthening

in Western Region for Sasan UMPP were about US$47 million and US$134 million, respectively.

Benefits of Projects under PSDP IV and PSDP IV AF

30. Implementation of the +500 kV HVDC Bipole and other 765 kV and 400 kV

transmission elements under these loans have facilitated strengthening of the National Grid

through enhancement of interregional and intraregional power transmission capacity. The benefits

show that significant transmission capacity has been installed, that is, about 6,23049

ckm at 400

kV level and about 8,000 MVA transformation capacity along with new 400/220 kV substations

at Pune, Solapur, and Parli and the 765/400 kV substation at Indore apart from extensions of

numerous substations. The interregional transmission line, namely, the 400 kV D/C Rourkela-

Raigarh-Raipur, under the EWTC Strengthening Scheme (under PSDP IV) has resulted in

enhancement of interregional power transfer capacity by about 1,400 MW.

Operational Experience

31. All major investments financed by these loans have resulted in further strengthening of

the National Grid and enhanced its reliability, safety, and security. Transmission assets of the

49 Excludes about 549 ckm under SRSS 13.

92

company are being successfully operated and maintained with availability of more than 99

percent.

Best Practices under the Loans

32. Procurement. Under this loan and in line with the Bank’s procedures, procurement for

transmission system projects was carried out, which were either uniquely positioned or pertained

to emerging transmission technologies in India. For example, the Balia-Bhiwadi Transmission

System, a long distance (approximately 800 km) bipole HVDC Transmission System for transfer

of 2,500 MW power at ±500 kV voltage level, was a unique project, considering the complexity

of procurement of HVDC Terminal Package. Similarly, procurement for certain packages in other

transmission projects involved procurement of plant and equipment and goods for 765 kV voltage

level, which was an emerging voltage level in transmission systems in India at that time.

Initiative for increased conductor and insulator vendor participation. To increase

participation of vendors for conductors and insulators, POWERGRID, in association with the

Bank, organized vendor conferences in April 2009 and September 2010. Such conferences

have resulted in more participation and competitive prices.

Conference with prospective bidders on common mistakes/discrepancies during bidding. In

September 2010, POWERGRID, in association with the Bank, also organized a vendor

conference regarding common mistakes or discrepancies during bidding. This conference has

resulted in significant improvement in the bids being submitted and helped in reducing delays

in bid evaluation on account of common errors or inconsistencies in the bids.

33. Retroactive financing. Under the loans, the provision for retroactive financing for up to

20 percent of the loan amount—Section IV (B) (1) of the Loan Agreements—resulted in

immediate disbursement of about US$57 million under PSDP IV and about US$26 million under

PSDP IV AF.

34. Restructuring of loans to optimize utilization. During the implementation stage, there

have been significant savings in the PSPD IV, PSDP IV AF, and PSDP V loans due to (a) ICB

process, (b) modification/deletion of some schemes according to system requirements, and (c)

depreciation of the Indian rupee against the U.S. dollar. The restructuring of the loans was carried

out with support from the Bank and the Department of Economic Affairs, MoF. This has helped

achieve optimal utilization of these loans. The restructuring of loans included new schemes and

swapping of some schemes between PSDP IV AF and PSDP V keeping in view their

commissioning schedule vis-à-vis loan closing dates and including an additional expenditure

category - Works, Installation, and Erection. The restructuring concerned the following

components:

a. PSDP IV (Loan No. 4890-IN)

• Inclusion of the new scheme, SRSS 13;

• Revision in the Performance Monitoring Indicators; and

• Inclusion of Works, Installation, and Erection under categories eligible for funding, in

addition to Goods.

b. PSDP IV AF (Loan No. 7593-IN)

• Shifting of one scheme, namely, System Strengthening in WR for Sasan UMPP, from

PSDP V to PSDP IV AF. At the time of restructuring of the loan, major scope under the

scheme was completed and about 88 percent of committed loan amount under this project

93

(about US$78 million) was disbursed. Thus, the shifting of project helped full utilization

of the PSDP IV AF loan.

• Shifting of two schemes, namely, Northern Region System Strengthening Scheme XXIV

and Southern Region System Strengthening XVII, from the PSDP IV AF to PSDP V loan,

keeping in view their expected commissioning beyond the PSDP IV AF loan closing date

of July 31, 2014.

• Revision in the Performance Monitoring Indicators.

• Inclusion of Works, Installation, and Erection under categories eligible for funding, in

addition to Goods.

35. Environmental and social. POWERGRID is committed to the goal of sustainable

development and conservation of nature and natural resources. While continually improving its

management systems, accessing specialist knowledge and introducing state-of-the-art and

internationally proven technologies, POWERGRID strictly follows the basic principle of

avoidance, minimization, and mitigation in dealing with environmental and social issues; where

necessary, restoration and enhancement is also undertaken. Based on these principles,

POWERGRID, in association with the Bank, took a proactive approach and developed a

comprehensive ESPP in April 1998 to address the environment and socioeconomic issues arising

from activities for its projects, after a wide consultation involving stakeholders, the general public,

representatives from MoP, MoEF, CEA, State Electricity Boards, allied organizations, academia,

NGOs, multilateral funding agencies, and PAP from its projects through a process of National

Consultation. Since then, POWERGRID has been successfully implementing the provisions of

ESPP in all its projects irrespective of the type of funding, which clearly demonstrated that it is

achieving the highest standard with respect to environment and social safeguards comparable to

any utilities in India and at the international level. Moreover, several good environmental

practices have been institutionalized, including technical innovations to minimize environmental

impact. The project exhibited good rehabilitation and resettlement practices and community

development programs. Some of them are listed:

POWERGRID has developed its corporate ESPP. Transmission line routes were selected on

the above-mentioned principles and routes involving less forest/wildlife area were selected

for detailed survey. Due to implementation of the ESPP, forest area involvement has reduced

drastically from 6 percent in 1998 to less than 2 percent in 2013.

POWERGRID has reduced wildlife area involvement by renovating its existing lines into

multicircuit lines. In the case of the Durgapur-Jamshedpur line (funding under PSDP IV),

POWERGRID accommodated 1.25 km of line passing through the Dalma Wildlife Sanctuary

on multicircuit towers in the existing RoW of the Maithan-Jamshedpur line by replacing the

existing towers with multicircuit towers to accommodate both lines and thereby avoiding

fresh impact on flora and fauna in the sanctuary area. Likewise, for the Baripada-Mendhasal

line of ERSS-I (funding under PSDP IV), POWERGRID selected the route involving

minimum area (about 0.552 ha only) traversing through the Chandaka Wildlife sanctuary.

POWERGRID was able to pass the Chandaka Wildlife Sanctuary overhead using

tall/extended towers without any tree felling or building towers inside the sanctuary area. The

lines under which forest area was reduced by following the principle of avoidance are as

listed in the table:

94

Table 7.5: Reduction in Forest Area under the Loan

Sl.

No. Scheme

Transmission

Line under the

Loan

Forest Area

Initially

Envisaged

(in ha, as

per IEAR)

Forest

Area

Actually

Involved

(in ha)

Remarks

PSDP IV

1 EWTC

400 kV D/C

Ranchi-

Rourkela

34.42

18.52

Forest area initially envisaged

was based on desk review/walk

over survey. However, the actual

forest area decreased after

detailed survey/joint inspection

and optimization of line route.

2 WRSS II 400 kV D/C

Damoh-Bhopal 89.3 88.71 Almost the same

3 ERSS I

400 kV D/C

Baripada-

Mendhasal

125.58 21.363

Forest area decreased

significantly following the

principle of avoidance and

minimization through

optimization of line route.

PSDP IV AF

1. WRSS II

400 kV D/C

Bhadrawati-

Parli

13.11 3.58

Actual forest area decreased

following the principle of

avoidance and minimization

through optimization of line

route.

For optimization of land requirement for substations, land management practices were

followed in consultation with engineering and site representatives, to reduce the area of

requirement. Typically, 20 to 60 ha of land is required for constructing a substation,

depending upon the type and voltage level. Considering the limited availability of land,

POWERGRID has constantly upgraded and improvised by investing in new technologies like

GIS, which requires less land in comparison to the traditional AIS. Following the principle of

minimization to conserve the precious land resources, POWERGID has taken a policy

decision to have a GIS substation in city area and to install multicircuit towers around 1-km

radius of all new substations.

