Operation Maintenance Aspects of MHPs 5 O and M-final-05-12-13.pdfLED Light‐Emitting Diode Lit Liter LSOs Local Support Organizations LT Low Tension LV Low Voltage MCB Moulded Circuit

Renewable Energy Guidelines

Volume 5

Pakistan Poverty Alleviation Fund, Islamabad

Operation & Maintenance Aspects of MHPs

Copyright © Pakistan Poverty Alleviation Fund – 2013

Reproduction is authorized provided the source is acknowledged and provided a reference copy is being sent to

PPAF and the reproduction is not sold.

For further information: Pakistan Poverty Alleviation Fund, www.ppaf.org.pk

Note: The information contained within this document has been developed within a specific scope and might be

up‐dated in the future.

The Renewable Energy Guideline Series has been developed by the German‐Pakistan project “Development of

Hydropower and Renewable Energy (HRE) in Khyber‐Pakhtunkhwa”, funded by German Development Bank

(KfW) on behalf of “Ministry for Economic Cooperation and Development” (BMZ).

Pakistan Poverty Alleviation Fund (PPAF)

Project team:

Mr. Zaffar Pervez Sabri

Senior Group Head, Public Goods and Services

Mr. Kamal Afridi

General Manager, Water, Energy & Climate Change

Mr. Shaukat Ali

Renewable Energy Specialist

Contact address:

1‐Hill View Road, Banigalla, Islamabad

PAKISTAN

E‐mail: [email protected]

Phone: (+92‐51) 261 3935‐50

Name of Consultants:

INTEGRATION

Team:

Dr. Ulrich Frings ‐ Team Leader

Mr. Sher Khan – Deputy Team Leader

www.integration.org

Author:

Sher Khan

Date: September, 2013

Renewable Energy Guidelines Sept. 2013 i

Volume 5 O&M Aspects

Guidelines & Manuals

Volume 1: Life Cycle Cost Analysis in MHP Planning

Volume 2: Community Contribution Aspects in Rural Power Supply Systems

Volume 3: General Design Criteria on MHPs

Volume 4: Design Aspects of Community PV Systems

Volume 5: Operation & Maintenance Aspects of MHPs

Volume 6: Quality Assurance & Control of Civil Works

Volume 7: Health, Safety & Environmental Aspects in Civil Works

Volume 8: Transmission & Distribution in Rural Power Supply Systems Design ‐ Specification ‐ Installation

Volume 9: Electro‐Mechanical Equipment for MHPs Design ‐ Specification ‐ Installation

Volume 10: Commissioning Guidelines PV ‐ MHP

Volume 11: Micro/Mini Hydropower Design Aspects

Volume 12: Civil Works in Rural Power Supply Systems

ii Renewable Energy Guidelines Sept. 2013


Table of Contents 1 Introduction ................................................................................................................................ 1

2 The sustainability dilemma ......................................................................................................... 1

3 Operation and maintenance (O&M) models in practice ............................................................ 3 3.1 Maintenance committee .................................................................................................... 3 3.2 Community‐based power utility ......................................................................................... 3 3.3 PO and CO joint management ............................................................................................ 4 3.4 Local leaseholders/operators ............................................................................................. 4

4 Operational experiences of MHPs .............................................................................................. 6 4.1 50 kW MHP Overik .............................................................................................................. 6 4.2 100 kW MHP Izh .................................................................................................................. 7 4.3 200 kW MHP Yalbu‐Sabsar ................................................................................................. 8 4.4 300 kW MHP Ahmadabad ................................................................................................... 9

5 Problems and solutions ............................................................................................................ 11

6 Annexes .................................................................................................................................... 13

List of tables Table 4‐1: Summary of existing revenues, expenditures and savings .................................................. 6 Table 4‐2: Summary of could be revenues, expenditures and savings ................................................. 7 Table 4‐3: Summary of existing revenues, expenditures and savings .................................................. 7 Table 4‐4: Summary of could be revenues, expenditures and savings ................................................. 8 Table 4‐5: Summary of revenues, expenditures and savings ................................................................ 8 Table 4‐6: Summary revenues, expenses and savings .......................................................................... 9 Table 4‐7: Summary of revenues, expenditures and savings .............................................................. 10 Table 4‐8: Summary revenues, expenditures and revenues ............................................................... 10

Acronyms and abbreviations A Ampere AC Alternating Current AKRSP Aga Khan Rural Support program ACSR Aluminium Conductor Steel reinforced CDM Clean Development Mechanism CO Community Organizations DC Direct Current EC European Commission ELC Electronic Load Controller E&M Electro‐mechanic FDC Flow Duration Curve GI Galvanized Iron GIS Geographic Information System GIZ German Technical Cooperation GOs Government Organization GPS Global Positioning System HDPE High Density Polyethylene H&S Health & Safety hrs hours HV High Voltage Hz Hertz (frequency unit)

Renewable Energy Guidelines Sept. 2013 iii


INGOs International Non Governmental Organization KfW German Development Bank kW Kilo Watt kWh Kilo Watt Hour kV Kilo Volt LED Light‐Emitting Diode Lit Liter LSOs Local Support Organizations LT Low Tension LV Low Voltage MCB Moulded Circuit Breaker MCCB Moulded Case Circuit Breaker MDPE Medium Density Polyethylene MHP Mini/micro Hydropower Plant MSDS Material Safety Data Sheets NGOs Non‐Governmental Organizations O&M Operation and Maintenance PF Power Factor PCD Pitch Circle Diameter PPAF Pakistan Poverty Alleviation Fund POs Partner Organizations (COs) PPIB Private Power Infrastructure Board PURE Productive Use of Renewable Energy PPE Personal Protective Equipment PV Photovoltaics PVC Polyvenylchloride SM Social Mobilizer SRSP Sarhad Rural Support Program RCBO Residual Current Breaker with Overload Protection SSLS Solar Street/home Lighting System Rs. Pakistani Rupees T&D Transmission and Distribution TOP Terms of Partnership V Volt WOs Women Organizations XLPE Cross‐linked polyethylene

