budget manual.pdf
TRANSCRIPT
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BUDGET MANUAL
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M. YOUSUF ADIL SALEEM & CO.Chartered AccountantsMember of Deloitte Touche TohmatsuLimited66-E-FCC, Syed Maratab Ali Road,Gulberg IV, Lahore PakistanTel: +92 (0) 42 35757188Fax: +92 (0) 42 35763091
WATER AND POWER DEVELOPMENT
AUTHORITY
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BUDGET MANUALWATER AND POWER DEVELOPMENT AUTHORITY
M. Yousuf Adil Saleem & Co., Chartered Accountants Page 3Member of Deloitte Touche Tohmatsu Limited V 7
TABLE OF CONTENTS
1 INTRODUCTION ...................................................................................... 1
1.1 GENERAL INFORMATION ...................................................................... 1
1.2 BUDGETING CONCEPT ........................................................................ 1
1.3 SCOPE ........................................................................................... 2
1.4 DEFINITIONS .................................................................................... 3
2 FEDERAL GOVERNMENT BUDGETING ............................................................. 8
2.1 BUDGET PROCESS ............................................................................. 8
2.1.1 Budget Call Circular ..................................................................... 8
2.1.2 Preparation of Budget Estimates...................................................... 8
2.1.3 Types of Budget ......................................................................... 8
2.1.3.1 Capital Budget ........................................................................ 9
2.1.3.2 Revenue Budget ....................................................................... 9
2.1.4 Public Sector Development Programme (PSDP) .................................... 9
2.1.5 Resource Estimation ................................................................... 10
2.1.6 Revised Estimates ...................................................................... 10
2.1.7 Review of the Budget Proposals ...................................................... 11
2.1.8 Finalization of the Budget Proposals ................................................ 11
2.2 FINANCIAL PROVISION OF THE CONSTITUTION .......................................... 11
2.2.1 Federal Consolidation Fund and Public Accounts ................................. 11
2.2.2 Custody of Federal Consolidated Fund and Public Accounts .................... 11
2.2.3 Annual Budget Statement ............................................................. 12
2.2.4 Supplementary And Excess Grants ................................................... 12
3 PROCEDURE FOR APPROVAL OF DEVELOPMENT SCHEMES ................................... 13
3.1 BUDGET ESTIMATE AND REVISED ESTIMATE .............................................. 13
4 CONCEPTION, PLANNING, DESIGN AND DEVELOPMENT OF PROJECT ...................... 15
4.1 GENERAL ....................................................................................... 15
4.2 RECONNAISSANCE LEVEL .................................................................... 15
4.3 PRE-FEASIBILITY STUDY ..................................................................... 16
4.4 FEASIBILITY STUDY ........................................................................... 16
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4.5 DETAILED DESIGN ............................................................................ 18
4.6 TENDER / CONTRACT DOCUMENT ......................................................... 18
4.7 PROJECT REPORTING PROCESS ............................................................ 19
4.7.1 PC-II Proforma .......................................................................... 19
4.7.2 PC-I Proforma ........................................................................... 20
4.7.3 PC-III Proforma .......................................................................... 20
4.7.4 PC-IV Proforma .......................................................................... 20
4.7.5 PC-V Proforma .......................................................................... 20
4.7.6 Anticipatory Approval .................................................................. 21
4.7.7 Administrative Approval ............................................................... 21
4.7.8 Concept Clearance ..................................................................... 21
4.7.9 Re-Appropriation ....................................................................... 21
4.7.10 Supplementary Grant or Token Allocation ......................................... 21
4.8 PREPARATION OF PC-I, II .................................................................... 22
4.9 FINANCIAL & ECONOMIC ANALYSIS CARRIED OUT IN PC-I .............................. 22
4.9.1 Net present value (NPV) ............................................................... 22
4.9.2 Internal Rate of Return (IRR) ......................................................... 22
4.9.3 Payback period ......................................................................... 23
4.10 PROJECT FINANCING- WATER SECTOR PROJECT ........................................ 23
4.11 PROJECT FINANCING- POWER SECTOR PROJECT ........................................ 23
4.12 FEATURES OF PROJECT FINANCE .......................................................... 24
5 PREPARATION OF ANNUAL PUBLIC SECTOR DEVELOPMENT PROGRAMME ................. 26
5.1 GENERAL ....................................................................................... 26
5.2 WATER DEVELOPMENT SCHEMES ........................................................... 26
5.3 POWER DEVELOPMENT SCHEMES ........................................................... 27
5.4 PROJECT DIGEST ............................................................................. 27
5.4.1 WATER WING PROJECT COSTS ........................................................ 27
5.4.2 POWER WING PROJECT COSTS ........................................................ 28
5.5 SCHEDULE FOR PREPARATION OF PSDP ................................................... 28
5.6 GUIDELINES FOR FILLING PSDP FORMATS ................................................. 31
5.6.1 General Instructions ................................................................... 31
5.6.2 Amended Final Budget Estimates .................................................... 33
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6 WATER WING CURRENT EXPENDITURE BUDGET ESTIMATE .................................. 34
7 BUDGETING OF FOREIGN LOAN/AID/SUPPLIERS CREDITS/GRANTS ....................... 35
7.1 GUIDELINES FOR PREPARATION OF FOREIGN LOAN/AID/GRANTS BUDGETS ........ 35
7.1.1 Foreign Loan/Aid/Grants .............................................................. 35
7.1.2 Procedure for preparing Foreign Loan Budgets .................................... 35
8 BUDGETING OF FOREIGN EXCHANGE ........................................................... 38
8.1 GUIDELINES FOR PREPARATION OF FOREIGN EXCHANGE BUDGET .................... 38
8.1.1 Estimates Of Foreign Exchange Requirements ..................................... 38
8.1.2 Foreign Exchange Components Of Development And Non-Development
Expenditure ........................................................................................ 38
8.1.3 Co-Ordination With Public Sector Development Plan (PSDP) .................... 39
8.1.4 Own Resources Commitment Budget .............................................. 39
8.1.5 Preparation Of Foreign Exchange Budget ........................................... 39
9 THE BUDGETING (ESTIMATION) PROCESS ...................................................... 43
9.1 CAPITAL EXPENDITURE-ASSETS............................................................. 43
9.1.1 Plant and Machinery ................................................................... 43
9.1.2 Camp Equipment ....................................................................... 43
9.1.3 Laboratory Equipment ................................................................. 43
9.1.4 Photographic Equipment .............................................................. 43
9.1.5 Arms Ammunition ....................................................................... 43
9.1.6 Computer & Ancillary Equipments .................................................. 44
9.1.7 Electrical Equipment ................................................................... 44
9.1.8 Office Machines And Equipment ..................................................... 44
9.1.9 Drawing and Survey Instrument ...................................................... 44
9.1.10 Residential Furniture And Fixture ................................................... 44
9.1.11 Non-Residential Furniture And Fixtures ............................................. 44
9.1.12 Tools and Plants including Miscellaneous T&P ..................................... 44
9.1.13 Library Books ............................................................................ 45
9.1.14 Utility Vehicles .......................................................................... 45
9.1.15 Mandatory Spare Parts ................................................................. 45
9.2 CAPITAL WORK IN PROGRESS ............................................................... 45
9.2.1 Land Acquisition/Compensation ..................................................... 45