Active participation of stakeholders, including PAP, is ensured during project implementation.

Public consultation/information has been made an integral part of the project cycle and the

public is informed about the project at every stage of execution and their grievances, if any,

are resolved as soon as possible. Moreover, public consultation/meetings are undertaken at

every stage of execution, ranging from survey and construction to commissioning of the

transmission line and during preparation and finalization of the RAP for substations.

Participation of women in finalizing RAP has been ensured at every stage of the process.

They have participated in various informal meetings, focused group discussions, and public

consultations. Their opinions and the priorities set by them have been considered. In public

consultations, PAP along with villagers/GP members participated and gave their

consent/priority for primarily taking up Community Development (CD) works. Hence, the

activities taken up for village development are priority based and are useful for all. Details in

respect of women’s participation during the public consultation held on the draft RAP at

various substations is given in the table:

95

Table 7.6: Women Participation Public Consultation Held on Draft RAP Sl. No. Substation No. of Women Participants

1 Balia 53

2 Bhiwadi 11

3 Parli 16

4 Solapur 6

5 Indore 8

6 Madhugiri 18

Awareness and training programs on protection of worker's health and safety is conducted

regularly at sites. Safety regulations/manuals are included in bidding documents and guides

provisions for workers’ health and safety.

POWERGRID has a dedicated unit to oversee all health and safety aspects of its project and

has framed guidelines and checklists for workers’ safety as its personnel are exposed to live

EHV apparatus and transmission lines. POWERGRID has taken proactive measures to reduce or arrest leakage of SF6 gas used in

circuit breakers (though SF6 gas leakage is not a major issue) through implementation of a

greenhouse gas reduction plan. This includes measures like installation of halogen gas leak

detectors and gas pressure monitors in all circuit breakers, connected to the control room to

raise an alarm in case of any leakage and pressure drop and strict checking at the store level

for issuing SF6 gas.

To develop surrounding and community resources in the affected villages, POWERGRID has

been taking up CD works in consultation with villagers.

Sustainability of RAP and CD works. CD works are finalized through public consultation

with PAP and villagers. Amenities or assets established under CD works are on the land

provided by GP and handed over to them with an agreement that maintenance of the created

amenities will be taken care of by the GP.

Self-help Groups (SHGs): CD works at the Parli substation had the provision of INR

10 million for each SHG formed by women from project affected families (PAFs),

facilitating these women to take loans and use the offered grant money as depository

asset. The money was used by the group as a guarantee against taking the loan for the

group members. Most of the group members have reported taking loans and investing

the money for procurement of goats, cows, and buffalos, which became an additional

income source for the family and for expansion of their business for regular monthly

income.

Hygiene and sanitation are often considered women’s tasks. Hence, the gender-based issue

regarding sanitation was addressed during the consultation/focus group meetings and

community toilets have been constructed for women in village at Solapur.

Rehabilitation Assistance (RA) to those in the vulnerable category, widows, handicapped,

minors, and the elderly, are provided in the form of monthly income scheme/fixed deposits

that ensured regular monthly income. The regular income for such vulnerable members of the

family not only provides a better life but also provides additional security and respect in

society.

Several employment avenues were opened up to the local residents with contractors of

POWERGRID even when POWERGRID’s projects did not envisage significant job

opportunities to the local residents directly. Contractors engaged by POWERGRID are bound

by the general conditions of the contract (General Condition No. 13), which stipulates that

local labor has to be given preference for unskilled and semiskilled jobs and will be informed

about the same by the project authorities and would be asked to hire unskilled labor from the

eligible PAP.

96

The establishment of POWERGRID’s substations is marked by huge investment in the area,

the impact of which spills over in both the local economy and backward linkages. This has

led to creation of many indirect job opportunities in terms of small businesses and other

services. Growth of small businesses and private services, which has come to the fore in

impact assessment of Bhiwadi, is one such example.

36. Sustainability reporting. POWERGRID has also taken a lead role by becoming the first

PSE in the Indian power sector to issue a separate environment and social sustainability report in

March 2010 for FY2008/09, based on internationally acclaimed/accepted Global Reporting

Initiative-G3 Guidelines/Index (GRI-www.globalreporting.org), for measuring, disclosing, and

being accountable to internal and external stakeholders for organizational performance toward

sustainable development. Since the reporting cycle is biennial, the second such report was

released in March 2013 for the period 2009–11.

Lessons Learned

37. Forest clearance. As per guidelines issued by the MoEF, processing time of a proposal

for forest clearance at the state level has been prescribed as 210 days. However, the time taken

normally is very high, which results in delay in implementation of the projects. Similarly, for

transmission lines that pass through wildlife sanctuaries, national parks, and notified eco-sensitive

zones, permission of the Supreme Court is essential but is a very cumbersome process. It may be

mentioned here that the forest proposals for such areas are processed only after the approval of

the Supreme Court and the whole process takes more than 2 to 3 years or even more.

POWERGRID has very limited influence on the state forest hierarchy in processing of forest

proposal due to the involvement of many officials. However, POWERGRID’s experiences

indicate that constant persuasion expedites the process. Therefore, POWERGRID has deputed

one officer exclusively for each region for regular follow-up and monitoring of forest proposals at

the state level and the concerned RMoEF to expedite forest clearance.

38. Forest Right Act. Forest clearance under the Forest (Conservation) Act, 1980, has always

been a lengthy process due to the involvement of different levels starting from the range officer to

the Forest Secretary at the state level and from the Assistant Inspector General (AIG) of Forests

to the minister of Environment and Forests, GoI. The MoEF, vide the circular dated August 3,

2009, mandated the requirement of settlement of FRA in the forest areas to be diverted for non-

forest purposes. The process also includes the written consent of the concerned gram sabha,

which was made compulsory under the Scheduled Tribes and Other Traditional Forest Dwellers

(Recognition of Forest Rights) Act 2006 (FRA 2006) for the entire proposal involving diversion

of forest land under the Forest (Conservation) Act, 1980. This further complicated the process of

forest clearance, which has resulted in enormous delays.

39. As per the MoEF’s letter dated February 5, 2013, consent of the gram sabha was not

required but recommendation of the committees under FRA 2006 was mandatory for issuance of

District Collector’s certificate under FRA 2006. However, the Ministry of Tribal Affairs issued a

circular on March 7, 2014, that FRA 2006 does not exempt any category of projects from consent

of the gram sabha and compliance of the FRA was mandatory before forest land can be diverted.

Failure to do so would be a violation of the law and consent of the gram sabha was required.

POWERGRID again took this up with the MoP to be discussed with the MoEF for delinking of

transmission lines from FRA 2006.

40. Land acquisition. Availability or acquisition of land for substations is a critical factor for

ensuring timely completion of given project. To expedite the land acquisition process,

97

POWERGRID has taken the initiative to acquire land on negotiated settlement or consent award

basis. Recently, a policy decision has also been taken for direct purchase of land through a

committee on willing buyer willing seller on market/negotiated rates to avoid public resistance

and court intervention faced during land acquisition.

41. Typically, 20 to 60 ha of land were required for constructing a substation, depending

upon the type and voltage level. However, keeping in mind availability of land for its projects

which has now become a scarce resource, POWERGRID, apart from adopting new technologies

like GIS which requires less land area (about 25 percent) as against conventional AIS substations,

is also following the practice of land management to minimize the land requirement to the barest

minimum. Following the principle of minimization to conserve precious land resources,

POWERGID has taken a policy decision to have GIS substations in the city area and install multi

circuit towers around 1-km radius of all new substations. A comparison of land area requirement

with the newly adopted technology for conventional AIS and GIS substations is given in this

table:

Table 7.7: Comparison of Land Requirement for AIS and GIS Sl.

No

Substation Detail Land Requirement

for AIS

Land requirement

for GIS

1 765/400 kV substation (typical with 8 diameters in

765 kV and 12 diameters in 400 kV)

115 acres 50 acres

2 400/220 kV substation (typical with 8 diameters in

400 kV and 28 feeders in 220 kV)

35 acres 16 acres

42. Wherever possible, POWERGRID tries to locate substations on government land, waste

land, or non-fertile land to reduce the impacts of land acquisition on PAP. In the absence of

government land, private land, which involves fewer PAP, is acquired.