Renewable Energy Guidelines Sept. 2013 1


1 Introduction

Chitral, Dir and Swat districts in Khyber Pakhtunkhawa and Gilgit‐Baltistan have the highest

concentration of mini and small hydropower projects in Pakistan. The identified potential of mini and

micro hydels in northern Pakistan is more than 2,500 MW. The government is operating projects at its

own and supplies the electricity to the consumers and determines and collects the tariff. The NGOs, and

INGOs are constructing projects less than 01 MW with community participation and beneficiary

communities are operating them at their own to meet their energy (lighting, heating and cooking).

In participatory community development, the beneficiary communities construct small infrastructure

projects with technical supervision of funding organizations, mainly NGO, and INGOs. Once

implementation is completed, the beneficiary communities take over the operation and maintenance

(O&M).

The traditional O&M approach adopted by NGOs and INGOs in Pakistan in community‐constructed

projects is formation of a Maintenance Committee comprising more than three members from among

the beneficiary community. It has been experienced over the years that when projects are of smaller

capacity (below 50 kW), to some extent this Committee successfully carries out the O&M responsibility.

However, in case of higher capacity projects (more technical), especially mini hydel plants, the informal

maintenance committee model somehow interfaces the problems. Therefore, effective O&M and

sustainability of higher capacity projects becomes a matter of concern for the donor organizations.

Recently different models have been adopted for successful O&M of the community owned MHPs with higher capacity. These models include;

a) Formal Community‐based Power Utilities

b) Community and NGO joint management, and

d) Local leaseholder/Operator.

In all cases the ownership of the project always remains with the beneficiary community. In this paper

the sustainability dilemma of community‐based projects, O&M models, existing practices, and prospects

of problems and solutions have been summarized.

2 The sustainability dilemma

Until now there is no quick enough technology to invest, which will give “return of investment” and

“profitability” for private investors in rural electrification, therefore, it has been and will remain a

subject of grant and subsidy based finance. Since rural electrification ignites social and economic

development, thus far it makes sense for the state and donor agencies to promote rural electrification,

which is otherwise not possible.

Furthermore, it facilitates and capacitates the public services; such as health care and education rate

especially of girls, leads to improved living conditions and reduces migration to urban centers.

Rural electrification is considered to be integral part of modern and efficient states. For community

based rural electrification public subsidy and/or donor grants are provided during its construction and

implementation phase; however it becomes a “Dilemma”, when once operated projects fail to operate

successfully due to technical faults and/or absence of inefficient operation and maintenance model for

the design lifetime.

2 Renewable Energy Guidelines Sept. 2013


The reliable supply of electricity during lifetime of the project is possible only when the project is well

designed and constructed, appropriate tariff determined and agreed by the communities and an

effective O&M system in place, which must comply with the principal interests and capacities of key

stakeholders; such as the communities/user, the operator and the funding organization.

The interest of the “communities/users” is to use the electricity, which should be reliable, affordable,

enabling and easy to handle. The only limitation is their ability to pay the tariff as well as their capacities

to utilize electricity in different manners. Consumption based metering and fee collection represents the

highest standard in rural electrification as it bears the incentives to utilize electricity economically

and/or productively.

The performance of the operator will depend mainly on his competences and incentives given for

his/her services. Appropriate technical training regarding O&M aspects is a required precondition for

sound operation of MHPs, but not sufficient in itself only. In majority of the cases the operator will aim

to earn a decent income and operating the project is one option among others. The devised O&M model

must ensure that the operator can earn a decent living from running the project and provide sound

incentives to run it as long as possible. The selection of the operator also is crucial as his personal

capacities; skills and attitude very highly influences his performance.

The basic interest of the funding organization/donor is to ensure “sustainability of the project”, which

has been designed and constructed for a certain period of lifetime. Additionally they want their funding

to be used in such projects; which the beneficiary communities will effectively and efficiently maintain

during its lifetime. Therefore the major concern of funding/donor organizations is sustainability of the

project is handed over to the communities. The communities/user can only assure this through a viable

O&M model, which is appropriate to operation, in the given socio economic condition of the beneficiary

communities, without facing major issues and challenges.

The GOs, NGOs, INGO and other agencies supporting rural off‐grid communities through small grants to

construct mini‐micro hydel projects, is a one‐time grant. It has been observed that in grant‐based

projects to the communities, periodic engineering supervision and pre fixed high community share

compromises quality construction and material of the completed projects. The implementation support

is with traditional development approach. The NGOs are having limited in‐house engineering capacities

to quality design and supervise the technical aspects in mini‐micro hydels. This ends up with the low

quality design, construction and supervision of the projects.

Once a project is completed, the Operation and Maintenance (O&M) is the responsibility of the

beneficiary community. The general practice in Pakistan for maintenance of such projects, the

communities form an informal Maintenance Committee for O&M, which has little past experience and

capacity to envision sustainability aspects of the project. In most of the cases the beneficiary

communities treat these projects as free gift from funding agencies, thus far show reluctance to pay

higher tariff to run the projects professionally.

Due to the reasons mentioned above, the majority projects end up into a sustainability dilemma, where

the community managed rural electrification projects face critical O&M problems. In most of the cases

the communities after some start time looking for external grants to fix minor faults and/or replace the

electromechanical parts of the constructed projects.