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9.2.2 Main Civil Works ........................................................................ 45
9.2.3 Power Generation Units ............................................................... 46
9.2.4 Maps and Other Survey Documents .................................................. 46
9.2.5 Preliminary Expenses-Survey and Investigation ................................... 46
9.2.6 Buildings ................................................................................. 46
9.2.7 Canals, Minors/Distributaries, Disposal/flood carrier channels, water courses
46
9.2.8 Dam Construction ...................................................................... 47
9.2.9 Electrical and Mechanical Works ..................................................... 47
9.2.10 Transmission & Transformation Equipment ........................................ 47
9.2.11 General / Plant Assets ................................................................. 479.2.12 Interest Charges Loans ................................................................ 47
9.2.13 Consultant Fee And Other Expenses ................................................ 47
9.2.14 Custom Duty, Sales Tax And Port Clearing Charges ............................... 48
9.3 Project Management Expenses ............................................................ 48
9.3.1 Pay And Allowances Of Officers and Staff Including Leave Salary .............. 48
9.3.2 Honoraria, Over Time And Off Day Wages .......................................... 49
9.3.3 Medical Expenses ....................................................................... 49
9.3.4 Leave Salary And Pension Contribution ............................................. 49
9.3.5 Group Life Insurance ................................................................... 49
9.3.6 Free Energy Supply To Staff .......................................................... 49
9.3.7 Pension And Gratuity .................................................................. 50
9.3.8 Employees share in fund contribution .............................................. 50
9.3.9 Traveling Allowance ................................................................... 50
9.3.10 Rents, Rates And Taxes ................................................................ 50
9.3.11 Audit Fees And Expenses .............................................................. 51
9.3.12 Telephone Charges ..................................................................... 51
9.3.13 Education Cess .......................................................................... 51
9.3.14 Maintenance And Running Of Vehicles .............................................. 51
9.3.15 Running And Maintenance Of Utility Vehicles ...................................... 52
9.3.16 Running and Maintenance Of Plant and Machinery ............................... 52
9.3.17 Work charged Establishment ......................................................... 52
9.3.18 Repair And Maintenance Of Residential And Non-Residential Buildings ....... 52
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9.3.19 Stationery And Printing ................................................................ 52
9.3.20 Entertainment Charges ................................................................ 52
9.3.21 Postage and Telegrams ................................................................ 53
9.3.22 Other Contingencies ................................................................... 53
9.3.23 Authority Overheads ................................................................... 53
9.3.24 Supervisory Expenses .................................................................. 53
9.3.25 Depreciation ............................................................................. 54
9.3.26 Telephone And Carrier System ....................................................... 54
10 MEDIUM TERM BUDGETARY FRAMEWORK .................................................... 55
10.1 INTRODUCTION ............................................................................... 55
10.2 MTBF AS A TOOL FOR MODERNISATION OF THE BUDGET SYSTEM..................... 55
10.3 DIFFERENCE BETWEEN MTBF AND TRADITIONAL BUDGETING ......................... 56
10.3.1 The Traditional Budgeting System ................................................... 56
10.4 MTBF PROCESS ................................................................................ 58
11 NON-DEVELOPMENTAL BUDGET ............................................................... 60
11.1 INTRODUCTION ............................................................................... 60
11.2 PROCEDURE FOR PREPARATION OF BUDGETS ............................................ 60
12 HYDROELECTRIC - O&M BUDGET ............................................................. 63
12.1 BUDGET FORMS & STATEMENTS ............................................................ 63
12.2 GENERAL ESTABLISHMENT EXPENSES ACCOUNT ......................................... 64
12.3 OPERATING EXPENSES ACCOUNT .......................................................... 64
12.3.1 R & M - Power Generation Plant Assets ............................................. 64
12.3.2 R & M - General /Plant Assets ........................................................ 64
12.3.3 Maintenance Power - Fuel And Lubricants ......................................... 65
12.3.4 Repair and Maintenance of Dam/Reservoir ........................................ 65
12.3.5 R & M - Civil Works on Freehold Land ............................................... 65
12.3.6 Lease rentals ............................................................................ 65
12.3.7 Ijarah Rentals ........................................................................... 65
12.3.8 Insurance ................................................................................ 65
12.4 DEBT SERVICING .............................................................................. 65
12.5 HYDEL LEVIES ................................................................................. 66
12.6 INCOME BUDGET .............................................................................. 66
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12.6.1 Sale of Power ........................................................................... 66
12.6.2 Miscellaneous Income .................................................................. 67
13 SELF FINANCING OF PROJECTS/WORKS ..................................................... 68
13.1 CAPITAL EXPENSE ............................................................................ 68
13.2 CAPITAL WORKS, FINANCED FROM REVENUE ............................................. 68
13.3 SELF SOURCE FUNDING ...................................................................... 68
14 PHASING OF BUDGETS .......................................................................... 70
14.1 MONTHLY PHASING OF INCOME AND EXPENSE BUDGET ................................ 70
14.2 MONTHLY PHASED CASH FLOW BUDGET .................................................. 71
14.3 STOCK LEVELS ................................................................................ 71
15 CASH FLOW BUDGETING ....................................................................... 72
15.1 EXPECTED REVENUE TO BE EARNED ....................................................... 72
15.2 REVENUE APPLICATIONS .................................................................... 72
15.3 SURPLUS AVAILABLE FOR SELF SOURCE FUNDING OF POWER DEVELOPMENT
PROJECTS .............................................................................................. 72
16 SELF FINANCING UNITS (SFU) ................................................................. 73
17 COMMON SERVICES BUDGETING .............................................................. 75
17.1 Expense Budgeting ........................................................................... 75
17.2 Source of funding ............................................................................ 75
18 NON DEVELOPMENT BUDGET- WATER WING ................................................ 77
19 BUDGETARY CONTROL ......................................................................... 79
19.1 MANAGEMENT ACTION ....................................................................... 79
19.2 FORECASTING RESULTS ...................................................................... 81
19.2.1 General ................................................................................... 81
19.2.2 How a forecast is made................................................................ 82
19.3 COMMITMENTS RECORDS .................................................................... 83
ANNEXURES .............................................................................................. 84
ANNEXURES WATER WING ............................................................................. 85
PROJECT TIME TABLES - ANNEXURE-W1-A.......................................................... 86
PROJECT DIGEST - ANNEXURE-W1-B ................................................................. 87
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FIXED EXPENSES- ANNEXURE-W1-C ................................................................... 89
ASSETS- ANNEXURE-W1-D .............................................................................. 91
WORKS- ANNEXURE-W1-E .............................................................................. 92