43. Right of Way. RoW is one of the major concerns being faced in construction of

transmission lines. Various factors such as high population density, other ongoing infrastructural

developments, and POWERGRID’s duty toward environmental preservation, limit the freedom to

select the most optimum route devoid of RoW issues. To address such issues to the extent

possible, POWERGRID has adopted innovative tower design to reduce the width of the RoW and

has also taken a policy decision to install D/C or multi circuit towers in forests and other

ecologically sensitive areas. This has resulted in huge saving of trees. To address the RoW issues

and to cater to the need of bulk power transfer to distantly located load centers, POWERGRID is

deploying various technologies such as multi circuits, compact and tall towers, High Surge

Impedance Loading Lines, Fixed and Thyristor Controlled Series Compensation, and HTLS

Conductors. POWERGRID is gradually adopting higher voltage levels such as 765 kV/800 kV

and increasing the power carrying capacity of transmission lines (up to 6,000 MW on D/C lines)

for optimizing the RoW without much effect on transmission losses.

44. Initiatives have been taken for re-conductoring of some of the existing lines such as the

Siliguri-Purnea D/C lines (under PSDP IV AF) with HTLS conductors to enhance their power

carrying capacity. A comparison of RoW requirements for 400 kV and 765 kV transmission lines

is given in the table 7.8:

98

Table 7.8: RoW under the Transmission Lines Sl. No. Voltage Level of Transmission Line ROW Requirement (in meters)

1 400 kV S/C 46

2 400 kV D/C 46

3 765 kV S/C 64

4 765 kV D/C 67

45. Increasing operational and maintenance efficiency. The company’s assets have grown

exponentially with the increased number of 765 kV transmission lines in the system.

Geographical spread of assets all over the country, open electricity market, wide variation in

power flow in terms of quantum and direction, increased penetration of renewable generation,

and the need for effective utilization of existing assets have made it a challenging task to maintain

such large power systems with high reliability, safety, and security in real time. Recognizing the

need for effective control on a real-time basis and to improve planning and operations of the

power system as a whole, POWERGRID has adopted various measures:

Remote operations of substations and creation of maintenance service hub facilities where a

group of experts of all areas, such as control and protection, switchyard equipment,

transformer, and reactor, shall be available to for major maintenance of equipment as and

when required. As of March 2014, there are 51 substations under remote operation and 12

unmanned substations.

Adoption of state-of-the-art monitoring techniques for transmission equipment for detection

of defects at their incipient stage.

Introduction of aerial patrolling of lines using helicopters for the first time in India in selected

areas such as deep forests, hilly terrain, and snowbound areas where ground patrolling is

difficult and very time consuming.

POWERGRID has undertaken full-scale implementation of WAMS on pan-India basis under

the Unified Real Time Dynamic State Measurement System (URTDSM) project integrating

state and central grids with the aim of enhancing efficiency in overall grid management in the

open electricity market regime.

With a view to optimize the operation and maintenance manpower and efficiently deploy

them, POWERGRID is in the process of establishing the National Transmission Asset

Management Center (NTAMC) at Haryana for centralized remote monitoring, operation, and

control of substations.

46. The result of consistent efforts and round-the-clock monitoring is demonstrated through

the company’s high operational performance during the year in terms of transmission system

availability (99.92 percent) and the number of trippings per line (0.56).

Institutional Strengthening

47. POWERGRID has started an organization-wide ERM framework and ERP toward

improving corporate governance and financial accountability.

48. ERM framework implementation. POWERGRID has implemented the ERM framework

with the approval of its Board in February 8, 2011. POWERGRID had constituted a Risk

Management Committee (comprising five members: ED-Finance, ED-Corporate Planning, ED-

Human Resource, ED-Western Region, and ED-Commercial). A Chief Risk Officer has been

designated who reports to the Risk Management Committee, which in turn will report to the

Board’s Audit Committee. The ERM framework identifies 24 major risks.

99

49. ERP implementation. ERP is being implemented in POWERGRID under the project

name ‘Roopantar’. The ERP implementation work is being carried out in partnership with M/s

TCS, who is deploying an SAP system. The ERP system includes Plant Maintenance (Operation

and Maintenance); Project System (Project Execution); Material Management (Project and

Operations); Finance and Control; Human Capital Management (HCM); e-procurement; and

Sales and Distribution (Commercial) for all the business verticals of POWERGRID, that is,

Transmission, Telecommunication, and Consultancy. ERP’s pilot deployment at the corporate

office and in one of the regions (Southern Region-II) has gone live in August 2014. The expected

benefit from the system is as listed:

Integrated processes

Elimination of duplication in work

Visibility of construction and operations inventory

Traceability of capital and operations expenditure

Better controls

Better reports for faster management decision

Performance of the World Bank

50. POWERGRID acknowledges the active support provided by the Bank during

administration of the loans and other issues pertaining to procurement, disbursement, and

safeguards. In view of the huge funding assistance to POWERGRID and also for future

engagements, POWERGRID would like to provide some suggestions for further improving

various processes:

a. Suggestions pertaining to procurement aspects

Threshold limit. The present limit for ‘prior’ review packages under the Bank’s loan is

US$25 million. Considering POWERGRID’s exposure to Bank loans and procedures, it is

suggested that the limit for ‘prior’ review packages be enhanced.

b. Suggestions pertaining to contracts management on the Bank’s Client Connection site

The changes in the contract value on account of price variation and amendments to the

contracts do not getting updated in Client Connection. POWERGRID maintains a database

of updated contract price and disbursement details and reports this information on a

periodic basis in the FMRs to the Bank. It is proposed that this information be updated

regularly in Client Connection by the Bank and permission may be given to the borrower

to view the information so that both the Bank and POWERGRID can verify it and the

information can be updated in a timely manner, in case of any discrepancy.

It will also help in reconciling if there is a proper history of applications under which

disbursements are made by Bank under each contract. This system will help both the lender

and the borrower in monitoring the availability of funds for disbursement against each

contract and facilitate optimal utilization of the fund. It is worth mentioning that a similar

system is already available on the ADB website and proved to be very effective both for

POWERGRID and ADB in reconciliation of contracts.

Scheme-wise Implementation Details


100

Project Cost

i. Total completion cost. About INR 27.46 billion (or US$450 million)50

ii. Bank funding under PSDP IV. About INR 16.17 billion (or US$265 million)

Commissioning

Poles I and II were commissioned in September 2010 and July 2012, respectively.51

Pole II

of the scheme was originally scheduled for completion in December 2009 but could only be

commissioned in July 2012 for reasons beyond the control of POWERGRID, as explained

below. As per the contract, eight converter transformers were to be manufactured and

supplied by M/s BHEL in technical collaboration with M/s Siemens AG, Germany, which

was the Joint Venture (JV) partners for the package, from July 2008 to March 2009.

However, the transformers could only be supplied from October 2011 to March 2012. The

reasons for the delay are as listed:

i. Development of manufacturing and testing facilities at BHEL, Bhopal works was

delayed by two years from February 2008 to March 2010 due to delay in construction of

the new facility before beginning the manufacturing of these converter transformers.

ii. Procurement and delivery of major raw material from the source approved by M/s

Siemens was delayed.

iii. As BHEL was manufacturing converter transformers based on Siemens technology for

the first time, the technology absorption process took longer than expected.

iv. There were some test bed failures at BHEL works. The root cause analysis process

jointly by Siemens and BHEL, resourcing of the raw material for repair, and so on took

substantial time, which delayed delivery of the transformer.

v. For transportation of converter transformers from BHEL, Bhopal works to Balia, both

road and water transport was used. During transportation, collapse of bridges and

variation of water level in the river considerably delayed the supply. For example, the

first converter transformer unit was ready for dispatch in the first week of October 2011

but due to collapse of a bridge in Madhya Pradesh, movement of all heavy equipment

was totally stopped by the government of Madhya Pradesh for almost two months.

Substations

Sl.

No.