3 Operation and maintenance (O&M) models in practice

It is common practice in Pakistan that when donor funded/grant based project construction is

completed, the project is handed over to the beneficiary community and/or Community Organization

(CO). The life long O&M of completed project is the responsibility of the beneficiary community. For this

purpose the beneficiary communities form their own mechanism to operate and sustain the projects.

The traditional model is formation of a Maintenance Committee by the beneficiary community,

comprising at least three members from among the beneficiary community. Before handing over the

project to the CO, the GOs, NGOs, INGOs ensure the COs to collect an amount equivalent to 3%‐5% of

the project cost as maintenance fund. This fund is deposited in a separate bank account in the name of

Maintenance Committee. The Maintenance Committee is authorized to use this fund for the O&M

activities. While handing over the projects to the beneficiary community and/or CO, there is no mention

of tariff, its collection and distribution mechanism, such as pay appropriate salary to the operator and

spare substantial amount for replacement of the equipment.

Due to emerging O&M issues new concepts of O&M have been successfully introduced by different

NGOs that are Partner Organizations (POs) of PPAF. The Aga Khan Rural Support Program (AKRSP) has

recently introduced a Community‐based Power Utility in 300 kW MHP Ahmadabad and its upcoming

large capacity projects (500 kW Shogore, 500 kW Raman and 800 kW Pawoor). The Sarhad Rural Support

Program (SRSP) has introduced NGO & CO joint O&M system in their MHPs. In this system the SRSP

takes partial responsibility of O&M together with the beneficiary community.

A third model has been broadly adopted very successfully in Afghanistan and Asia region is a Local

Leaseholder and/or Operator lead management of the MHPs.

Details of these models have been summarized in the following.

3.1 Maintenance committee

In this model, the beneficiary community forms a Maintenance Committee electing and/or selecting at

least three members for the Committee from among the member households. This Committee is

responsible for all O&M aspects of the MHP project. A separate bank account is opened in the name of

two members of the Committee. The initial deposit in this account is at least 3%‐5% of the construction

cost of the project. This amount is collected from the beneficiary member households of the

community. It is mandatory for the community to deposit the first maintenance fund in the bank

account of Maintenance Committee before the project is handed over to the community.

The Maintenance Committee is informal and provides volunteer services for the community. The

members of the Committee become responsible for determining the tariff and its collection. The tariff is

fixed with community consent and utilizes the maintenance fund for the O&M activities. The operators

are only responsible for technical operations and their salary is determined and paid by the Committee.

The Committee ensures that all the beneficiaries are equally involved in the maintenance process. The

Committee also undertakes the responsibility to generate the funds required for the repair of civil works

& maintenance of the MHP.

3.2 Community‐based power utility

The AKRSP has successfully piloted a Community‐based Power Utility concept in its 300 kW mini

hydropower project Ahmadabad Gilgit. Thereafter the Power Utility idea has been introduced in 3 mini

hydropower projects in Chitral (800 kW MHP Pawoor, 500 kW MHP Raman, and 500 kW MHP Shogore).



These 3 projects are currently under construction and expected to be operational in 2014. Once the

construction of these projects will be completed, the Utilities will take over the projects.

Formation and Registration: In “Community‐based Power Utility” model, each Power Utility has to be

formed and formally registered under the Companies Ordinance 1984 and/or any other Act of

Registration. Upon construction completion, the Power Utility takes over the O&M and becomes

responsible for management and sustainability of the MHP. The AKRSP provides all technical assistance

to the CO(s) in formation and registration of the Utility.

Membership and Shareholding: The beneficiary households hold individual shares of the Utility. The

shareholding is through cash contribution in the construction and in the shares of the Utility during its

Registration. In case of AKRSP’s Power Utilities in Chitral, the organization has taken a loan from the

Acumen Fund, therefore AKRSP has held majority share holding, until the loan will be paid out of tariff

collected from the beneficiary communities. The shares will be gradually transferred to the community

after repayment of loan. Ultimately 100% shareholding will be transferred to the beneficiary

communities on full repayment of the loan.

Training and Capacity Building: AKRSP is providing necessary training to the community members in

legal aspects as well as membership, shareholding, rights of shareholders, etc. Specialized training will

be provided to the technical staff responsible for O&M of electromechanical (E&M) equipment and

Transmission and Distribution (T&D) lines, meter reading, tariff collection, record keeping and financial

management. The annual and periodic audit of these Utilities will be conducted to ensure financial and

other compliances.

Establish Technical Support Mechanism: the AKRSP is to establish a market based technical support

mechanism to provide technical support for the Utilities and other community based MHPs operating in

Chitral. In order to do this AKRSP will encourage and facilitate market based service provider(s) to

provide technical services, financial audit and other support required. The Utilities will be linked with

national and international service providers and other support mechanisms.

3.3 PO and CO joint management

The SRSP has introduced a new concept of joint management of MHPs by NGO and CO. In this

mechanism, SRSP is directly involved in O&M of MHPs, after handing over the projects to the beneficiary

communities. However, the ownership of the project always lies with the beneficiary community.

The SRSP provides technical assistance to the beneficiary communities in determining the tariff, revenue

collection and its utilization. The SRSP has designated operators and provides technical support in

problem hunting of the project during O&M and has the say in tariff collection and its utilization.