PUBLIC SECTOR DEVELOPMENT PROGRAMME 20_ _-20_ _ WATER WING WAPDA -
ANNEXURE-W1-F ........................................................................................ 93
QUARTERLY CASH PLAN- ANNEXURE-W1-G ......................................................... 94
QUARTERLY WORK PLAN- ANNEXURE-W1-H ......................................................... 95
CONTRACT WISE/WORK WISE DETAILS- ANNEXURE-W1-I ......................................... 96
FINANCIAL FORECAST- ANNEXURE-W1-J ............................................................. 97
SUPERVISORY OFFICE BUDGET PROFOMA- ANNEXURE-W2 ........................................ 98
ANNEXURES POWER WING ........................................................................... 101
PROJECT TIME TABLES - ANNEXURE-P1-A ........................................................ 102
PROJECT DIGEST - ANNEXURE-P1-B ................................................................ 103
CAPITAL EXPENDITURE AND FINANCING PATTERN - ANNEXURE-P1-C ......................... 104
FIXED EXPENDITURE AND FINANCING PATTERN - ANNEXURE-P1-D ............................ 105
PUBLIC SECTOR DEVELOPMENT PROGRAMME 20_ _-20_ _ POWER WING WAPDA (37
COLUMN) - ANNEXURE-P1-E ......................................................................... 107
CASH PLAN FOR FY - ANNEXURE-P1-F .............................................................. 108
ANNUAL WORK PLAN FOR FY - ANNEXURE-P1-G .................................................. 109
FOREIGN LOANS FOR THE FY - ANNEXURE-P1-H .................................................. 110
SANCTIONED STRENGTH - ANNEXURE-P1-I ........................................................ 110
OPERATIONS AND MAINTENANCE BUDGET (CAPITAL & REVENUE) - ANNEXURE-P2-A ...... 111
ACTIVITY-WISE PROGRESS OF CAPITAL BUDGET FOR THE CURRENT FY - ANNEXURE-P2-B 115
ACTIVITY-WISE CAPITAL BUDGET FOR (NEXT YEAR) FY - ANNEXURE-P2-C ................... 115
ACTIVITY-WISE PROGRESS OF REPAIR & MAINTENANCE BUDGET FOR FY - ANNEXURE-P2-D
........................................................................................................... 116
ACTIVITY-WISE REPAIR & MAINTENANCE BUDGET FOR (NEXT YEAR) FY - ANNEXURE-P2-E 116
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REVISED BUDGET FOR CURRENT FY & BUDGET ESTIMATES FOR NEXT FY (VEHICLE WISE
REPAIR) - ANNEXURE-P2-F ........................................................................... 117
REVISED BUDGET FOR CURRENT FY & BUDGET ESTIMATES FOR NEXT FY (VEHICLE WISE
FUEL)- ANNEXURE-P2-G .............................................................................. 117
STORE BUDGET FOR FY - ANNEXURE-P2-H ........................................................ 118
FORM-A PAYMENT OF LOCAL MATERIAL - ANNEXURE-P2-I ...................................... 119
FORM-B PAYMENT OF IMPORT OF MATERIAL / WORKS - ANNEXURE-P2-J .................... 120
FORM-C FOREIGN EXCHANGE BUDGET OF LC OPENING FOR NEXT FY - ANNEXURE-P2-K .. 120
MANPOWER DATA AS ON ___________ - ANNEXURE-P2-L....................................... 121
LIST OF OFFICERS/OFFICIALS RETIRING DURING FY- ANNEXURE-P2-M ........................ 121
CASH FLOW PROJECTIONS ANNEXURE-P3 ......................................................... 122
HYDEL O&M BUDGET TIME TABLE ANNEXURE-P4 ................................................. 124
ANNEXURES GENERAL ................................................................................ 125
Project AID - ANNEXURE-G1 ......................................................................... 126
SUMMARY OF FOREIGN EXCHANGE REQUIREMENT - ANNEXURE-G2 ........................... 127
FOREIGN EXCHANGE REQUIRED FOR DEVELOPMENT SCHEMES DURING FY - ANNEXURE-G3 128
DETAILS OF FOREIGN EXCHANGE REQUIREMENT FOR IMPORTS (DEVELOPMENT) DURING FY -
ANNEXURE-G4 ......................................................................................... 128
DETAILS OF FOREIGN EXCHANGE REQUIREMENT FOR IMPORTS (CURRENT) DURING FY -
ANNEXURE-G5 ......................................................................................... 129
FOREIGN EXCHANGE BUDGET- INVISIBLE (DEVELOPMENT) FOR FY - ANNEXURE-G6 ........ 130
FOREIGN EXCHANGE BUDGET INVISIBLE (CURRENT EXPENDITURE)FOR FY- ANNEXURE-G7 131
PC-II FORM - ANNEXURE-G8 ......................................................................... 132
PC-1 FORM- ANNEXURE-G9 .......................................................................... 133
PC-III FORM (a &b) - ANNEXURE-G10 ............................................................... 134
PC - IV - ANNEXURE-G11 ............................................................................. 135
PC-V FORM - ANNEXURE-G12 ........................................................................ 136
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BUDGET MANUALWATER AND POWER DEVELOPMENT AUTHORITY
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M. Yousuf Adil Saleem & Co., Chartered Accountants Page 1Member of Deloitte Touche Tohmatsu Limited V 7
1 INTRODUCTION
1.1
GENERAL INFORMATION
Water and Power Development Authority (WAPDA) is an autonomous Federal
institution created by the virtue of an act of Parliament 1958. WAPDA Authority
comprises Chairman and Members Water, Power and Finance. Its statutory mandate
is to utilize water and power resources of the country in a unified and coordinated
position. WAPDA was empowered to frame program for the generation of Hydel and
Thermal Power, Transmission and distribution lines and Grids etc. The Power Wing
of the Authority has been restructured into independent thermal generation
companies, distribution companies and a transmission and dispatch company,
whereas Hydel power generation has remained with WAPDA. The registered office
of the Authority is situated at WAPDA House, Shahrah-e-Quaid-e- Azam, Lahore,
PAKISTAN.
1.2 BUDGETING CONCEPT
The budgeting process is based on two main elements namely the expenses that
are estimated or forecasted to be incurred in the next period and the estimation of
sources/income from where these expenses will be met. Further the expenses are
divided into capital and revenue. Expenses which are proposed to be incurred on
procurement of assets or development of assets are termed as capital expenditure.
The expenses estimated to be incurred on running of the organisation are termed
as revenue expenditure.
This Budget manual has been compiled to provide guidance to the employees of
Water and Power Development Authority (WAPDA) on all major areas of the
budgeting process. This manual lays down comprehensive policies and procedures
to be followed in preparation of the Budget. The policies stated herein are
minimum requirements under normal conditions and are intended to assist the
budgeting personnel in the preparation of accurate and reliable budget estimates
and its reporting to all concerned quarters.
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This manual has been divided into two parts, which are as follows:
PART-I DEVELOPMENT BUDGETING-WATER & POWER
PART II NON DEVELOPMENT BUDGETING
All Wings of WAPDA through the respective General Managers Finance are
independently responsible for developing their budgets and dealing directly with the
Ministry in all budgeting matters. The Budget and Coordination Department under the
Member Finance deals with the Policy matters related with the budgeting process.
Once the budget of the wingsis approved by the Ministry the same is passed on to the
Budget and Coordination Department for consolidation and circulation purposes.
1.3
SCOPE
This manual shall be reviewed and approved by the Authority from time to time or
as and when need arises.
The policies and procedures prescribed in this manual shall apply to all budgeting
preparation related matters of WAPDA and are applicable to the Budget
preparation personnel in particular.
The Budget Personnel shall be responsible for the preparation of budget
information on the forms and schedules given in the Annexures. These are Model
Formats and are meant to acquaint the readers/users of the manual with reference
to the write-up provided in various chapters of the manual.
The Model Formats are subject to change according to the requirements of the
Federal Government. Only the formats issued by the relevant office of the General
Manager Finance calling for the compilation of the budget shall be treated as the
final version of the formats on which the budget for the year/period shall be
compiled.
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1.4
DEFINITIONS
In this Manual, unless there is anything repugnant on the subject or context.-
Terms Description
Annual Plan Coordination
Committee (APCC)"Annual Plan Coordination Committee"means the Committee headed by theSecretary, Finance and Economic Affairs, toprepare Annual Plan for submission to theNational Economic Council.
Anticipatory ApprovalApproval granted by the Chairman ECNEC for
execution of a scheme in anticipation of itsformal approval by ECNEC. Requests for suchapprovals is submitted to the CabinetDivision and has to be secretary of thedivision concerned for all federal schemesand by the ACS (Dev) for provincial schemes.
Authority"Authority" means the Pakistan Water andPower Development Authority establishedunder WAPDA Act 1958; comprising ofChairman, Members Water, Power andFinance.
Authority OverheadsOverhead charges for meeting the expensesof the Authority and its central offices.