Scope of

Works

Original

Commissioni

ng Schedule

Actual

Commis

sioning

Resettlement and Rehabilitation

Funding: PSDP IV

1. ±500 kV

HVDC

substation at

Balia along

with

associated

works

September

2009

July

2012

RAP involved 168 acres of private land in Uttar

Pradesh. RAP was completed in October 2011 with:

RA (INR 12.112 million) distributed to all 386

eligible PAP.

Full land compensation (INR 57.38 million)

disbursed to all PAP.

Following CD works (INR 9.82 million)

completed at:

o Bhind Lakhansingha village - Construction

50 Exchange rate considered US$1 = INR 61. The cost includes HVDC Transmission Line funded under PSDP III. 51 The HVDC bipole line was covered under the PSDP III loan and completed in March 2010. Pole I of the HVDC line

along with terminal stations was originally planned to be completed by September 2009 but was completed in August

2010 due to the reasons explained above.

101

Sl.

No.

Scope of

Works

Original

Commissioni

ng Schedule

Actual

Commis

sioning

Resettlement and Rehabilitation

of road, 2 new rooms in higher secondary school,

2 toilets in school premises (one each for girls

and boys), providing furniture for students in

school, and installation of 5 hand pumps

o Chakhabaspur village - Construction of

road, 2 rooms for primary school, toilets in

school premises (one each for girls and boys),

bus shelter at main road passing through the

village, providing furniture for students in the

school, and installation of 5 hand pumps

o Ibrahim Patti village - Construction of toilet

in school, boundary wall in school, installation of

2 hand pumps, providing furniture in school, and

renovation of pond

2. ±500 kV

HVDC

substation at

Bhiwadi

along with

associated

works

September

2009

July

2012

RAP (completed in April 2010) involved 10.53 acres

of private land in Rajasthan and included:

RA (INR 5.032 million) distributed to all eligible

97 PAP

Full land compensation (INR 20.67 million)

amount disbursed to all 97 PAP

Completed CD works (INR 6 million) includes

construction of 1 room with baramada for

dispensary; construction of road; and provision of

drinking water supply

Other Features of the Scheme

i. Procurement. Under the project, the 2 packages that were covered under PSDP IV were

awarded in March 2007and December 2007, respectively.

Package Type Prior Review Post Review Total

Insulator – 1 1

Substation 1 – 1

Total 1 1 2

ii. Environmental assessment reports. As only HVDC terminal stations were covered

under PSDP IV, there was no forest involved. Since the HVDC bipole line was funded

under PSDP III, the necessary documents (IEAR and FEAR) were submitted as part of

PSDP III.

Major Benefits of the Scheme

i. The HVDC link is operating successfully and enables a maximum power flow of 2,000

MW.

ii. The HVDC link is facilitating bulk power exchange between the Northern, Western,

and Eastern Regions. The link has become an important component in strengthening

the Northern Region grid as the HVDC system comes with benefits such as controlled

power flow, control features that help in damping the system oscillation after any

disturbance, no contribution to any additional short circuit current to Balia (while AC

systems does contribute), and flexibility of operations.

102


Project Cost

i. Total completion cost. About INR 4.92 billion (or US$81 million)52

ii. Bank funding under PSDP IV. About INR 0.52 billion (or US$8.45 million)

Commissioning

The scheme was originally planned to be completed by January 2009 but was later

revised to be completed by March 2009 along with the commissioning of the associated

transmission lines, which were funded under PSDP III and commissioned in April 2009.

These were the reasons for this marginal delay in commissioning of the associated

transmission lines:

i. There was a delay in receipt of forest clearance for the Zerda-Kankroli 400 kV D/C

line. The forest proposals were submitted in 2006–07 for clearance in five divisions

of Rajasthan and Gujarat States. The process took longer due to delay in processing

at various stages within the state forest departments.

ii. In addition, there was a stay order at three of the locations by the Nathdwara court,

Rajasthan. The sites were vacated in February 2009. Thereafter, the line was

commissioned in April 2009.

Substations

Sl.

No

Scope of Works Original

Commissioning

Schedule

Actual

Commissioning

Resettlement &

Rehabilitation

Funding: PSDP IV

1. 400/220 kV Agra

(POWERGRID) substation

extension

January 2009 March 2009 RAP was not required

as the project involved

extension of existing

substations only. 2. 400/220 kV Gwalior


extension

January 2009 March 2009

3. 400/220 kV Kankroli


extension

January 2009 April 2009

4. 400/220 kV Zerda (GEB)

substation extension January 2009 April 2009


i. Procurement. Under the project, the 2 packages that were covered under PSDP IV were

awarded in April and July 2007, respectively.


Insulator – 1 1

Substation – 1 1

Total – 2 2

52 The cost includes HVDC Transmission Line funded under PSDP III.

103

ii. Environmental assessment reports. As only substations are covered under PSDP IV,

there was no forest involved. The associated transmission lines were funded under

PSDP III. The necessary documents (IEAR and FEAR) were submitted as part of PSDP

III.

Major Benefits of the Project

i. These two interregional transmission lines along with the extension of the associated

bays have enhanced the interregional power transfer capacity by 2,100 MW.

ii. These two separate interconnections have also enhanced system stability as well as

security of the Northern and Western grids.

c. Western Region System Strengthening Scheme II

Project Cost

i. Total completion cost. About INR 29.90 billion (or US$490 million)

ii. Bank funding under PSDP IV and PSDP IV AF. About INR 25.11 billion (or

US$411.71 million, of which US$152.73 million under PSDP IV and US$258.98

million under PSDP IV AF).

Commissioning

The project was scheduled for commissioning in July 2010 but could be progressively

commissioned only till December 2012 due to delays in obtaining forest clearance for

various lines under the project, especially Raipur-Wardha and Korba-Birsinghpur (varied

between 22 and 62 months). The details are as listed:

Raipur-Wardha 400 kV D/C line

For the state of Chhattisgarh:

i. Proposal for forest clearance for the Chhattisgarh portion was submitted in October

2007.

ii. The stage-I approval was accorded on May 31, 2010, by the RMoEF, Bhopal

stipulating various conditions.

iii. After complying with all the conditions in stage-I approval, the stage-II (final)

approval was issued on March 9, 2011, by the RMoEF, Bhopal.

iv. On stage-II approval, the cost of tree cutting was deposited and approval was given in

May 2011 for tree cutting.

For the state of Maharashtra:

i. Proposal for forest clearance for the Maharashtra portion was submitted in October

2007.

ii. The proposal involved forest area in the Gondia division and under Forest

Development Corporation of Maharashtra (FDCM). The NOC from the FDCM was

obtained in November 2010.

iii. The proposal was forwarded by the state government to the MoEF at New Delhi in

May 2011, which directed the RMoEF, Bhopal for site inspection in June 2011

followed by submission of report to the MoEF in July 2011. The proposal was then

discussed in the meeting of the FAC (August 2011). Since the line passes through the

wildlife corridor (Tiger Corridor), comments were solicited from the National Tiger

Conservation Authority (NTCA). NTCA/Wildlife Institute of India (WII) submitted its

recommendations to the MoEF in December 2011 and the proposal was again

104

discussed in the FAC held in December 2011 and cleared for approval. Accordingly

the stage-I approval was issued on April 30, 2012, stipulating various conditions.

iv. After complying with all the conditions in the stage-I approval, the approval was

obtained on September 17, 2012, for the second and final stage.

v. Further, since the line passes through a protected area/eco-sensitive zone and the

proposed land is within 10 km of the boundary of the protected reserve, tree felling

permission had also to be taken from the High Court, Maharashtra. Hence, along with

the forest department, an application was filed in the High Court in September 2011,

seeking permission for tree felling in the forest area for establishment of the 400 kV

D/C transmission line. However, pending MoEF approval, the High Court directed

that the request be filed again after obtaining MoEF consent. On stage-II approval in

September 2012, a fresh appeal was filed before the High Court subsequent to which

the permission for tree felling in the forest area was granted on November 30, 2012.

After permission of the High Court, construction activities started in forest areas and

the work was completed and the line successfully charged on December 31, 2012.