3.4 Local leaseholders/operators

In Afghanistan and other Asia region countries, another O&M model is in practice for rural

electrification, which enables and empowers local private operators as leaseholders. It also ensures the

involvement of the communities/user to the manageable and required extend. It aims to provide the

right incentives to the involved parities for social and economic progress. The following are the rights

and responsibilities of the leaseholder/operator, the communities, and other parties of interest:

The Communities/User: propose the potential local operators, leases the MHP to one of the suggested

operators for a specific period, build up an Energy Committee, accepts the code of conduct

(use/payment), supports the leaseholder in all relevant questions (esp. in fee collection, labour intensive

repairs etc.). Takes over major repairs and replacements (> Rs. 100,000), saves the lease fee on an



individual account and does not utilize it for any other purpose than the respective MHP, assists and

monitors performance of the leaseholder/operator.

Local Leaseholder/Operator: is responsible for continuous and professional operation of the system,

maintenance and repairs (<Rs. 100,000), monthly meter reading and fee collection, monthly payment of

lease (30%), monthly repairs or savings for repair (10%), utilization of 60% turn over for salaries, new

meters, and promotion of Productive Use, data collection (generation and use) and reporting to the

owner/community.

The Funding Agency/Owner: Designs the systems viable for lease models with reference to the number

and nature of users (demand), transfers the plant ownership to the owner/community, supports the

professional O&M by the leaseholder with an adequate framework (trainings, PURE promotion etc.).

Sets up standards for operation and tariffs, establish a market based support mechanism that is within

easy access operator operators and the user community.



4 Operational experiences of MHPs

The PPAF is main funding agency to NGOs in the renewable energy sector in Pakistan. The AKRSP and

SRSP are the lead NGOs executing MHPs through donor grants. The main funding to AKRSP’s MHP

program is from PPAF, while SRSP is also getting a substantial grant from EU and other donors.

In the current practice the civil works construction, E&M equipment and T&D system is designed to

meet the basic electrification requirements of the communities. Uncertified locally manufactured

turbines and control governors are used which have a maximum design life of 8 to 10 years.

In 2012, the GIZ has assessed more than 32 MHPs funded by PPAF to AKRSP. According to this

assessment, the efficiency of most of the projects above 50 kW is below 45%. The low efficiency is

mainly attributed to locally manufactured electromechanical equipment and low quality of civil

structures.

The AKRSP has recorded kWh meter usage and consumption pattern of those MHPs, which fall under its

Climate Change project. The experiences from four projects have been summarized, how the existing

O&M system and the tariff practices are and could be scenario of these with few assumptions. The could

be scenario of this study is based on the following assumptions;

a viable model is in place

reliable projects with 21 years E&M life (currently installed E&M and T&D system is basic)

realistic user fee/tariff is determined and collected by the community

supply of spare parts and market based technical support mechanism is in place.

The current O&M situation and could be scenario of 04 projects; have been summarized in the

following.

4.1 50 kW MHP Overik

The project is located in Garumchashm district Chitral and serves a population of 190 households. The

productive utilization is limited to few village‐based businesses, such as flourmill; oil abstraction

machine and other very small businesses on need basis. However, some of the households among the

community have procured domestic appliances, which they use. The recorded revenue collection,

expenditures and savings for the period June‐13 to Oct‐13 have been summarized in Table 4‐1.

Table 4‐1: Summary of existing revenues, expenditures and savings

S# Tariff ‐ Per Unit Cost (Rs.)

Domestic Commercial

Five months Revenues

(Rs.)

Number of Operators employed

Salary of Operators (Rs.)

Other O&M Cost (Rs.)

Five Months Savings (Rs.)

Rs. 2 NA 90,000 2 6,000x2=12,000

=60,000

15,800 14,200

Source: MHP Maintenance Committee Records, Village Overik Chitral

A traditional Maintenance Committee is currently responsible for the O&M activities. The operators are

underpaid. Even then the Maintenance Committee is unable to set aside substantial amount for major

replacement of the E&M equipment and civil works.

Based on the assumption that the project has been constructed with quality civil structures, E&M

equipment, T&D line and appropriate tariff, could be scenario for this project has been worked out;

details of which have been summarized in the Table 4‐2. For details see the Annex 1 attached.



Table 4‐2: Summary of could be revenues, expenditures and savings

Description Qty. Comments

Capacity (kW) 50 Local Technology

Beneficiary households 190

Plant Factor (%) 25

*Consumption per year kWh (Mil.) 0.1095 Average per year

Consumption per month kWh (Mil.) 0.009125 Average per month

**Revenues per year (Rs.Mil.) 0.883 21 Years Average/Year

Revenues per month (Rs.Mil.) 0.074 Average per month

***O&M Cost per year (Rs.Mil.) 0.3 21 Years Average/Year

O&M Cost per month (Rs.Mil.) 0.025 Average per month

****Revenues Surplus (Rs.Mil.) 0.583 21 Years Average/Year

Lifetime Savings (Rs.Mil.) 12.246 After 21 Years

*70% Low home users, 10%High home users, 20% Commercial Uses/Productive Uses

**Tariff: Rs. 5 Low/High home users and Rs. 7 Commercial/Productive Uses

***O&M Cots is considered 5% of construction cost

***The balance amount after O&M expenditures

Source: AKRSP’s CDM project’s Technical Model

4.2 100 kW MHP Izh

The project is located in village Izh Garumchashma, district Chitral and falls in the proximity of a business

market area in the valley. The beneficiary population of this project is 250 households. The project also

supplies electricity to the market shops and small businesses in daytime.

The civil structures and T&D lines are basic and locally manufactured E&M technology is used. The

recorded Plant Factor in this project is exceptionally high and in some months it remains above 60%. The

data recorded by the Maintenance Committee regarding revenue collection, expenditures and savings

for the period June‐13 to Oct‐13 have been summarized in Table 4‐3.

Table 4‐3: Summary of existing revenues, expenditures and savings

Tariff – Rs./Unit

Domestic Commercial

Five months Revenues

(Rs.)


Salary of Operators (Rs.) Other O&M Cost (Rs.)