BudgetA plan of financial operation embodying anestimate of proposed expenditures for agiven period and the proposed means offinancing the same over a future definedperiod for achieving organisationsobjectives.
Budget and Accounts Officer"Budget and Accounts Officer" means anofficer attached with the Project Directorincharge of small project for the aforesaidpurpose and submission of accounts andbudget to the Chief Engineer or GeneralManager concerned, as the case may be.
Central Development Working
Party (CDWP)"Central Development Working Party" meansa body headed by the Secretary, PlanningDivision to process and clear the Schemes
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Terms Description
costing over Rs.60 Million and up to Rs.
1,000 Million submitted to it by therespective Administrative Ministries and forthe Provinces up to Rs. 5,000 million, as thecase may be.
All projects (federal or provincial) in whichFEC is more than 25% of the project cost willalso be considered by CDWP.
Chairman"Chairman" means the Chairman of thePakistan Water and Power DevelopmentAuthority
Common Services Services being performed for all Wings ofWAPDA
CustodianAn individual responsible for safeguardingcash.
Departmental Development
Working Party (DDWP)Departmental Development Working Party"means a body for approving programme upto Rs. 60 million for federal ministry/division/department headed by therespective Secretary/ Head of Department
and includes representatives of FinanceDivision and concerned Technical! Section inthe Planning and Development Division
Director Budget and Accounts"Director Budget and Accounts' means anofficer attached to General Managerconcerned for the purpose of preparation,consolidation and submission of accountsand budget of the particular Sub-Sector tothe Director(Finance) attached with theGeneral Manager Finance
Director General Finance (B & C) "Director General Finance (Budget &Coordination)" means the officer appointedto coordinate and consolidate the accountsand the budget of the Water and PowerWings of the Authority
Drawing & Disbursing Officer
(DDO)The person designated as such by thecompetent authority
Executive Committee of National
Economic Council (ECNEC)"The Executive Committee of NationalEconomic Council" means the Executive
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Terms Description
Committee headed by the Finance Minister
to accord approval to the PCI Proforma ofthe schemes costing over Rs. 1,000 Million,as presented to it by the Planning Divisionafter clearance by the Central DevelopmentWorking Party.
ExpenseGeneral expense including WAPDA supplies,office repair, vehicle running andmaintenance, postage, utilities,reimbursement of travel and the like whichare related to the operations of WAPDA.
Fiscal year A twelve months period over which acompany budgets its spending. Fiscal year ofWAPDA is established for the period endingon 30th June.
General Manager (Finance)
Coordination"General Manager (Finance) Coordination"means the officer appointed to coordinateand consolidate the accounts and the budgetof the Water and Power Wings of theAuthority
General Manager (Finance)
Water/Power" General Manager (Finance) Water/Power"means an officer attached to the respectiveMember for the purpose of preparation,consolidation and submission of accountsand budgets of the respective Wing afterapproval from the Member to the Authority
Major Head-Development"Major Head" in relation to developmentexpenditure means developmental loans andadvances by the Federal Government frominternal and external resources to WAPDAWater & Power Wings.
Member "Member" means the Member (Water, Power& Finance) of WAPDA
National Economic Council (NEC)"National Economic Council" means a bodyheaded by the Prime Minister to givesanction to the Annual Plan beforepresentation to the Parliament i.e. NationalAssembly and the Senate.
PC-1 A pro-forma prescribed by PlanningCommission on which all projects/schemes
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Terms Description
are required to be drawn up. It covers all
technical and financial details,environmental aspects, benefits, risks andenvironment issues related with the project.
PC-1 (Low Cost)A proforma prescribed for small projectscosting less than Rupees one million
PC-1 (Umbrella PC-1)
A proforma prepared by the Federal ministryhaving provincial components to be financedthrough a joint loan by the donor agency. (Itcould fall in any one sector of the economy)
PC-II A proforma prescribed by PlanningCommission for Survey and FeasibilityStudies of development projects which isprepared prior to initiating any project.
PC-III
A proforma prescribed by PlanningCommission for Physical Targets based onPSDP Allocations of development projectswhich is prepared after PC - I.
PC-IVA proforma prescribed by PlanningCommission for Project Completion Report.
PC-VA proforma prescribed by PlanningCommission for Annual Performance Reportafter Completion of Project
Priority Committee"Priority Committee" means the Committeeheaded by the Additional Secretary; Budget,for the purpose of fixation of priority andfinancial allocation to various schemes andprojects as presented by the sponsoringagencies to the Federal Government through
their respective PSDP's.Project Director
In-charge of a project
Secretary WAPDAThe Secretary of WAPDA Authority
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PART -I
WATER AND POWER DEVELOPMENT BUDGETING
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2 FEDERAL GOVERNMENT BUDGETING
2.1
BUDGET PROCESS
The budgeting process kicks off with issue of the budget call circular by the
Ministry of Finance (which is tasked with preparation of the countrys budget) to
various ministries and line departments and independent entities.
2.1.1
Budget Call Circular
1.
This is the official notice issued by Ministry of Finance to departments
asking them to prepare and submit budget estimates for the following fiscal
year. This document is a complete set which includes budget forms,
instructions and guidelines for preparing budget estimates.
2.
It also sets out the target dates by which the various stages of budget
formulation are to be completed. Since time factor is important, emphasis
is laid, among other things, on the strict observance of the budget time
table at all stages of budget making.
3.
The departments/agencies are required to submit a statement of: (i)
permanent expenditure on the current budget (ii) projected expenditures
on existing development projects (iii) proposals for new expenditures, and
(iv) proposals for expenditure on new development projects.
2.1.2
Preparation of Budget Estimates
Keeping in view the past actual expenditures, current trends and future
expectations, estimates are prepared in details separately for current, non-development and development expenditures.
2.1.3
Types of Budget
The Budget is divided into two main sections, namely:
i)
Capital Budget
ii)
Revenue Budget
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2.1.3.1
Capital Budget
The Capital Budget is intended for development projects in the country.
The capital expenditure is generally met from the revenue surplus, reserve
funds and borrowings for specific or general purpose.
2.1.3.2
Revenue Budget
The Revenue Budget presents current or day-to-day non-development
expenditures. The current revenue derived through taxes, duties and other
miscellaneous receipts is used to finance debt repayments, running of civil
government, defense etc. If revenue receipts are greater than the current
and non-development expenditures, the surplus amount is transferred to
Capital Budget. If revenue receipts are less than the current expenditures,
the Government has to plug the gap through borrowings.
2.1.4
Public Sector Development Programme (PSDP)
The development projects for the year are outlined in Public Sector
Development Programme (PSDP). It indicates the financial allocation and
targets of various development schemes. It is prepared by the Planning
Commission in consultation with the Ministry of Finance and the Provincial
Governments. The Plan is finally approved by the National Economic Council.
The preparation of Annual Budget Plan starts as early as November. The size of
the plan is fixed by taking into consideration the requirements of the economy
and plan targets. The plan is communicated to the executing agencies and the
provincial governments by the Planning Commission. The sector-wise
development programs are formulated by sponsoring agencies and finalized by
the Planning Commission after a detailed discussion. These allocations are thenconsidered, first by the Priorities Committee in March/April and then by the
Annual Plan Coordination Committee in April/ May. The National Economic
Committee gives final recommendation of the plan for approval of the
Parliament.