Korba STPP-Birsinghpur 400 kV D/C line

The transmission line was passing through the forest area in the states of Madhya

Pradesh and Chhattisgarh. The proposal for forest clearance was submitted on May 17,

2006. However, it took considerable time for the MoEF to grant the final approval

(stage-II) in spite of continuous follow-up by POWERGRID at different levels. Stage-I

and stage-II approvals for the Madhya Pradesh portion was granted on March 2, 2009,

and November 9, 2009, respectively and for the Chhattisgarh portion on July 28, 2010,

and June 14, 2011, respectively.

Transmission Lines

Sl.

No.


Commissio

ning

Schedule

Actual

Commissio

ning

State Forest

Area

(ha)

Approval Status (and

Time Taken since

Submission of Forest

Proposal to DFO)

Funding: PSDP IV

1. 400 kV D/C Korba-

Birsinghpur line -

454 ckm

July 2010 February

2012

Chhattis

garh

Madhya

Pradesh

157.48

96.84

Final approval in June

2011 (62 months)

Final approval in

November 2009 (41

months)

2. 400 kV D/C

Birsinghpur-Damoh

line – 508 ckm

July 2010 February

2011

Madhya

Pradesh

84.51 Final approval in May

2009 (38 months)

3. 400 kV D/C

Damoh-Bhopal line

- 432 ckm

July 2010 March 2010 Madhya

Pradesh


2009 (40 months)

Funding: PSDP IV AF

4. 400 kV D/C

Wardha-Parli quad

line - 674 ckm

July 2010 July 2011 Mahara

shtra


2011 (22 months)

5. 400 kV D/C

Bhadrawati-Parli

line - 776 ckm

July 2010 March 2011 Mahara

shtra

3.58 Final approval in July

2010 (44 months)

105

Sl.

No.


Commissio

ning

Schedule

Actual

Commissio

ning

State Forest

Area

(ha)

Approval Status (and

Time Taken since

Submission of Forest

Proposal to DFO)

6. 400 kV D/C Parli

(MSETCL)-Parli

(POWERGRID) line

- 10 ckm

July 2010 February

2011

Mahara

shtra

– No forest was involved

7. 400 kV D/C Raipur-

Wardha line - 741

ckm

July 2010 December

2012

Chhattis

garh

Mahara

shtra

15.37

100.91

Final approval in March

2011 (42 months)

Final approval in

September 2012 (60

months)

Substations

Sl.

No.


Commissioni

ng schedule

Actual

Commissioni

ng

Resettlement & Rehabilitation

Funding: PSDP IV

1. New 400/220 kV

Pune substation July 2010 October

2010

42 acres of encroachment free government

land in Maharashtra was acquired. No PAP

involved; hence, no RAP.

Under CD work (INR 2.93 million),

reinforced concrete road in the adjoining

village (Nav Lakh Umbre) (about 800

meters) has been constructed.

2. New 400/220 kV

Solapur substation July 2010 March 2010 RAP (completed) involved 39.79 acres private

land in Maharashtra and includes:


eligible PAP.

Completed CD works (INR 8.991 million):

Construction of community hall (2,000 sq.

ft.) comprising 1 hall, stage with rooms on

both sides, and 1 kitchen; community toilets

with septic tank, 10 units each at 3 locations

for women, around the village; library

building; distribution of 5 personal

computers for the high school; construction

of approach road connecting the community

hall to the main road (Solapur-Akkalkot)

with 1 culvert; construction of approach

road connecting the main road to the SC and

ST colony; construction of road in minority

colony with 1 side drain; and approach roads

on already laid metal roads inside new

village developed adjacent to old village,

with 2 culverts and 1 side drain providing

110 mm diameter Hume pipe crossings.

3. Extension of

Gwalior and Bina

substations

July 2010 February

2010

RAP was not required as the project involved

extension of existing substations only.

106

Sl.

No.


Commissioni

ng schedule

Actual

Commissioni

ng


4. Extension of

Damoh and Bhopal

substations

July 2010 February

2011 and

March 2011,

respectively

5. Extension of

Kolhapur

substation

July 2010 February

2011

6. Extension of

Aurangabad, Parli,

and Korba

substations

July 2010 August 2011

and February

2012,

respectively

Funding: PSDP IV AF

7. 400 kV Parli (New)

substation

July 2010 March 2011 RAP (completed) involved 36.5 acres of

private land in Maharashtra and include:


eligible PAP.

Completed CD works (INR 57.09 million):

Construction of water-bound macadam road

along the east side of the substation

boundary wall; construction of reinforced

concrete road inside the village; extension of

school building; extension of community

hall and financial assistance of INR 0.3

million to three Mahila Bachat Gut (SHG)

under rural self-employment scheme at INR

0.1 million to each Gut.

8. Extension of 400

kV Bhadrawati,

Parli (MSETCL),

Wardha, Seoni, and

Raipur substations

July 2010 Progressively

from

February

2011 to

September

2011

RAP was not required as the project involved

extension of existing substations only.

9. Extension of 400

kV Rajgarh,

Karamsad, Limbdi,

Zerda,

Ranchodpura, and

Birsinghpur

substations

July 2010

10. FSC at Rajgarh

substation for 400

kV Rajgarh-

Karamsad D/C line

July 2010

11. FSC at Wardha

substation for 400

kV Wardha-Raipur

D/C line

July 2010


i. Procurement. Under the project, 16 packages were covered under PSDP IV and 25 packages

were covered under PSDP IV AF. These packages were awarded from May 2007 to March

2009.

107


PSDP IV

Tower 3 – 3

Conductor 3 1 4

Insulator 2 2 4

Substation 3 1 4

Reactor 1 – 1

Total 12 4 16

PSDP IV AF

Tower 7 – 7

Conductor 4 3 7

Insulator 2 2 4

Substation 1 2 3

Reactor 1 1 2

FSC 1 1 2

Total 16 9 25

ii. Environment assessment reports Report Target Date for

Submission

(as per PIP)

Actual Date of

Submission

Set-A

IEAR – December 2006

FEAR May 2008 November 2009*

Set-D

IEAR March 2007 March 2007

FEAR December 2008 September 2009* Note: *Forest clearance is an important input for the FEAR, which is basically a compliance report of the

IEAR listing all measures taken for management of environment and social issues. During the one-year period

starting from October 2006 to October 2007, no forest clearance was granted by the MoEF due to intervention

of the Supreme Court. Accordingly, there were delays in obtaining forest clearance and as agreed with the

Bank, POWERGRID submitted the FEAR.


These elements have augmented intraregional transmission system in the Western Region

to facilitate import of power from neighboring regions as well as further dispersal towards

various load centers in various parts of the region to meet the long-term power transfer

requirement.


Project Cost


ii. Bank funding under PSDP IV and PSDP IV AF. About INR 3.61 billion (or US$59.15

million, of which US$52.91 million under PSDP IV and US$6.24 million under PSDP

IV AF)

Commissioning

The scheme was originally targeted to be completed by June 2009 but could only be

completed by June 2011 due to delays in obtaining forest clearance for various lines under

the project, especially Ranchi-Rourkela and Rourkela-Raigarh (varied between 30 and 55

months). The details are as listed:

i. Ranchi-Rourkela line. The proposal for forest clearance was submitted on January 3,

108

2006. However, forest clearance was received on August 4, 2010, as the realigned route

proposed by the concerned forest officials passed through the extremist influenced area,

creating a lot of resistance to complete the realignment survey and plot identification,

including tree enumeration. Chronological details of obtaining the forest clearance are

provided in annex 2.

ii. Rourkela-Raigarh line. The proposal for forest clearance was submitted on February 7,

2008, whereas the permission for construction work in forest area was obtained from

the MoEF on July 26, 2010, as a special case, in view of the importance of the

transmission line for the Commonwealth Games 2010.

Transmission Lines

Sl.

No.

Scope of

Works

Original

Commissio

ning

schedule

Actual

Commissi

oning

State Forest

Area (ha)

Approval Status (and Time

Taken since Submission of

Forest Proposal to DFO)

Funding: PSDP IV

1. 400 kV D/C

Ranchi-

Rourkela

Line – 290

ckm

June 2009 Novembe

r 2010

Jharkh

and

18.52 Final approval obtained in

August 2010 (55 months).

2. 400 kV D/C

Rourkela-

Raigarh Line

– 420 ckm

June 2009 June 2011 Orissa 111.39

Special permission obtained

on July 26, 2010, in view of

the importance of

transmission line for

Commonwealth Games 2010

(30 months).