Five Months Savings (Rs.)

Rs. 2 6 members

10 non‐members

189,431 2 7,000x2=14,000

=70,000

52,202 67,229

Source: MHP Maintenance Committee Records, Village Izh, Chitral

A traditional Maintenance Committee looks after this project. This Committee is collecting tariff from the communities and commercial users. The operator’s are underpaid and recorded savings after other O&M expenditures are also not substantial, even though the plant factor in this project is exceptionally high, which is due to high commercial users.

The could be scenario with quality civil structures, E&M equipment, T&D line and appropriate tariff (21

years life time) has been summarized in Table 4‐4. For detail calculations see Annex 2 attached.



Table 4‐4: Summary of could be revenues, expenditures and savings

Description Qty. Comments



Plant Factor (%) 50



**Revenues per year (Rs.Mil.) 1.815 21 Years Average/year

Revenues per month (Rs.Mil.) 0.151 Average per month

***O&M Cost per year (Rs.Mil.) 0.6 21 Years Average/year


***Revenues Surplus (Rs.Mil.) 1.215 21 Years Average/year




***O&M Costs is 5% of construction cost

****The balance amount after O&M Expenditures


4.3 200 kW MHP Yalbu‐Sabsar

The project is located in village Sabsar, Roundu district Skardu. The designed capacity of the project is

200 kW. The locally manufactured E&M technology and basic T&D system have been installed. The MHP

is supplying electricity to more than 260 households together with small businesses operating within the

community. The project is facing continuous O&M problems since its operation. This is due to basic civil

structures and T&D and use of local and uncertified technology.

A Maintenance Committee is operating this project and flat tariff has been determined @Rs. 110 per

household. The Committee collects the tariff from the community. The recorded revenue collection,

expenditures and savings for the period June‐13 to Nov‐13 have been summarized in Table 4‐5.

Table 4‐5: Summary of revenues, expenditures and savings

Tariff – Rs./Unit

Domestic Commercial

Six months Revenues (Rs.)


Salary of Operators (Rs.)

Other O&M Cost (Rs.)

Six Months Savings (Rs.)

@Rs. 200 per household

NA 276,000 2 12,000x2=24,000

=144,000

55,500 76,500

Source: Maintenance committee records MHP Valbu, Baltistan

With the quality civil structures, T&D system, E&M equipment and appropriate tariff the project would

have different scenario. Based on the aforementioned assumptions for this project with 21 years

lifetime the results have been summarized in the Table 4‐6. For detail calculations see the Annex 3.



Table 4‐6: Summary revenues, expenses and savings

Description Amount Comments



Plant Factor (%) 40



**Revenues per year (Rs.Mil.) 5.932 21 Years Average/Year







***O&M Cost is 5% of Construction Cost

***The balance amount after O&M Expenditures


4.4 300 kW MHP Ahmadabad

The project is located in village Ahmadabad, Hunza Gilgit. The beneficiary households of this MHP are

more than 450 including village Ahmadbad Bala and Paeen, Salmanabad, Faizabad, Altit and Altit Fort.

The civil structures are basic and locally manufactured E&M technology is used. The project is using

existing T&D lines those laid by the Water and Power Department, Gilgit‐Baltistan. The design capacity

of this project is 300+kW, but due to use of local technology and basic civil structures, the efficiency is

very low, thus far the project is underperforming.

The AKRSP has piloted its first ever concept of Community‐based Power Utility in this project. The MHP

Ahmadabad Utility is formally registered and operating as legal entity. The ownership of this project lies

with the beneficiary community of village Ahmadabad, who has formed a Utility. The Utility sells the

surplus electricity to nearby villages.

The Utility has installed energy meters and collects the tariff accordingly. The Utility has created a

welfare fund from the project revenues; which they support as education scholarship to the talented

and needy students, health support for the poor and deserving, support to the poor girls in marriages

among the beneficiary community.

The recorded revenue collection, expenditures and savings for the period Jan‐13 to Nov‐13 have been

summarized in Table 4‐7.



Table 4‐7: Summary of revenues, expenditures and savings

Tariff – Rs./Unit Units Consumed Revenues Salary of Operator

Salary and other Expenses

Five Months Savings

Domestic Commercial kWh Rs. Rs. Rs. Rs.

4 7 small 363,194 1,759,031 12,000 1,059,864 67,229

10 large

Source: MHP Ahmadabad Community‐based Utility records, village Ahmadabad Gilgit

The could be scenario with better E&M equipment, efficient and reliable T&D system with 21 years life

time has been summarized in Table 4‐8. For detail calculations see the attached Annex 4.

Table 4‐8: Summary revenues, expenditures and revenues

Description Amount Comments

Capacity (kW) 300

Beneficiary Households 450

Plant Factor (%) 30



**Revenues per year (Rs.Mil.) 8.327 21 Years average/Year






**Tariff: Rs. 6 Low/High home users and Rs. 7 Commercial/Productive Uses (with 5% inflation)

***O&M Cost is 5% of Construction Cost

***The balance amount after O&M Expenditures




5 Problems and solutions

The rural electrification projects mostly face sustainability problems and this is due to the following

reasons;

Compromising on design and construction quality of civil structure, E&M and T&D

Non availability of a viable O&M model

Not fixing and collecting an appropriate tariff/user fee, enough to cover the O&M and setting aside a replacement cost in a sustainable manner.

The problems and proposed solutions have been summarized in the following.

The problem is to not having in house capacity to design and supervise the quality construction, procurement and installation in the projects.