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2.1.5
Resource Estimation
Prior to determining the size of the plan, the Ministry of Finance determines
the resources available to undertake development projects. This exercise is
completed in coordination with the governmental agencies concerned,
particularly Federal Board of Revenue (FBR) and Provincial Finance
Department. Following are the principal components of resource estimation:
i) Public Savings: the surplus of revenue receipts over current
expenditures;
ii) Net Capital Receipts: recovery of loans, saving schemes, prize
bonds, Government Bills, etc.;
iii) Foreign Economic Assistance; and
iv) Deficit Financing (Local Bank Borrowing).
2.1.6
Revised Estimates
The Revised Estimates for the current year are also prepared. These estimates
include provisions for authorized expenditure which is expected to be incurred
before the close of year. If revised estimates for the year exceed the
authorized grants, these should be supported by documentary evidences to
prove that the increase has been duly authorized by the competent authority.
The executing agency will also indicate how the excess is to be met from either
or all of the following:
i) Appropriation of savings in the existing grants;
ii) Appropriation from other items; and
iii) Supplementary grants.
Budgeting is a very serious process and if revised estimates are less than the
authorized grants, the reasons for under-utilization of the grants have to be
clearly stated.
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2.1.7
Review of the Budget Proposals
The proposals submitted by different departments and ministries are reviewed.
The review of the budget proposals vary greatly depending on whether the
expenditures are fixed/variable and are for a new item. Most of the current
budget is treated as fixed; it is not reviewed in detail unless there is an
extraordinary change in the estimates from the previous year. All costs relating
to personnel (employees) including pension costs, debt servicing and office
administration are categorized as fixed expenditure.
2.1.8
Finalization of the Budget Proposals
Once the proposals have been reviewed and modified wherever necessary these
are consolidated on basis of departments, ministries and the Government and
put up for approval of the Federal /provincial governments.
2.2
FINANCIAL PROVISION OF THE CONSTITUTION
Finance Procedure as prescribed by the Constitution of 1973 of Islamic Republic of
Pakistan is contained in Articles 78 to 85. These Articles are produced below:-
2.2.1
Federal Consolidation Fund and Public Accounts
All revenues received by the Federal Government all loans raised by that
Government, and all money received by it in repayment of any loan, shall form
part of a consolidated fund, to be known as the Federal Consolidated Fund.
All other moneys received by or on behalf of the Federal Government or
received by or deposited with the Supreme Court or any other court or
department, or independent body or Authority, established under the authority
of the Federation; shall be credited to the Public Account of the Federation.
2.2.2
Custody of Federal Consolidated Fund and Public Accounts
The custody of the Federal Consolidated Fund, the payment of money into that
Fund, the withdrawal of moneys there-from, the custody of other moneys
received by or on behalf of the Federal Government, their payment into, and
withdrawal from the Public Account of the federation and all matters
connected with or ancillary to the matters aforesaid, shall be regulated by Act
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of parliament or, until provision in that behalf is so made, by rules made by the
President.
2.2.3
Annual Budget Statement
The Federal Government shall in respect of every financial year cause to be laid
before National Assembly a statement of the estimated receipts and
expenditure of the Federal Government for that year, which is known as the
Annual Budget Statement. The Annual Budget Statement shows separately all
sums required to meet expenditure described by the Constitution as
expenditure charge upon the Federal Consolidated Fund; and the sums required
to meet other expenditure proposed to be made from the Federal ConsolidatedFund; and shall distinguish expenditure on revenue account from other
expenditure.
2.2.4
Supplementary And Excess Grants
If in respect of any financial year it is found:-
i)
that the amount authorized to be expended for a particular service for the
current financial year is insufficient, or that a need has arisen for
expenditure upon some new service not included in the annual Budget
Statement for that year; or
ii)
that any money has been spent on any service during a financial year in
excess of the amount granted for that service for that year; the Federal
Government shall have power to authorize expenditure from the Federal
Consolidated Fund, whether the expenditure is charged by the Constitution
upon that Fund or not and shall causes to be laid before the National
Assembly a Supplementary Budget Statement or as the case may be, an
Excess Budget Statement, setting out the amount of that expenditure.
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3
PROCEDURE FOR APPROVAL OF DEVELOPMENT SCHEMES
3.1
BUDGET ESTIMATE AND REVISED ESTIMATE
1.
Under clause 8 of WAPDA Act, the Authority is charged with the responsibility
for preparation of comprehensive plans for the development and utilization of
water and power resources of Pakistan on a unified and multipurpose basis. For
this purpose, the Authority will prepare scheme or schemes for the Federation
and Provinces or any part thereof providing for all or any of the following
matters, namely:-
i)
irrigation, water supply and drainage; and recreational use of waterresources;
ii)
the generation, transmission and distribution of power; and the
construction, maintenance and operation of power houses and grids;
iii)
flood control;
iv)
the prevention of water logging and reclamation of waterlogged and salted
lands;
v)
inland navigation; and
vi)
the prevention of any ill-effect on public health resulting from the
operation of the Authority.
2.
WAPDA Water Wing undertakes schemes for development of dams, water
channels drainage and other projects as are awarded to it by Federal or
provincial or local Governments or by the WAPDA power wing. The schemes are
conceived as a result of work undertaken by the Planning and Investigation
department of Water Wing, which identifies the probable sites for the water
and power projects. The funds for this task are earmarked by the Federal
Government in the annual PSDP. Based on these surveys the process of pre-
feasibilities and later technical feasibility are undertaken. Once the project is
approved the respective planning departments of the two wings take over the
execution part of the Scheme. All development schemes undertaken by Water
wing are funded, whether it involves foreign exchange or local funding, by the
entity (federal, provincial or even the power wing) which has ordered/initiated
the scheme. Its operational budget consists of the expenses of supervisory
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offices and is recovered through overhead charge billed to the schemes.
3.
With the restructuring of the WAPDA Power Wing into independent thermal
generation companies, distribution companies and a transmission and dispatch
company, the functions of thermal generation, distribution and transmission
were transferred to these companies. WAPDA at present only undertakes power
generation projects based on hydel power. However unlike Water Wing the
Power Wing has to identify the sources from where the scheme shall be funded,
that is whether through foreign loans/aids/grants or direct negotiation with
foreign banks or through the surplus expected from sale of power.
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4
CONCEPTION, PLANNING, DESIGN AND DEVELOPMENT OFPROJECT
4.1
GENERAL
The harnessing of hydropower resources requires a long gestation period from
project conception to power generation. The project development involves two
important stages of planning and implementation. In addition to critical stage of
project implementation, site identification, preliminary economic studies,
feasibility study and detailed engineering design are important mile stones of
planning phase.
Field visits and investigations are a first step for establishing the design
parameters, and for estimation of cost and benefits. The scope of field works and
further studies is established as per requirement of the original study. With further
detailed studies, technical parameters and cost estimations are improved to refine
the economic and financial viability of the project. Planning phase spread over a
number of sub stages as explained herein after.
4.2 RECONNAISSANCE LEVEL
1.
Reconnaissance study is defined as the preliminary feasibility study designed to
ascertain whether a feasibility study is warranted. The reconnaissance study is
first planning stage to identify and to catalogue the hydropower resources
existing in the river basins. A reconnaissance study is an abridged feasibility
study having as its major objective a preliminary economic evaluation and
identification of the technical issues, which will be considered during feasibility
study.
2.
At reconnaissance level, structure location, placement of structures, geo-
technical problems, accessibility, transmission lines, settlements and
resettlement issues, availability of construction materials, diversion scheme,
geo.-technical and engineering geology, appraisal of discharge, verification of
estimated head and such matters are assessed. In addition, type of weir and
powerhouse are important features, which are to be investigated.
3.