3. 400 kV D/C

Raigarh-

Raipur Line –

440 ckm

June 2009 September

2010

Chhatti

sgarh

Nil No forest area involved.

Substations

Sl.

No.

Funding Scope of Works Original

Commissionin

g Schedule

Actual

Commissionin

g

Resettlement &

Rehabilitation

1. PSDP

IV

Extension of 400 kV

Ranchi, Rourkela,

Raipur & Raigarh S/S

June 2009 Progressively

from Sep

2010 to Nov

2010

RAP was not required



substations only.

2. PSDP

IV AF

FSC at Raipur


D/C Rajgarh – Raipur

line

June 2009 March 2011 RAP was not required



substations only.


i. Procurement: Under the project, 5 packages were covered under PSDP IV and 1

package was covered under PSDP IV AF, these packages were awarded from July 2007

to March 2009.

109


PSDP IV

Tower – 3 3

Insulator – 1 1

Substation – 1 1

Total – 5 5

PSDP IV AF

FSC – 1 1

Total – 1 1

ii. Environment Assessment Report

Report Target Date for Submission (as per PIP) Actual Date of

Submission

IEAR January 2007 February 2007

FEAR January 2008 June 2009


The scheme has strengthened the existing Rourkela-Raipur interregional transmission

corridor facilitating more reliable and secure power transfer from the Eastern to Western

Region. The interregional link along with installation of the FSC has augmented the

interregional transmission capacity of the National Grid by 1,400 MW.


Project Cost


ii. Bank funding under PSDP IV and PSDP IV AF. about INR 6.76 billion (or US$110.91

million, of which US$59.83 million under PSDP IV and US$51.08 million under PSDP

IV AF)

Commissioning

The scheme was originally scheduled to be completed by October 2009 but most of the

elements were complete by May 2013 except for the second circuit of re-conductoring of the

Purnea-Siliguri line, which could only be completed by March 2014. The delay in

completion of the projects was mainly due to the following reasons:

i. Delays in obtaining forest clearance for various lines under the project that were

available from April 2009 to April 2011 (varied from 22 to 42 months). The longest

was taken by the Baripada-Mendhasal line, for which the proposal for forest clearance

was submitted on February 28, 2008. However, the final clearance was received almost

after 3.5 years (on August 25, 2011).

ii. Completion of the Durgapur-Jamshedpur Line got delayed as Eastern Coalfields

Limited did not allow construction works through their area near Durgapur. This was

compounded by severe RoW problems for some part of the line. POWERGRID short-

terminated and commissioned the line at Durgapur STPS Switchyard (at Andal) to

gainfully use the line. iii. Completion of the Jamshedpur-Baripada line was also affected due to severe RoW

problem. iv. Re-conductoring of the Purnea-Siliguri line was initially affected on account of the

delay in conductor supply due to the devastating earthquake and tsunami in Japan in

110

March 2011. This calamity affected the factory of M/s J-Power Systems Corporation

Ltd (JV partner of the contract supplier) at Toyoura, leading to delay in conductor

supplies. Further, supply of hardware material also got affected due to floods in

Thailand.

v. Shutdown of the existing line for re-conductoring works on the Purnea-Siliguri line was

difficult, especially during the monsoon and hence, could only be achieved in phases.

Transmission Lines

Sl.

No.

Scope of

Works

Original

Commissio

ning

Schedule

Actual

Commissi

oning

State Forest

Area

(ha)

Approval Status (and Time

Taken since Submission of

Forest Proposal to DFO)

Funding: PSDP IV

1. 400 kV

D/C

Durgapur-

Jamshedpu

r line – 314

ckm

October

2009

April

2012

West

Bengal

Jharkhand

Wild Life

Jharkhand

30.55

11.38

2.70

Final approval obtained on

March 24, 2010 (22 months).


July 3, 2009 (30 months).


February 10, 2010.

2. 400 kV

D/C

Jamshedpu

r-Baripada

line – 282

ckm

October

2009

May 2013 Jharkhand

Orissa

54.40

3.38


October 12, 2009 (39

months).


April 17, 2009 (31 months).

3. 400 kV

D/C

Baripada-

Mendhasal

line – 544

ckm

October

2009

August

2011

Orissa 20.81

0.55

(Wildli

fe)


August 25, 2011 (45

months).

Permission of the Supreme

Court obtained on May 4,

2010.

Funding: PSDP IV AF

4. Re-

conductori

ng of

Purnea-

Siliguri 400

kV D/C

line – 346

ckm

October

2009

1st circuit

in May

2013 and

2nd circuit

in March

2014.

Nil Nil Since it was re-conductoring,

it did not require any new

approvals.

Substations

Sl.

No.


Commissio

ning

schedule

Actual

Commissi

oning

Resettlement &

Rehabilitation

1. PSDP IV Extension of 400 kV Durgapur,

Jamshedpur, Baripada, and

October May 2013 RAP was not

required as the

111

Sl.

No.


Commissio

ning

schedule

Actual

Commissi

oning

Resettlement &

Rehabilitation

Mendhasal substations and

renovation of Siliguri and Purnea

substations

2009 project involved


substations only.


i. Procurement. Under the project, 6 packages were covered under PSDP IV and 3

packages were covered under PSDP IV AF and were awarded from March 2007 to

September 2010.


PSDP IV

Tower – 4 4

Insulator – 1 1

Substation – 1 1

Total – 6 6

PSDP IV AF

Tower 1 – 1

Conductor 2 – 2

Total 3 – 3

ii. Environment assessment reports Target Date for Submission (as per PIP) Actual Date of Submission

IEAR May 2007 August 2007

FEAR May 2008 July 2009


i. This scheme has strengthened the transmission networks and enables transfer of

power from the eastern part of the Eastern Region to the central areas of the region

and further transmission. ii. Earlier, the Siliguri-Purnea line was evacuating hydel power from the Tala and Teesta

projects. Strengthening of this line has resulted in transferring additional power with

reliability from the planned generation projects in Sikkim, Bhutan, and the

Northeastern Region through the chicken neck area.

f. Southern Region System Strengthening – XIII (New Scheme Added Through Restructuring)

Project Cost

i. Total completion cost. About INR 4.92 billion (US$81 million)

ii. Bank funding under PSDP IV. INR 2.30 billion (US$37.65 million, which is the

amount disbursed till August 22, 2014)

Commissioning

The scheme was originally scheduled for completion by June 2014, before the loan closing

date but is now expected to be completed not before March 2015 due to severe RoW issues

faced in the state of Karnataka since February 2013. The reason for the delays is the intense

organized protests by landowners and villagers on both the lines funded under this loan.

112

Even after intervention of the state authorities, the protests are not dying out. POWERGRID

is continuously in consultation with the relevant state authorities and has been taking

measures as being suggested and agreed but protests have been re-emerging. Chronological

details of the status of the works at site are provided in annex 2. Implementation of this line

will now be monitored under PSDP V, the ongoing lending engagement with POWERGRID.

Transmission Lines

Sl.

No.

Scope of

Works

Original

Commissioni

ng schedule

Actual

Commissio

ning

State Forest

area

(ha)

Approval status

(and time taken

since submission

of forest proposal

to DFO)

Funding: PSDP IV

1. 400 kV D/C

Gooty –

Madhugiri

line – 417

ckm

June 2014 Under

Implementat

ion

Andhra

Pradesh/

Karnataka

Nil No forest was

involved

2. 400 kV D/C

(Quad)

Madhugiri -

Yelahanka

line - 132 ckm

Karnataka Nil No forest was

involved

Substations

Sl.

No.

Scope of

Works

Original

Commissioning

Schedule

Actual

Commissioning


Funding: PSDP IV

1. 400/200

kV

Madhugiri

(Tumkur)

Substation

June 2014 Under

Implementation Possession for land (total about 113.35

acres) already obtained through

Karnataka Industrial Areas

Development Board (KIADB). PAP:

78; RA: INR 8.028 million.

Some portion of land was acquired by

KIADB on behalf of POWERGRID for

which social impact assessment (SIA)

study was undertaken based on which

an RAP was prepared in June 2014.

