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WAPDA PAKISTAN Project Management By Atif Azam Khan

WAPDA
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WAPDA, the Pakistan Water and Power Development Authority, was created in 1958 as a Semi-Autonomous Body for the purpose of coordinating and giving a unified direction to the development of schemes in Water and Power Sectors, which were previously being dealt with, by the respective Electricity and Irrigation Department of the Provinces. Since October 2007, WAPDA has been bifurcated into two distinct entities i.e. WAPDA and Pakistan Electric Power Company (PEPCO). WAPDA is responsible for water and hydropower

development whereas PEPCO is vested with the responsibility of thermal power generation, transmission, distribution and billing. There is an independent Chairman and MD

(PEPCO) www.pepco.gov.pk replacing Chairman WAPDA and Member (Power) who were previously holding the additional charges of these posts.
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WAPDA is now fully responsible for the development of Hydel Power and Water Sector Projects.

PEPCO has been fully empowered and is responsible for the management of all the affairs of corporatized nine Distribution Companies (DISCOs), four Generation Companies (GENCOs) and a National Transmission Dispatch Company (NTDC). These companies are working under independent Board of Directors (Chairman and some Directors are from Private Sectors).

The Companies are administratively autonomous and leading to financial autonomy by restructuring their balance sheets by bringing their equity position to at least 20 percent, required to meet the

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WAPDA PAKISTAN Project Management By Atif Azam Khan


prudential regulations and to facilitate financing from commercial sector (approved by ECC). Forces for change

REGULATIONS

STUCTURE

WAPDA

POLITICS

CUSTOMERS

PRIMARY OBJECTIVES: The central argument for privatization revolves around efficiency. It is argued that governments have grown too fat to effectively handle the delivery and provision of public services including WAPDA. It is also asserted that the decline in the quality and performance of public sector services is largely due to politicization . These departments also suffer from bureaucratic irregularities, official arrogance, and corrupt and socially irresponsible practices which cause major obstacles to efficient provision of services.
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According to the proponents this can be put to end by de-bureaucratization, deregulation, and involving the private sector in the provision of public services. Privatization is seen as a panacea for these ills as, according to them, private concerns are more efficient in production of goods and in service delivery. Management of WAPDA s 12 Companies for their transition towards a corporate and commercial operating environment through Business Process Reengineering. Institute a Change Management Program to induct a new culture, latest technologies & Management practices Develop framework for a competitive modern power sector for cost effective operations for provision of affordable electric power to customers. CHANGE PROCESS:

FOCUS OF WAPDAs Government College of Management Sciences, ABBOTTABAD [Type text] RESTRUCTURING

NTDC

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WAPDA PAKISTAN Project Management By Atif Azam Khan

AIMS OF CHANGE : Because of the power sector s poor operational and financial performance since the mid-1990s, the government decided to restructure the sector as the government claimed from an inefficient state-controlled monopoly to a competitive, market-driven system . Its first step was to amend the WAPDA Act in December 1998, which allowed the establishment of the Pakistan Electric Power Company (PEPCO) for unbundling of the WAPDA s Power Wing into eight distribution companies (formed from existing area boards); three generating companies (comprising 11 of Wapda s generating plants); and the National Transmission and Dispatch Company (NTDC). The restructured
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power sector was to consist of (i) competitive generation with independent system operators and a bulk power market; (ii) unbundled, open, and undiscriminating access to transmission and distribution services; and (iii) an independent regulatory body for effective market governance. y Competitive generation with independent system operators and a bulk power market; y Unbundled, open, and undiscriminating access to transmission and distribution services y An independent regulatory body for effective market governance. y Better customer service. y Augmentation of the system. y Restructuring of power wing. y Decentralization of power.

The second step of the government s plan was to (i) sell PEPCO s generating and distribution companies and (ii) privatize Karachi Electric Supply Corporation (KESC). The transformation of the power sector into a privatized electricity market was expected to take a number of years and would comprise two phases. In the first phase, the system was to be a single buyer type where all electricity would be bought by NTDC from various private and public generating companies for resale to the distribution companies. In the second phase, the system was to be of a multiple buyer and seller type where the distribution companies and large consumers would have a choice of which generating company to buy from.