Preliminary layout drawings, power and energy estimation, and preliminary cost
are prepared and the economic viability of the project is established. For
reconnaissance studies power unit cost (cost per kW installed and unit cost of
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annual energy generation (cost per kWh) should be established. Ranking of
projects identified in a specific region or river is prepared on the basis of
economic evaluation of identified schemes. Finally, a detailed assessment ofdata requirement for feasibility study is prepared.
4.3
PRE-FEASIBILITY STUDY
1.
A pre-feasibility study is the second organised step in the hydropower
investigation and planning. At this stage the project has already been
identified, located and properly named. Pre-feasibility study is normally
prepared for a large or mega project before feasibility to check the economic
viability with improved data. The main purpose of the pre-feasibility study is
to:
i)
Establish demand for the project.
ii)
Formulate a plan for developing this project
iii)
The project is technical, economical and environmental acceptable.
iv)
Make recommendation for future action.
2.
Pre-feasibility study is normally based on available data and information of
reconnaissance level field survey. However, investigations are made in
sufficient detail and data presented should be of sufficient accuracy.
3.
In pre-feasibility study, one or more project alternatives are proposed and
studied before selection. Further investigation and processing is required
before selection. The layout alternatives are studied and investigated to find
the best project development possibilities for which detailed field
investigations are needed.
4.4
FEASIBILITY STUDY
1.
Feasibility studies are carried out to determine the technical, economical
and environmental viability of a project. This phase of investigation consist
of detailed investigations and studies, which are directed towards
achieving the ultimate permission, financing, final design and construction
of the project under investigation.
2.
A feasibility study is prepared following the rules set by national and
international finance institutions, serves as basic document for financing.
The main purpose of this phase of investigation is to establish and define
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PREPARATION/ UPDATION OF
RESOURCES INVENTORIES
3 TO 4 YEARS
OPERATION
PREPARATION/ UPDATION OF RANKING
OF RESOURCES
PRLLIMINARY/
RECONNARSSANCE STUDIES
PRE-FEASIBILITYSTUDIES
FEASIBILITY STUDIES
RESOURCES STUDIES SITE- SPECIFIC STUDIES
Continous Process
the engineering and operation plan and to determine whether the potential
development is technically and economically feasible.
3.
Feasibility studies are sufficiently detailed and ensure that during detailed
engineering, the feasibility of the project is not impaired due to major
alterations in the plan. The feasibility design is normally termed as
preliminary design.
4.
Field investigations like topographic survey, geological mapping, bore hole
drilling, field and laboratory tests, refraction survey, socio-environmental
survey, hydrological and sediment observations, model studies, by thematic
survey, power market survey and transmission line survey are carried out
with sufficient details.
5.
Detailed studies are carried out for hydrology and sedimentation, power and
energy, geology, foundation conditions and construction material, seismic
risk evaluation, environmental impact assessment, project layout studies
and optimisation studies, civil engineering design, hydro-mechanical and
mechanical design, electrical design, project quantities and costs,
construction planning and scheduling, economic analysis and financial
analysis.
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4.5
DETAILED DESIGN
1.
The detailed design is undertaken to provide basis for tender document on
which tenders for construction can be invited. The detailed engineering studies
consist of:
i)
Detailed field investigations
ii)
Specifications
iii)
Final design
iv)
Cost estimate
v)
Construction schedule
vi)
Design report and data books
2.
After the selection of a project layout the engineering design of civil,
mechanical and electrical equipment are taken up. Engineering survey,
geological explorations and similar work accomplished during feasibility
investigations are usually carried out to the extent needed to prove technical
feasibility and provide basis for preliminary design and reliable cost estimate.
The purpose of the detailed investigations is to extend and supplement the
information developed during feasibility investigations.
3.
Civil design relating to regulation work, waterways, powerhouse, etc. are
carried out. The design consists of hydraulic design, structure design,
dimensioning of electromechanical and hydro-mechanical equipment and
preparation of specifications. Drawing should be sufficiently detailed and on
the basis of which bill of quantities is prepared and it should provide the basis
for writing performance requirements and specifications.
4.
The detailed engineering studies include the preparation of general and
detailed specifications for the construction and supply of the project. The
specifications will set the quality of the work to be performed and the
standards to be used by the contractors and equipment manufacturers.
Specifications must include the terms of payment. The specifications will also
propose methods of construction and any special conditions or procedures to be
observed during construction.
4.6
TENDER / CONTRACT DOCUMENT
1.
For contracting the works or supply, documents are prepared which govern
the tender and form the documentary basis for the contracts between the
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owner and contractors and suppliers. For successful tendering, the tenders are
amended to incorporate all amendments resulting from the tender and contract
discussions, including the signed contract form.
2.
The contract documents mainly consist of the following:
i)
Contract conditions
ii)
Engineering documents
3.
The contract conditions deal with the legal aspects and compiled mainly into
one separate volume while the engineering documents take care of technical
side of the work and compiled into three or more volumes. The Tender
documents consist of following Five Important Parts;
i)
Instruction to tenderers
ii)
General conditions of contracts
iii)
Special conditions of contract.
iv)
Special and technical provisions
v)
Various forms
4.7
PROJECT REPORTING PROCESS
To monitor the project planning and progress reports during different stages of
project cycle, government of Pakistan has designed five different forms from PC-I
to PC-V.
i)
PC-II AND PC-I DEAL WITH IDENTIFICATION AND PREPARATION OF PROJECTS
FOR IMPLEMENTATION
ii)
PC- III DEALS WITH THE PROGRESS MONITORING OF PROJECTS UNDER
PLANNING AND IMPLEMENTATION
iii)
PC-IV AND PC-V DEAL WITH PROJECTS AFTER IMPLEMENTATION.
4.7.1
PC-II Proforma
It deals with project proposal and is required for conducting surveys
(identification of hydropower resources) and feasibility studies, in respect of
large projects. The objective of this is to get full justification for undertaking
the project before large resources are tied up.
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4.7.2
PC-I Proforma
It is the basic form on which all projects are required to be drawn up. PC-I is
prepared after detailed feasibility study has been completed. However,
detailed design and drawings are not pre-requisite for the approval and
preparation of PC-I. Its preparation is the pivotal phase of the project cycle
because after its approval project implementation will be taken up.
4.7.3
PC-III Proforma
This proforma is designed to furnish information on the progress of on-going
projects on quarterly basis. It is required to be submitted by the executing
agencies/departments within 20 days of the closing of each quarter. It includes
financial as well as physical progress of the subject project. Information
regarding bottlenecks experienced during the execution period is also
incorporated.
4.7.4
PC-IV Proforma
The project completion report on PC-IV is to be furnished by every executing
agency soon after a project is completed. It includes the full history of the
project including financial and physical phasing, emphasizing the risks taken
and mistakes committed along with the remedial measures adopted andexperience gained. It also includes the history of the number of persons
employed.
To guide those who are charged with the execution and supervision of similar
projects in future, some suggestions about prevention of delays and cost
escalation is also included. This is also very much needed in post evaluation
process. It should include the comparison of planned performance with actual
performance. The reasons to achieve planned performance should be explained
in detail.
4.7.5
PC-V Proforma
This is to be furnished on an annual basis for a period of five-years by the
agencies responsible for operation and maintenance of the projects. It should
include the review of cost, expenditure and financial results as estimated in
completion report. Reasons for variation in result may also be included for
future guidance to planner and decision makers. The performance of the
persons involved in operation and maintenance is the major part. Any
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difficulties experienced during operation should also be highlighted. Future
suggestion to avoid any type of mistake may also be included.
4.7.6
Anticipatory Approval
This is an approval for the execution of a scheme given in advance, to begin
loan negotiation, before the scheme is approved formally by the ECNEC. The
request for anticipatory approval has to be submitted on the prescribed
proforma to Planning Commission through formal channels.