The proposed solution is to have the design and construction of the projects as per known standards. The implementing agencies should have in house engineering capacity to design and implement the project for a known lifetime with Least Cost life Cycle Approach (LCCA). The designs should not be based on initial low cost, but it should be based on LCCA for the design life of the project. This will provide an opportunity for the community to invest low during O&M.

The challenge is to establish a viable community owned O&M model, effective enough to sustain the system for lifetime, especially larger capacity MHPs.

The proposed solution could be AKRSP’s “Community‐based Power Utility” and/or “Local

Leaseholder/Operator” led model for the projects above 100 kW. The higher capacity projects will

involve productive uses, trading with surrounding energy deficit communities and run the project as

a small business entity, therefore formal structure such as Utility could be a viable option. However,

it needs to be studied more for diverse communities with different mix of cultures, traditions and

community organizations.

For projects less than 100 kW, local leaseholder/operator led model and conventional Maintenance

Committee could be a viable option.

The challenge is to determine a cost effective tariff/user fee, which is affordable by the community and its collection through the community mechanism. The tariff should be enough to ensure a decent income for the operators, cover the routine O&M and replacement cost of electro‐mechanical equipment once it attains the design life.

The solution for this challenge is doing careful planning, design and quality construction, which may

ensure supply the electricity as determined. Determine and fix a reasonable tariff before signing the

project construction Term of Partnership (ToP) with the beneficiary community. Build the capacity

and skills of operators and other project staff and create awareness among the beneficiary

community about relationship of high tariff, quality electricity supply and sustainability of the

project. Promote Productive Uses and small businesses to ensure high plant factor thus far more

revenues.

The challenge is to ensure supply of spare parts and market based technical support mechanism for effective O&M and sustainability.

The proposed solution could be, both the fund‐managing agency (PPAF) and POs should provide

support to develop and establish a market‐based mechanism for supply of spare parts locally.

Encourage and provide technical support to the private sector to establish this mechanism. Enable

the operators to access required spare parts and technical support from the market‐based



mechanism. The PPAF/POs have to devise and support a market based value chain development for

the project related spare parts and technical support.

The summary conclusion is; establishment of a viable O&M model to ensure sustainability of the

community led and community managed projects needs careful selection of the model for each

community keeping their socio‐economic, cultural, religious, ethnic and other diversities prevailing

among the beneficiary community.

The selection of O&M models should be finalized before signing of ToP between the PO and the CO. The

PO and CO should agree on the model and work for its success during construction stage and after

commission and operation of the MHPs to ensure sustainability of the projects.



6 Annexes

Annex 1: 50 kW MHP Overik ........................................................................................................ 14

Annex 2: 100 kW MHP Izh ............................................................................................................ 16

Annex 3: 200 kW MHP Yalbu‐Sabsar ............................................................................................ 18

Annex 4: 300 kW MHP Ahmadabad ............................................................................................. 20



Annex 1: 50 kW MHP Overik

Project Input Sheet 50 kW MHP Overik, Chitral Exchange Rate 100 Rs./US$ Capital Cost 6,000,000 Million Annual O&M Cost 5%

1 2 3 4 5 6 7 Name of Project Size (MW) Commissioning Year Life Year Project Cost

(PKR) Annual O&M Cost

(PKR) Beneficiary Houses

Izh 0.0500 2010 21 6,000,000 300,000 140 Description Cost Currency Cost Currency 12% Supervision 720,000 PKR 7,200 US$ 20% Community 1,200,000 PKR 12,000 US$ 80% Grant 4,800,000 PKR 48,000 US$ Total 6,720,000 67,200 US$

Study Features Description Unit/Qty Start Year 2010 End of E&M Equipment Life 2030 MW 1.00 Max Annual Energy (GWh) 8.76 Actual Annual Energy (GWh) 2.19 Hydel Plants

Plant Life 40 Plant Load Factor 25%

Source: AKRSP CDM projects technical model sheet



Demand and Tariff Pricing Structure MHP Overik 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Consumption Factor 1.00 1.00 1.00 1.00 11.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00

Commercial Users 0.1 0.10 0.11 0.11 0.11 0.11 0.12 0.12 0.12 0.13 0.13 0.14 0.14 0.15 0.15 0.16 0.16 0.17 0.18 0.18 0.19

Hi Home Users 0.2 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20

Lo Home Users 0.7 0.70 0.69 0.69 0.69 0.69 0.68 0.68 0.68 0.67 0.67 0.66 0.66 0.65 0.65 0.64 0.64 0.63 0.62 0.62 0.61

Tariff Lo Home Users (per KWh) 5.0 5.00 5.25 5.51 5.79 6.08 6.38 6.70 7.04 7.39 7.76 8.14 8.55 8.98 9.43 9.90 10.39 10.91 11.46 12.03 12.63

Tariff Hi Home Users (per KWh) 5 5.0 5.3 5.5 5.8 6.1 6.4 6.7 7.0 7.4 7.8 7.76 7.76 7.76 7.76 7.76 7.76 7.76 7.76 7.76 7.76

Tarrif Commercil Users (per KWh) 7 7.0 7.4 7.7 8.1 8.5 8.9 9.4 9.8 10.3 10.9 10.86 10.86 10.86 10.86 10.86 10.86 10.86 10.86 10.86 10.86

Inflation 0.00 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05

Energy Consumption, Revenues and O&M

1 2 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

Project Size MW

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Total GWh

Izh 0.050 0.110 0.110 0.110 0.110 0.110 0.110 0.110 0.110 0.110 0.110 0.110 0.110 0.110 0.110 0.110 0.110 0.110 0.110 0.110 0.110 0.110 2.300

Total 0.050 0.110 0.110 0.110 0.110 0.110 0.110 0.110 0.110 0.110 0.110 0.110 0.110 0.110 0.110 0.110 0.110 0.110 0.110 0.110 0.110 0.110 2.300