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CHANGE PROCESS

WAPDA ( POST- RESTRUCTURING SCENARIO )


THE NE

Authority

WATER WING

The corporatization process was effectively completed andthe corporatized entities of WAPDA
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HYDEL DEVT.

APDA

RESTRUCTURED POWER WING

FINANCE WING

SOURCE OF MANPOWER FOR SUPPORT SERVICES


PROVIDE CHARGEABLE SERVICES

COMMON SERVICES

RESIDUAL ASSETS

Autonomous Companies
HYDEL OPERATIONS

GENCOs

NTDC

DISCOs

(3)

(1)

(8)

WAPDA PAKISTAN Project Management By Atif Azam Khan


y 9 DISCOs, y 3 GENCOs y a nd N T DC ar e f u nc t i o n i ng u n d e r i n d ep e nd e nt Bo ar d o f Dir ectors New organization PEPCO was formed to materialize the change. Change task evolved around y Corporatization y Privatization Under new set up there is new power wing.

POWER WING

MD PEPCO

LESCO

GEPCO

FESCO

IESCO

PESCO

TESCO

MEPCOO

HESCO

QESCO

SESCO

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NORTHREN SOUTHREN

THERMAL GENERATION:

GENERATION COMPANIES

JAM SHORO

KOT ADU

MUZZAFAGARH

Effects on departments: Human resource department: Over 46 years of operations, WAPDA's human resource hasdeveloped into a reservoir of knowledge, competence andexpertise through training and experience gained at theaccomplished projects and remaining associated with the diversified development program.

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CEO

DY DIRECTOR HR

ASST DIRECTOR HR

PUBLIC RELATION OFFICER

ASSISTANT DIRECTOR HR

HEAD CLERK

CLERICAL STAFF

NEW STRUCTURE:

HR AND ADMIN DIRECTOR

MANAGER HR

MANAGER ADMIN

MANAGER L&L

DY MANAGER HRM

DY MANAGER TMP

DY MANAGER SERVICES

DY MANAGER L&L

employees performance evaluation is done at the end of the each t h r o u g h A n n u a l C o n f i d e n t i a l Report (ACR)
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Due to privatization large number of changes occurred in designation. Large number of changes occurred at clerical level. Due to new structure it became top heave organization as large number of people are in top management and middle management.

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What happened after change?

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Over the past 14 years, Pakistan has been following a strategy of deregulation, privatization and transformation of its public sector entities (PSEs). The key shortcomings are: Poor governance; Political and bureaucratic interference; Institutional weakness; and Lack of professional management. In the 1990s, IFIs like the WB, IMF and ADB asked the Pakistan government that the fiscal situation could not improve unless and until the losses from PSEs are substantially curtailed or eliminated, and that this was only possible through a massive restructuring of these entities leading to their privatization. The process of restructuring of wapda started in it 1999 and at that time it was planned to accomplish it in 2 years but unfortunately it did not goa s planned and still the privatization process is in practice. PEPCO is still not dissolved. Though they succeeded to develop customer service centres but failed to deliver the service. They failed to augment the system as well as they could not break the status quo and attitude of people.

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CHANGE ROLES: Change initiator In case of privatization of WAPDA change initiator role was played by

chairman WAPDA along with the member power, member water and member finance. Vision: Because of the power sector s poor operational and financial performance since the mid-1990s, the government decided to restructure the sector as the government claimed from an inefficient state-controlled monopoly to a competitive, market-driven system . CHANGE TASK: Its first step theyamended the WAPDA Act in December 1998, which allowed the establishment of the Pakistan Electric Power Company (PEPCO) for unbundling of the WAPDA s Power Wing into eight distribution companies (formed from existing area boards); three generating companies (comprising 11 of Wapda s generating plants); and the National Transmission and Dispatch Company (NTDC). Trade union activities were suspended, and handed over control of energy transmission to the army (this was before the military takeover of Pakistan
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government itself). The union was suspended by presidential decree, which abrogated the right of the union to operate, even as a bargaining agent Proposal Submitted to GOP for Price consideration to be paid or settled by GOP with WAPDA so that share of the corporate entities owned by WAPDA can be transferred in the name of GOP Spitted the organization structure and designed new decentralized structure.