4.7.7
Administrative Approval
Project approved is followed by Administrative approval. The Federal Ministry
in case of federally sponsored projects issues it and is actually sanctioned for
incurring expenditure.
4.7.8
Concept Clearance
The project in which foreign exchange is involved needs to be submitted to
Concept Clearance Committee located in the Planning and Development
Division on prescribed proforma to obtain its clearance for starting negotiation
for aid by the Economic Affairs Division. The Committee has same composition
as CDWP and meets concurrently with CDWP.
4.7.9
Re-Appropriation
If there is some savings on a project and execution agency may desire to utilize
the same on some other project being executed by the same agency, the
request is to be made to Planning and Development Division for re-
appropriation. After consideration of the case in relation to the implementation
of the other projects, the Planning Division decides the case.
4.7.10
Supplementary Grant or Token Allocation
If the saving is not available in the agencys allocation, it requests the Planning
and Development Division to allow a supplementary grant. The Planning
Division decides each case on its merit and then recommends it to the Finance
Division. Un-approved priority projects are financed with Token Allocation to
bring these projects on PSDP subsequently.
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4.8
PREPARATION OF PC-I, II
1.
Every scheme prepared by the Authority shall be submitted for approval to the
Government with the following information;
i)
a description of the scheme and the manner of its execution;
ii)
an estimate of costs and benefits; the allocation of costs to the various
purpose to be served by the scheme and the amounts to be repaid by the
beneficiaries; and
iii)
a statement of the proposals by the Authority for the resettlement or re-
housing of persons likely to be displaced by the execution of the scheme.
2.
The basis of the development budgeting is;
i)
approved PC-II and PC-1 Proforma;
ii)
loan agreement entered into with the foreign loan giving agencies with the
approval of the Government;
iii)
contract agreement entered into with the local and foreign suppliers;
iv)
the strategy and the targets set-forth in the respective plan documents and
the annual plans as indicated by the Government in the Water and Power
Sectors.
4.9 FINANCIAL & ECONOMIC ANALYSIS CARRIED OUT IN PC-I
4.9.1
Net present value (NPV)
The present value is the value today of a sum of money due in the future,
taking account of the cost of money known as the discount rate. The discount
rate used by the investor in the Equity of a project Company is the required
minimum rate of return. The NPV is the difference between discounted cash
inflows and outflows of an investment opportunity during the indicated period.
4.9.2
Internal Rate of Return (IRR)
The IRR measures the return on the Investment over its life. It is the discount
rate at which the NPV of cash inflows and outflows is zero. As against positive/
negative amount of NPV, the IRR calculation shows exact discount rate or
return on investment of a project. In working out EIRR, the revenue inflows also
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i) sale proceeds of bonds issued under the authority of the Government;
ii) loans obtained by the Authority with the special or general sanction of the
Government;
iii)
direct loans negotiated by the Authority from local and foreign financial
institutions
iv)
foreign aid and loans obtained from the International Bank of
Reconstruction and Development, ADB, KFW etcwith the sanction of and on
such terms and conditions as may be approved by the Government;
v)
income from sale of electricity; and
vi)
any other sums received by the Authority.
2.
For the purpose of borrowing money under WAPDA Act, the Authority shall be
deemed to be local Authority under the Local Authorities Loans Act, 1914. The
Authority is permitted to borrow money for making and execution of any
scheme in furtherance of the objective as defined in WAPDA Act. The liability
of the Government to the Creditors of Authority shall be limited to the extent
of grants made by the Government and the loans raised by the Authority with
the sanction of the Government.
4.12
FEATURES OF PROJECT FINANCE
1.
Project finance structures differ between various industrial sectors and from
deal to deal. There is no such thing as standard project finance, since each
deal has its own unique characteristics. However, there are common principles
which underline the project finance approach. Some typical characteristics of
project finance are
i)
It is provided for a ring-fenced project (i.e., one which is legally and
economically self-contained) through a special purpose legal entity (usually
a company), whose only business is the project (the Project Company).
ii)
It is usually raised for a new project rather than an established business
although project finance loans may be refinanced.
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iii)
There is a high ratio of debt to equity (leverage or gearing) roughly
speaking, project finance debt may cover 70-90% of the cost of a project.
There are no guarantees from the investors in the Project Company (non-recourse finance), or only limited guarantees (limited-recourse finance),
for the project finance debt.
iv)
Lenders rely on the future cash flow projected to be generated by the
project for interest and debt repayment (debt service), rather than the
value of its assets or analysis of historical financial results.
v)
The main security for lenders is the project companys contracts, licenses,
or ownership of rights to natural resources; the project companys physicalassets are likely to be worth much less than the debt if they are sold off
after a default on the financing.
vi)
The project has finite life, based on such factors as the length of the
contracts of licenses or the reserves of natural resources, and therefore the
project finance debt must be fully repaid by the end of this life.
2.
Based upon the feature elaborated above, the project finance differs from a
corporate loan, which is primarily lent against a companys balance sheet and
projections extrapolating from its cash flow and profit record, and assumes the
company will remain in business for an indefinite period and so can keep
renewing (Rollover) its loans.
3.
The project finance itself has two elements:
i)
Equity, provided by investors in the project
ii)
Project finance-based debt, provided by one or more groups of lenders
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5 PREPARATION OF ANNUAL PUBLIC SECTOR DEVELOPMENTPROGRAMME
5.1
GENERAL
As defined by the Federal Government, the overall objective of Public Sector
Development Program (PSDP) is to achieve sustainable economic growth so as to
improve living standards of common people. It is formulated to implement
Governments socio-economic agenda in line with objectives of Economic Growth
Framework recently formulated by the Planning Commission to ensure inclusive
growth by achieving MDGs (Millennium Development Goals), , including but not
limited to reducing poverty, minimizing wastages, ensuring balanced
development, gender balance and achieving food, energy and water security. The
PSDP responds to emerging needs of the economy with substantial investment in
priority sectors of Infrastructure and Social Sectors. Towards this end, a close
collaboration with provinces has been stressed to efficiently utilize limited public
funds as per sectoral priorities. In era of resources constraints, the quality of public
investment is being enhanced even for provision of public goods. Role of Private
sector is recognized to supplement the efforts of the government. Resources andefforts of private sector are being leveraged for innovative financing like Public
Private Partnership (PPP), Build to Operate and Transfer (BOT) and Build to
Operate and Own (BOO) basis
5.2
WATER DEVELOPMENT SCHEMES
The Schemes/Programmes which are undertaken by the WAPDA Water wing are as
under:
i)
Tube well
ii)
Canals/Water Distribution Works
iii)
Surface Drains, Pumping Stations, Tubewell Electrification
iv)
Water Reservoirs and Dams
v)
Irrigation and Drainage programmes
vi)
Flood Damage works
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vii)
Project Management Expenses (Overheads)
viii)
Interest on loans during construction
ix)
Consultancy and Engineering Fees
x)
Preliminary Civil works
5.4.2
POWER WING PROJECT COSTS
In the case of Power Wing the cost of project are covered under the following
major heads:
i)
Land Acquisition and settlement
ii)
Operational building and Civil Works
iii)
Power Generation Plant
iv)
Furniture and Fixtures
v)
Transportation Equipment
vi)
Transmission and transformation equipment
vii)
Tunnels, Weir, Head/Tail Race
viii)
Residential and Non-residential Buildings
ix)
General Plant Assets including Utility Vehicles
x)
Project Management Expenses
xi)
Interest on loans during construction
xii)
Consultancy and Engineering Fees
xiii)
Preliminary Civil works
5.5
SCHEDULE FOR PREPARATION OF PSDP
1.