Total Energy Production and Revenues

Total KWh (Mil.) 0.110 0.110 0.110 0.110 0.110 0.110 0.110 0.110 0.110 0.110 0.110 0.110 0.110 0.110 0.110 0.110 0.110 0.110 0.110 0.110 0.110 2.300

Total Revenues (Rs. Mil.) 0.57 0.57 0.60 0.63 0.67 0.70 0.73 0.77 0.81 0.85 0.89 0.92 0.96 0.99 1.02 1.05 1.09 1.12 1.16 1.20 1.24 18.55

Total O&M (Rs, Mil.) 0.300 0.300 0.300 0.300 0.300 0.300 0.300 0.300 0.300 0.300 0.300 0.300 0.300 0.300 0.300 0.300 0.300 0.300 0.300 0.300 0.300 6.30

Surplus Revenues (Rs. Mill) 0.27 0.27 0.30 0.33 0.37 0.40 0.43 0.47 0.51 0.55 0.59 0.62 0.66 0.69 0.72 0.75 0.79 0.82 0.86 0.90 0.94 12.25




Annex 2: 100 kW MHP Izh

Project Input Sheet 100 kW MHP Izh Exchange Rate 100 Rs./US$ Capital Cost 12,000,000 Million Annual O&M Cost 5%

1 2 3 4 5 6 7 Name of Project Size (MW) Commissioning

Year Life Year Project Cost (PKR) Annual O&M Cost (PKR) Beneficiary

Houses Izh 0.1000 2010 21 12,000,000 600,000 225 Total 0.100 12,000,000 600,000 225 Description Cost Currency Cost Currency 12% Supervision 1,440,000 PKR 14,400 US$ 20% Community 2,400,000 PKR 24,000 US$ 80% Equity+Loan 9,600,000 PKR 96,000 US$ Total 13,440,000 134,400 US$

Study Features

Description Unit/Qty

Start Year 2010

End of E&M Equipment Life 2030

MW 1.00 Max Annual Energy (GWh) 8.76 Actual Annual Energy (GWh) 2.19 Hydel Plants

Plant Life 40 Plant Load Factor 25%

Demand and Tariff Structure 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030



Hi Home Users 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25

Lo Home Users 0.5 0.50 0.49 0.48 0.47 0.47 0.46 0.45 0.44 0.43 0.42 0.41 0.39 0.38 0.37 0.35 0.34 0.33 0.31 0.30 0.28 Tariff Lo Home Users (per KWh) 5.0 5.00 5.25 5.51 5.79 6.08 6.38 6.70 7.04 7.39 7.76 8.14 8.55 8.98 9.43 9.90 10.39 10.91 11.46 12.03 12.63 Tariff Hi Home Users (per KWh) 5 5.0 5.3 5.5 5.8 6.1 6.4 6.7 7.0 7.4 7.8 7.76 7.76 7.76 7.76 7.76 7.76 7.76 7.76 7.76 7.76 Tarrif Commercil Users (per KWh) 7 7.0 7.4 7.7 8.1 8.5 8.9 9.4 9.8 10.3 10.9 10.86 10.86 10.86 10.86 10.86 10.86 10.86 10.86 10.86 10.86

Inflation 0.00 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05



Energy Consumption, Revenues and O&M of MHP Izh

1 2 4 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

Project Size MW

Life Year

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Total GWh

Izh 0.100 21 0.219 0.219 0.219 0.219 0.219 0.219 0.219 0.219 0.219 0.219 0.219 0.219 0.219 0.219 0.219 0.219 0.219 0.219 0.219 0.219 0.219 4.599

Total 0.100 0.219 0.219 0.219 0.219 0.219 0.219 0.219 0.219 0.219 0.219 0.219 0.219 0.219 0.219 0.219 0.219 0.219 0.219 0.219 0.219 0.219 4.599


Total KWh (Mil.) 0.219 0.219 0.219 0.219 0.219 0.219 0.219 0.219 0.219 0.219 0.219 0.219 0.219 0.219 0.219 0.219 0.219 0.219 0.219 0.219 0.219 4.599


Total O&M (Rs, Mil.) 0.600 0.600 0.600 0.600 0.600 0.600 0.600 0.600 0.600 0.600 0.600 0.600 0.600 0.600 0.600 0.600 0.600 0.600 0.600 0.600 0.600 12.60





Annex 3: 200 kW MHP Yalbu‐Sabsar

Project Input Sheet 200 kW MHP Yalbu-Sabsar

Exchange Rate 100 Rs./US$ Capital Cost 24,000,000 Million Annual O&M Cost 5%

1 2 3 4 5 6 7 Name of Project

Size (MW) Commissioning Year Life Year Project Cost (PKR) Annual O&M Cost (PKR) Beneficiary Houses

Izh 0.2000 2010 21 24,000,000 1,200,000 260 Total 0.200 24,000,000 1,200,000 260 Description Cost Currency Cost Currency 12% Supervision 2,880,000 PKR 28,800 US$ 20% Community 4,800,000 PKR 48,000 US$ 80% Equity+Loan 19,200,000 PKR 192,000 US$ Total 26,880,000 268,800 US$