Consultation on draft RAP organized in

July 2014 and final RAP after

incorporating inputs of public

consultations submitted to the Bank in

October 2014. CD works after

consultation with villagers include

providing approach road to village

(INR 5 million); providing internal

concrete roads in the village

(approximately 0.6 km; INR 2 million);

construction of draining system in the

village (approximately 0.6 km; INR 1.

million). These works have already

been awarded and are targeted to be

113

Sl.

No.

Scope of

Works

Original

Commissioning

Schedule

Actual

Commissioning


completed by January 2015.

2. 400 kV

Bay

extension

at Gooty

RAP was not required as the project

involved extension of existing

substations only.


i. Procurement. Under the project, 8 packages were covered under the PSDP IV loan.

These packages were awarded from December 2011 to August 2012. The mix of

packages was as given in the table:


Tower 3 – 3

Conductor – 3 3

Insulator – 1 1

Substation – 1 1

Total 3 5 8

ii. Environment assessment report

Report Target Date for Submission (as per PIP) Actual Date of Submission

IEAR – February 2011

FEAR – May 2014


As implementation of the line has been affected due to severe RoW issues in the state of

Karnataka, the benefits are yet to accrue. The line is expected to carry about 1,600 MW of

power. However, it may be mentioned that no power is being bottlenecked due to delay in

implementation of these transmission lines.

g. System Strengthening in Western Region for Sasan UMPP (Scheme Shifted from PSDP V

Through Restructuring)

Project Cost


ii. Bank funding under PSDP IV AF. About INR 5.12 billion (or US$84 million)

Commissioning

The scheme was originally scheduled for completion in December 2012 (as per PAD of

PSDP V) but it could only be commissioned by October 2014 due to reasons as explained

below:

i. Gwalior substation. Marginal delay of about 3 months was mainly on account of the

intense fog conditions prevailing in the northern part of India around Agra and

Gwalior regions at the time completion, which are not suitable for the transmission

system, especially of 765 kV. Work at Gwalior substation also got delayed as upgrade

of Bina-Gwalior-Agra line was delayed due to major grid disturbance in July 2012.

114

ii. Indore substation. Acquisition of land got delayed initially due to stiff resistance from

the farmers. Once it was resolved, the site levelling work to be done from July 2010 to

January 2011 got delayed as the vendor did not perform leading to termination of the

contract, which was re-awarded in July 2011. This was then completed within

contract period of six months.

iii. Shunt reactor package. The package could be awarded in February 2012 after 23

months from initiation of the procurement process (NIT issued in March 2010) after

getting necessary approvals from the Bank at various stages of the procurement action.

The reason for the delay was formulation of suitable qualification requirement in the

contracts for setting up of repairs and maintenance (R&M) facilities for 765 kV

transformers and reactors by the vendors, especially foreign bidders.

Substations

Sl.

No.

Scope of

Works

Original

Commissioning

Schedule

Actual

Commissioning


Funding: PSDP IV AF

1. 765/400 kV

Indore

substation

December 2012 June 2013 RAP (completed) involved 6.28

acres government and 90.05 acres

private land in Madhya Pradesh and

included:

RA (INR 8.309 million)

distributed to all 90 eligible PAP

Completed CD works (INR 6.45

million) include construction of a

community center, library, and

school boundary wall, additional

class room, 2 toilets at the high

school in Hatunia village;

distribution of 10 computers;

waiting shed, multipurpose shed,

and hand pump installation;

provision of school furniture in

Kadwa village and solar lights in

village in place of two buildings

that were earlier agreed by the

villagers.

2. Extension

of 400 kV

Indore

(MPPTCL)

substation

December 2012 June 2013 RAP was not required as the project


substations only.

3. Upgrading

Gwalior

substation

to 765 kV

and

extension

of 400 kV

December 2012 March 2013 RAP was not required as the project


substations only.

4. Upgrading

Bina

substation

to 765 kV



substations only.

115

Sl.

No.

Scope of

Works

Original

Commissioning

Schedule

Actual

Commissioning


by 2x1000

MVA

transformer

s

5. Single

Phase

Transforme

rs at

Gwalior

and Indore

substation

December 2012 October 2014 RAP was not required as the project


substations only.

6. Shunt

reactors at

Bina,

Gwalior,

Indore

Substation



substations only.


i. Procurement: Under the project, the 5 packages that were covered were awarded

from September 2010 to February 2012. The mix of packages was as listed:


Substation 2 – 2

Transformer 2 – 2

Reactor 1 – 1

Total 5 – 5

ii. Environment assessment reports

Report Target Date for Submission (as per PIP) Actual Date of Submission

IEAR June/July 2009 May 2009

FEAR – Not required


Under the transmission scheme, a total transformation capacity of 8,000 MVA has been

added to cater to the load demand of major load centers in Madhya Pradesh.

Comments on Draft ICR:

Reference in Draft

ICR

Observations from

POWERGRID or

GoI

Observations Bank Team’s

Response

Cover page, Loan

numbers

POWERGRID As per the loan

agreements the loan

numbers are 4890-IN

and 7593-IN

It is system generated

and cannot be

changed

116

Reference in Draft

ICR

Observations from

POWERGRID or

GoI


Response

Cover Page, Name of

the Project

POWERGRID Added “…AND ITS

ADDITIONAL

FINANCING”

Incorporated

Data sheet, Project

Name

POWERGRID Added “…AND ITS

ADDITIONAL

FINANCING”


and cannot be

changed

Data sheet, Loan

Numbers

POWERGRID As per the loan

agreements the loan

numbers are 4890-IN

and 7593-IN


and cannot be

changed

Section 1, Heading 1,

Context at Appraisal

POWERGRID Added “…(2007-08)” Incorporated


Para 7, Rationale for

World Bank assistance

POWERGRID Editorial change Incorporated


Revised Components

POWERGRID These components

were added to original

components under

PSDP-IV and are not

the revised

components

This is the set

template for the ICR.

Footnote 23 POWERGRID Replace distribution

with transmission

Incorporated


Relevance of

Objectives, Design

and Implementation,

Para 57

POWERGRID Correct the resource

mobilization figure

from US$20 billion to

US$11 billion.

Incorporated

Section 3, Heading 5

(b), Institutional

change/ strengthening,

para 69


Section 3, Heading 5

(b), Institutional

change/ strengthening,

para 74


Section 6, point g POWERGRID Editorial change Incorporated

Annex2, Output, Grid

Disturbance of July

2012

POWERGRID To replace ‘CERC’ by

‘Enquiry Committee

constituted by MoP’

Incorporated

Annex2, Output,

Other Key

Developments at

Entity Level

POWERGRID Added “As per Public

Enterprises (PE)

Survey 2013 (by

Department of Public

Enterprises (DPE),

GoI), POWERGRID

is the fifth largest

Incorporated

117

Reference in Draft

ICR

Observations from

POWERGRID or

GoI


Response

Central Public Sector

Enterprises (CPSE) in

terms of Gross

Block.”

Annex2, Output,

Other Key

Developments at

Entity Level


Annex 7, Table 7.4 POWERGRID Correction in certain

figures

Incorporated

Map POWERGRID Please share the final

MAP with

POWERGRID before

publication of the

ICRR

No map will be

included.

118

Annex 8. Comments of Co-financiers and Other Partners/Stakeholders

Not applicable

119

Annex 9. List of Supporting Documents

1. Financial and economic models at completion for the five core and candidate schemes

2. POWERGRID’s Completion Report for the project, December 2014

3. Implementation Completion and Results Report for PSDP III

4. Project Appraisal Document for PSDP IV

5. Project Paper for PSDP IV AF

6. Aide Memoires

7. Implementation Status Reports

8. CPS for 2013–2017

120

Annex 10: Eligibility Criteria for Selection of Candidate Schemes to be financed

under PSDP Loans

As agreed during appraisal of PSDP III, the schemes to be eligible for financing under the PSDP

III loan as well as the follow-on loans will be based on PIPs submitted by POWERGRID to

establish the satisfaction of the Bank that an investment scheme for which Bank approval is

sought meets the following eligibility criteria:

General Criteria

1. The investment scheme is technically and operationally justified and has been formulated after

taking into account other alternative investments.

2. The investment scheme is based on least cost options and is included in the overall least cost

Investment Program of POWERGRID and is economically and financially justified.