The schedule for the preparation and submission of the Public Sector
Development Program and the formats, on which PSDP will be submitted to the
Federal Government, is circulated by the Planning Commission to all
concerned. Complete instructions for preparing the PSDP, are provided with
these formats.
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2.
Some of the important points to be taken care of while preparing these
estimates are:
i)
inter and intra sectoral priorities in formulating development programmes
have to be carefully devised in order to ensure that the scarce resources
available, for the development programmes are not thinly spread on a
large number of schemes specially, the new ones. Adequate provisions
may, however, be made for the on-going essential projects to obviate the
necessity of proposing supplementary grants immediately after
programme is approved.
ii)
Estimated physical achievement up to the end of June for each project
should be indicated in the format. (This physical progress will pertain to
the year during which the programme is being submitted).
iii)
Physical targets envisaged for the next financial year for each project in
each sector should be indicated in the format and also in the statement of
physical targets given in Annexure W1-J.
3.
In drawing up the development programme, it has to be ensured that no serious
imbalance would arise in the implementation of sectoral and sub-sectoral
programmes. The General Managers entrusted with the planning work in Water
and Power Wings will ensure that the process for approval of projects is
accelerated within the framework of policy decision taken by the Government
from time to time, so that an adequate portfolio of duly approved projects is
ready and available for the programme as well as for foreign aid negotiations.
4. In drawing up the development programmes, the following consideration
should generally be kept in view:-
i)
The major objective should be the consolidation of the development
efforts in order to achieve the maximum efficiency in public investment.
ii)
No new project should ordinarily be undertaken unless it is in-escapable.
Decision for starting any new project should be taken at a high level
giving full justification in each case.
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iii)
The programme should fully cater for and protect the on-going projects
which are in advanced stage of execution and other key programmes
related to the output in the short run.
iv)
Priority should be given to foreign aided projects, which are in
consonance with the national objectives, as any reduction in the
expenditure on aided projects would also tend to reduce the resource
availability.
v)
Long term commitments on projects which have not yet been started
should be avoided and resources should be concentrated on immediately
productive programme to protect the production goals. Efforts should bemade to increase efficiency in implementation and utilization of existing
capacity.
vi)
The proposed schemes should be arranged in order of priority so that if
resources fall short of requirements, low priority schemes may either be
dropped or allocations for such schemes be reduced.
vii)
Construction component of the programme be limited to the barest
minimum. Standard rates on an average basis should be adhered to.
viii)
PSDP should be in line with prevalent economic policies and strategies of
the Government. All Ministries/ Divisions may therefore, scrutinize their
projects in the approved portfolio and those awaiting approval and
determine whether these fall within the parameters of the economic
agenda of the Government. While undertaking this exercise, Ministries/
Divisions may also identify projects that are based on (a) public private
partnership (PPP) and (b) community/ NGOs participation in terms of cost
sharing or otherwise.
ix)
The amount on the projects to be financed through foreign aid should
separately be mentioned with source in rupees indicating the expenditure
on import of goods and services. This is necessary because under certain
foreign aid agreements the Government of Pakistan is required to first
incur the expenditure in local currency and claim re-imbursement later
on. Allocations to on-going projects which have reached at fairly advanced
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stage of completion should adequately be earmarked in order to complete
such projects during the Fiscal Year.
x)
Brief project profile may be given in the given column of the prescribed
proforma.
xi)
Provision of payment of equipment, IDC and Custom duty may be
adequately reflected separately under the proposed demand. This would
assist the forum while considering allocations for these projects under
Annual PSDP.
5.6
GUIDELINES FOR FILLING PSDP FORMATS
The PSDP plan on the Budgetary Corporation Programme For Water and Power
Wings which will accompany the PSDP are reproduced as Annexure W1-A to W1-J
and Annexure P1-A- to P1-I, respectively.
The instructions for filling up the Model Budget Form supporting documents to the
PSDP will be strictly followed. The same codes as provided in the Chart of Account
shall be used for each minor head, detailed head and primary unit of
appropriation.
5.6.1
General Instructions
1.
After completion of the model budget forms in the manner specified in the
preceding paragraphs, the format of PSDP will be completed.
2.
The figures of actuals to be shown under the relevant column will be
accurately worked out and based on the reconciled and booked figures of
the General Manager Finance concerned. For this purpose, each Project
Director and Chief Engineer will be allowed the assistance of Budget and
Accounts Officer under the restructured organization of Budget and
Accounts. The main function of this officer will be not only to coordinate
the figures of Budget and Accounts but also to assist the Project Director
and Chief Engineer in preparation of Budget.
3.
The year-wise phasing of funds should be based on the phasing given in the
PC-I/PC-II wherever possible, while keeping in sight the project completion
period. Similarly, the contractual obligations should also be kept in view
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while formulating the budgetary demand for the next year.
4.
These forms duly completed will be submitted to the respective Chief
Engineers/General Managers who after consolidation, will forward it to the
respective General Manager Finance. General Manager Finance concerned
will after scrutiny forward the PSDP along with supporting data to the
Authority through the Member Finance for approval, before transmitting it
to the Federal Government.
5.
The PSDP after approval by the Authority, will be forwarded to the Ministry
of Water and Power with copies to the Ministry of Finance, Economic
Affairs, Division, Planning Division, respective Provincial GovernmentsDepartments and all G.Ms and C.Es. The PSDP will also be accompanied by
an explanatory memorandum prepared on the basis of data and other
material furnished by the respective G.Ms and the others, and finally
approved by the Authority on the proposals submitted to them.
6.
The PSDP submitted by WAPDA to the Ministry of Water and Power is first
considered in a Pre-priority meeting convened by the Ministry of Water and
Power. The next meeting of the PSDP is held in the Ministry of Finance and
Economic Affairs for consideration of PSDP proposals by the Priority
Committee. In the Priority Committee WAPDA is represented by its three
Members. After the proposals are cleared by the Priority Committee, the
PSDP is taken up in the meeting of Annual Plan Coordination Committee
which is presided over by the Secretary, Ministry of Finance and Economic
Affairs. This meeting is held at the Secretary's level and is attended by
Chairman from the WAPDA side. The PSDP proposal after approval in the
Annual Plan Co-ordination Committee is then finally approved by the NEC
presided over by the Prime Minister before it is presented in the form of
grants and appropriation to the Federal Legislature for final approval. After
the Legislature passes the budget of the Federal Government, the
budgetary documents are made available to WAPDA in which the grants
made to it for the water and power schemes are specified.
7.
Similar procedure is observed in submission of PSDP to the Provincial
Governments in respect of schemes which are executed by WAPDA on their
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behalf. After the Budgets are passed by the Provincial Assemblies, the
Budget grants as notified through the various Budget documents are
supplied to WAPDA.
5.6.2
Amended Final Budget Estimates
On receipt of the budgetary documents, the budget grants are notified by the
respective General Manager (Finance) to the respective Wings. Thereafter, the
sub-head-wise details are approved by the Member concerned and transmitted
to the G.Ms, Chief Engineers and Project Directors. In case the allocation
approved by the Government is less than that demanded by the Chief Engineers
and the Project Directors, an exercise will at once be undertaken by the ChiefEngineers and Project Directors to re-determine physical targets which could be
fulfilled within the reduced allocation. The revised targets will be
communicated by the Project Directors/Chief Engineers to the General Managers
within a fortnight of receipt of the budget grants. The General Managers in turn
will communicate these targets to the Member concerned who after the
approval by the Authority will communicate these to the Federal and Provincial
Governments. The GM Finance (Water) and (Power) will provide a co