Study Features


Start Year 2010


MW 1.00

Max Annual Energy (GWh) 8.76

Actual Annual Energy (GWh) 3.50

Hydel pPlants

Plant Life 40

Plant Load Factor 40% Demand and Tariff Pricing Structure

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030



Hi Home Users 0.1 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10

Lo Home Users 0.65 0.65 0.64 0.63 0.62 0.62 0.61 0.60 0.59 0.58 0.57 0.56 0.54 0.53 0.52 0.50 0.49 0.48 0.46 0.45 0.43 Tariff Lo Home Users (per KWh) 5.0 5.00 5.25 5.51 5.79 6.08 6.38 6.70 7.04 7.39 7.76 8.14 8.55 8.98 9.43 9.90 10.39 10.91 11.46 12.03 12.63 Tariff Hi Home Users (per KWh) 5 5.0 5.3 5.5 5.8 6.1 6.4 6.7 7.0 7.4 7.8 7.76 7.76 7.76 7.76 7.76 7.76 7.76 7.76 7.76 7.76 Tarrif Commercil Users (per KWh) 7 7.0 7.4 7.7 8.1 8.5 8.9 9.4 9.8 10.3 10.9 10.86 10.86 10.86 10.86 10.86 10.86 10.86 10.86 10.86 10.86

Inflation 0.00 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05



Energy Consumption, Revenues and O&M

1 2 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

Project Size MW

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Total GWh

Izh 0.200 - 0.701 0.701 0.701 0.701 0.701 0.701 0.701 0.701 0.701 0.701 0.701 0.701 0.701 0.701 0.701 0.701 0.701 0.701 0.701 0.701 0.701 14.717

Total 0.200 0.701 0.701 0.701 0.701 0.701 0.701 0.701 0.701 0.701 0.701 0.701 0.701 0.701 0.701 0.701 0.701 0.701 0.701 0.701 0.701 0.701 14.717


Total KWh (Mil.) - 0.701 0.701 0.701 0.701 0.701 0.701 0.701 0.701 0.701 0.701 0.701 0.701 0.701 0.701 0.701 0.701 0.701 0.701 0.701 0.701 0.701 14.717

Total Revenues (Rs. Mil.) - 3.85 3.89 4.07 4.28 4.56 4.74 4.99 5.26 5.54 5.84 6.16 6.34 6.51 6.69 6.87 7.05 7.23 7.41 7.59 7.76 7.93 124.57

Total O&M (Rs, Mil.) 1.200 1.200 1.200 1.200 1.200 1.200 1.200 1.200 1.200 1.200 1.200 1.200 1.200 1.200 1.200 1.200 1.200 1.200 1.200 1.200 1.200 25.20





Annex 4: 300 kW MHP Ahmadabad

Project Input Sheet 300 kW MHP Ahmadabad

Exchange Rate 100 Rs./US$

Capital Cost 36,000,000 Million

Annual O&M Cost 5%

1 2 3 4 5 6 7 Name of Project Size (MW) Commissioning Year Life Year Project Cost (PKR) Annual O&M Cost (PKR) Beneficiary Houses

Arkari 0.3000 2010 21 36,000,000 1,800,000 150

Total 0.300 36,000,000 1,800,000 150

Description Cost Currency Cost Currency

12% Supervision 4,320,000 PKR 43,200 US$

20% Community 7,200,000 PKR 72,000 US$

80% Equity+Loan 28,800,000 PKR 288,000 US$

Total 40,320,000 403,200 US$

Study Features


Start Year 2010


MW 1.00

Max Annual Energy (GWh) 8.76

Actual Annual Energy (GWh) 3.07

Hydel pPlants

Plant Life 40

Plant Load Factor 35% Demand and Tariff Pricing Structure

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030



Hi Home Users 0.1 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10

Lo Home Users 0.6 0.60 0.69 0.68 0.68 0.67 0.67 0.66 0.65 0.64 0.63 0.62 0.61 0.60 0.59 0.58 0.57 0.56 0.55 0.54 0.52

Tariff Lo Home Users (per KWh) 6.0 6.00 6.30 6.62 6.95 7.29 7.66 8.04 8.44 8.86 9.31 9.77 10.26 10.78 11.31 11.88 12.47 13.10 13.75 14.44 15.16

Tariff Hi Home Users (per KWh) 6 6.0 6.3 6.6 6.9 7.3 7.7 8.0 8.4 8.9 9.3 9.31 9.31 9.31 9.31 9.31 9.31 9.31 9.31 9.31 9.31

Tarrif Commercil Users (per KWh) 6 6.0 6.3 6.6 6.9 7.3 7.7 8.0 8.4 8.9 9.3 9.31 9.31 9.31 9.31 9.31 9.31 9.31 9.31 9.31 9.31

Inflation 0.00 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05



Energy Consumption, Revenues and O&M of MHP Ahmadabad

1 2 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

Project Size MW

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Total GWh

Arkari 0.300 0.920 0.920 0.920 0.920 0.920 0.920 0.920 0.920 0.920 0.920 0.920 0.920 0.920 0.920 0.920 0.920 0.920 0.920 0.920 0.920 0.920 19.316

Total 0.300 0.920 0.920 0.920 0.920 0.920 0.920 0.920 0.920 0.920 0.920 0.920 0.920 0.920 0.920 0.920 0.920 0.920 0.920 0.920 0.920 0.920 19.316

Energy Production and Revenues

Total KWh (Mil.) 0.920 0.920 0.920 0.920 0.920 0.920 0.920 0.920 0.920 0.920 0.920 0.920 0.920 0.920 0.920 0.920 0.920 0.920 0.920 0.920 0.920 19.316


Total O&M (Rs, Mil.) 1.800 1.800 1.800 1.800 1.800 1.800 1.800 1.800 1.800 1.800 1.800 1.800 1.800 1.800 1.800 1.800 1.800 1.800 1.800 1.800 1.800 37.80



Documents

Operation Maintenance Aspects of MHPs 5 O and M-final-05-12-13.pdfLED Light‐Emitting Diode Lit Liter LSOs Local Support Organizations LT Low Tension LV Low Voltage MCB Moulded Circuit