Risk Allocation Tool Deliverable 2: Updated Risk Allocation Tool Based on Hands-On Session

The tool aims to increase project performance and reduce final costs by quantifying the Value for Money (VfM) of various options for the delivery of variable renewable energy projects (solar and wind) and power transmission projects. The tool was validated and updated through a series of virtual sessions with sector stakeholders, including the Ministry of Energy (MoE), provincial energy departments, National Electric Power Regulatory Authority (NEPRA), Alternative Energy Development Board (AEDB), Pakistan Power Infrastructure Board (PPIB), Central Power Purchasing Agency-Guarantee (CPPA-G), and National Transmission and Despatch Company (NTDC). The validation sessions allowed stakeholders to review the risk assessment methodology and the structure and operation of the tool. The risk matrix was updated to include all low-ranked risks, which were previously excluded from the assessment. The approach was revised to include risks that were ranked identical for both benchmark and alternative scenarios. Additionally, CPPA-G presented a list of risks that were catalogued during their internal meetings, and the team made comparative analysis and updated the tool to include several additional risks from the CPPA-G's register. The ownership of the tool was transferred to PPIB, CPPA-G, and NTDC, with SEP recommending next steps for each entity. NTDC's managing director created a risk management taskforce to manage risks on their most recent projects, and SEP proposes to invite the taskforce to report back on applications to the tool. CPPA-G started a planning group with strong capabilities and requested support to use the tool, as well as an opportunity to discuss short, medium, and long-term actions that Pakistan can take to reallocate risk to the private sector. PPIB has been most involved since the beginning and has participated in all validation sessions. The updated financial analysis was completed, and the results are presented in the report. The analysis focuses on quantifying the VfM of various options for the delivery of variable renewable energy projects and power transmission projects. The results show that the tool can be used to identify the risks associated with different project options and to allocate those risks to the party best able to bear them. The next steps for activity close out are outlined in the report, including the formal presentation of the tool during a closing ceremony to the leadership of the three entities most actively engaged (PPIB, CPPA-G, and NTDC). The report also recommends that the entities use the tool to manage risks and allocate them to the party best able to bear them, and that they work together to reallocate risk to the private sector. The Risk Allocation Tool is a valuable resource for the SEP project and for the energy sector in Pakistan. It provides a framework for identifying and managing risks, and for allocating those risks to the party best able to bear them. The tool has been validated and updated through a series of virtual sessions with sector stakeholders, and the ownership has been transferred to PPIB, CPPA-G, and NTDC. The tool is expected to be used to manage risks and allocate them to the party best able to bear them, and to reallocate risk to the private sector.