CHANGE IMPLEMENTOR: To materialize the change PEPCO was formed. The Pakistan Electric Power Company (Private) Limited (PEPCO) has been entrusted the task of managing the transition of WAPDA from a bureaucratic structure to a corporate, commercially viable and productive entity. It is a mammoth task and progress in the initial months was rather slow, but one should keep in mind that responsibility is enormous and transition is a long drawn process. y Deregulation of power sector. y Promotion of IPPs(independent power producers) y Restructuring of WAPDA y Privatization of selected corporate entities.
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The Authority issued licenses, franchising monopoly business, setting and enforcing performance standards and codes of practices, enforcing competitive policies, and setting charges for the monopoly parts of the industry. It is also mandated to protect consumers against monopolistic prices, encourage efficiency in licensee operations through financial incentives, encourage economic efficiency by promoting competition, and eliminate cross-subsidies between regions and consumer groups.

POWER WING MD PEPCO

LESCO

GEPCO

FESCO

IESCO

PESCO

TESCO

MEPCOO

HESCO

QESCO

SESCO

Wapda s all the wings have further been strengthened / reinforced in the new corporate restructured set-up and human resource directorates have been established in all the distribution companies to plan and manage the human resource. CHANGE FACILITATOR To facilitate the change process and ease out all the complications outside consultants were hired. These consultants were hired in the areas of finance, human resource and technical assistance.
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WAPDA PAKISTAN Project Management By Atif Azam Khan


These consultants include Philippine based company, ADB (Asian

development Bank) and WB. For facilitation process and adjustments to new posts and jobs they called seminars, trainings, workshops and meetings. The WB and ADB supported the government s plan for the restructuring and privatization of the energy, oil and gas sectors, and provision of a legal framework to implement the Oil and Gas Reform Program in addition to strengthening the regulatory framework. The World Bank under the SAL (Structural Adjustment Loan) approved in 1999 US$350 million for working on the power sector to restore financial viability of Wapda and KESC to ensure line losses are reduced, distribution is improved and cross-arrears between energy utilities and governments are settled. It also envisaged formation of the NEPRA, to regulate the power companies and provide necessary comfort to investors and consumers. The World Bank was also responsible for converting the various distribution centers of WAPDA into corporate entities and then privatizing them.

CHANGE RECIPIENT:

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In this change process change recipients were all those employees who were shifted from wapda to Pepco. Roles changed; seniority levels revised. Designations changed. Employee between scale 1-15 were shifted from wapda to pepco through an executive order. Employees between scale 17-20 were given option. Active resistance came from employees in form of protests including sit ins infront of the parliament house Pakistan Wapda Hydro Electric Central Labour Union has launched protest campaigns against privatization of WAPDA. Union members have taken out processions and held rallies in different cities of the country from time to time to urge the government to desist from privatizing the organization. The slogan-chanting workers have urged the federal government not to privatize profit-earning organizations like Wapda at the behest of the World Bank and IMF.

They criticize the policies of downsizing and rightsizing of the government which, according to the union leaders, have caused an unprecedented unemployment and lawlessness in the country. The union leaders and workers are determined to resist the privatization of Wapda's regional organizations. Union secretary-general Khursheed Ahmed Khan has called upon all worker unions to join hands with Wapda workers in their just struggle against the
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anti-labour bureaucracy. He warns they will continue their struggle against the exploitation of workers by multinational companies and their Pakistani supporters Power Sector and Consumer Concerns

Power sector has undergone major developments in recent years, including partial privatization, but despite that electricity services in the country remain substandard and unsatisfactory. The benefits of privatization have not been passed on to the consumers, who remain confronted with a host of problems ranging from arbitrary price increases to power fluctuations and very poor quality of services.

As far as the rationale for the privatization of the power sector is concerned, it is important to note that the main justification given for its privatization was to attract the foreign investors. The efficiency gains did not constitute any significant or primary rationale for privatization.

The privatization of the power sector has been opposed on various counts. It has been argued that the maintenance and security of the assets like bulbs, electricity lines, poles, etc. scattered all over the country is difficult, and their replacement or repair is expensive and costly. There is a huge risk involved in their maintenance and security, and their handing over to the private sector is likely to increase that risk. Though the government had decided to privatize the sector in early 1990s, it took years to actually start privatizing the sector. The efforts for privatization could only materialize in 1996, when the government decided to privatize KotAddu and Jamshoro thermal power plants and the Faisalabad Area Electricity Board. In addition, the government decided to privatize KESC as well.

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