3. The appropriate authorities of the GoI have provided required clearances/approvals for

implementing the investment scheme, including environment and forest clearances, as applicable,

before initiation of construction of those relevant segments of such an investment scheme for

which environmental and forest clearances are required.

4. The investment scheme has adequate financing, procurement, and implementation plans.

5. The investment scheme complies with POWERGRID’s environmental and social policy and

procedures and, toward that end, POWERGRID has carried out an environment impact

assessment and prepared an environmental mitigation plan, and where applicable, a resettlement

and rehabilitation plan or other development plan for adversely affected people, all in a manner

satisfactory to the World Bank.

6. The investment scheme shall be for strengthening of the transmission system and interregional

power exchange for the National Grid.

7. Such additional criteria as may be specified by the Bank for each additional investment scheme,

other than the core schemes.

121

Annex 11. Templates

1. Table of Contents for Quarterly Progress Report (QPR)

a. Executive Summary

b. Project Description

c. Status of Implementation

d. Disbursement

e. Commercial issues

f. Status of Procurement

g. Annexures:

i. Gantt Chart for each scheme

ii. Percentage Progress for each scheme

2. Contracts Monitoring Report for Works/Goods under PSDP IV and PSDP IV AF

The following information for each package/contract was submitted by POWERGRID as

part of the quarterly FMRs:

a. General:

i. Package Number

ii. Description of Works/Goods

b. Bidding Stage:

i. Method of procurement ICB/NCB

ii. Preparation of Bid Document (Date)

iii. Bank's No Objection to Bidding Documents (Date)

iv. Bids Invitation (date)

v. Bid Opening (date)

vi. NOA/Contract Award Decided / BER submitted to Bank (Date/ Value/

Currency)

vii. Bank's No Objection to Contract Award (Date)

c. Commencement of Works:

i. Signing Date

ii. Currency

iii. Original value (in Million)

iv. Name of Contractor/ Nationality

v. Type of Contract

vi. Contract No.

vii. WBR No.

viii. Commencement Date

ix. Original Completion Date

x. Revised Completion Date

d. Variations:

i. Latest Amended Value

ii. Fundable Value

iii. Price Variation + Taxes

iv. Total Fundable Value

e. Disbursements:

i. Percent of contract fundable per LOA

ii. Expenditure during the current quarter by PGCIL

iii. Expenditure incurred by PGCIL till current quarter

122

iv. Total World Bank disbursements till current quarter

3. Physical Progress Monitoring Report for Schemes under PSDP IV and PSDP IV AF

The following information for each package within each scheme was submitted by

POWERGRID as part of the quarterly FMRs:

a. Task Name

b. Currency

c. LOA Value

d. Latest Amended Value

e. Fundable Value

f. Price Variation

g. Total Fundable

h. Utilization

i. Percent Utilization

j. Baseline Start

k. Start/Actual Start

l. Baseline Finish

m. Finish/Actual Finish

n. Percent Complete

123

Annex 12. Incorporation of Lessons from DIR

Sl.

No.

Issue Actions Taken by Task Team and/or

POWERGRID

Actions Proposed to be

Taken by the Task Team

and/or POWERGRID

Project Design

1 Risk of fraud and corruption

(F&C) F&C has been rated moderate based on:

borrower’s previous satisfactory

performance; and

increased accountability as

company has been listed and

independent directors appointed.

• Key information is continuously published

on the company’s web site (i.e., bidding

documents, IFB, and contract awards)

• Board Committees chaired by Independent

Directors for (i) Audit and (ii) Shareholder

complaints/investor grievance fully

operational

• Company subject to the surveillance of the

independent Central Vigilance Commission

of India

• No accountability issues in audit reports

under PSDP III

• POWERGRID to upgrade

website for easier and

broader access to information

2 Critical implementation

failures for proper operation

of assets created with Bank

financing are not properly

identified and mitigated

POWERGRID has implemented several

complex power systems based on:

• high-quality design and implementation;

• capacity building by training staff; and

• standardized processes based on ISO

certifications (9001, 14000 and 18001).

• Standardized processes to

fully be implemented in

regional units

• Implementation of CSR and

CD policy.

3 Conflict of interest in entities

delegated to carry out

procurement,

implementation, and

supervision functions

• POWERGRID implements its projects

directly.

• There is an internal control framework

within POWERGRID, the adequacy of

which is verified annually by the statutory

auditor while conducting entity audit

Adequacy of internal control

framework will be supervised

by the task team (TT) at

periodic intervals.

Supervision

4 Physical implementation is

not verified during

supervision

• Financed activities are few and assets are

large and easily verifiable.

• POWERGRID has multitiered monitoring

systems of physical implementation.

• TT has included site visits as part of the

supervision.

• In addition to physical

monitoring, POWERGRID

will also carry out

independent environmental

review for selected.

• Disbursements will be

based on reports that will

capture both financial and

physical information of the

activities.

124

Sl.

No.


POWERGRID



and/or POWERGRID

5 Reports and data provided by

borrower are not verified by

Bank when supervision is

delegated to borrower.

• Supervision is carried out directly by TT

which verifies information provided by

POWERGRID.

• POWERGRID also has a multitiered

system with independent checks and

balances.

• Quarterly financial results declared by the

company are published.

• Financial information is audited by

independent private auditors with a

supplemental audit by the Comptroller and

Auditor General.

• Not applicable

6 Aide memoires are opaque

and lacked details as they are

negotiated with borrower.

• Aide memoires reflect TT’s findings

candidly.

• Action plan in aide

memoires systematically

monitored through a matrix.

7 Bank’s prior and post review

do not detect F&C collusion

price fixation.

• POWERGRID bidding is competitive with

multiple qualified bidders participating

• Procurement processes in POWERGRID

have checks and balances.

• Committee on contract awards includes

independent directors.

• 100 percent of Bank-funded contracts are

procured under ICB.

• Due to large value, almost 33 percent of

the contracts are subject to prior review by

Regional Procurement Manager (RPM)

and/or Operational Procurement Review

Committee (OPRC).

• A sample of contracts not subject to prior

review is subject to post review.

• Disclosure of procurement process

(bidding documents and contract award) in

United Nations Development Business

(UNDB) and POWERGRID websites.

• POWERGRID to move

toward e-procurement for

supply of goods at the

closing of the project.

8 Bank and borrower do not

sufficiently verify

authenticity of bidder’s

qualification.

• POWERGRID’s suppliers are mostly large

firms with adequate track record.

• New bidders are subject to verification

through a special committee before contract

award.

• Verification reports are shared with the

Bank.

• Not required.

9 Bank FMS lacks contract-

specific data, making it

impossible to reconcile

payments with contracts.

• POWERGRID’s financial system is linked

with contract level data and is able to

provide detailed information about sub-

projects, contracts/ packages and

expenditures there under.

• Enhanced monitoring of

contract-level expenditure

details in supervision mission

125

Sl.

No.


POWERGRID



and/or POWERGRID

10 Response to F&C complaints

is based on borrower’s

response without further

verification and there is no

mechanism to handle

complaints.

POWERGRID has a robust complaint

management system, including:

• an independent Vigilance Department

which reports to the chairman; and

• a web-based complaint management

system that allows anybody to post

complaints.

• About 300 complaints have been posted in

the last three years and very few are related

to procurement.

• Bank TT relies mostly on POWERGRID’s

information to deal with complaints.

Bank TT will improve the

complaint managing and

recording by:

• seeking additional

information from other

sources; and

• systematically following up

on complaint responses.

11 Bank TT, borrower, and

other government entities do

not share key information

about procurement (debarred

firms).

• POWERGRID procurement systems are

subject to scrutiny by the Central Vigilance

Commission of India.

• Not applicable

Project Evaluation

12 Inconsistency between

project implementation

success rating and actual

project implementation as the

Bank relies on borrower

information only.

POWERGRID has a successful track record

in implementation.

• PSDP II was rated Highly Satisfactory on

ICR, which was ratified by IEG’s rating.

• TT will keep similar

practices on assessing and

rating implementation of the

ongoing projects.

Decentralized Procurement

13 Pervasive F&C due to

contracts which are

physically dispersed and of

low value.

The procurement funded by the Bank is all

centrally procured.

• Not applicable