Technical Assessment of CPPA-G for USAID G2G Grant Assistance

In June 2015, CPPA-G was formally separated from NTDC and assigned to undertake commercial operations, including procuring electric power on behalf of the DISCOs and implementing billing, collection, settlement, and payments in the power sector supply chain. The Economic Coordination Committee of the Cabinet (ECC) mandated CPPA-G to facilitate a transition of the Pakistan power market from the existing 'Single Buyer' to a 'Single Buyer-Plus' model for the period 2016-2020, and to a Competitive Trading Bilateral Contracts Market (CTBCM) by July 1, 2020. Post 2020, CPPA-G shall be split into three organizations: a Market Operator, a Special Purpose Supplier (SPS), and an Independent Auction Administrator (IAA). CPPA-G is seeking financial resources from USAID (under G2G grant assistance) in the following areas: detailed design of the CTBCM, capacity building of staff, and strengthening of IT infrastructure. The budget estimates for USAID's G2G assistance are based on CPPA-G's estimates, as specified in the PC-1 document (prepared by CPPA-G, dated November 2017). The technical assessment conducted by the Sustainable Energy for Pakistan (SEP) Project identified several areas for technical assistance, including the provision of simulation software and related hardware for power market simulations, the design and implementation of a new IT Data Center, and consulting services for the detailed design of the CTBCM. The assessment also identified some risks and organizational challenges associated with the transition to the competitive power market, including external factors that could impact the activity and considerations for USAID. The proposed technical assistance includes the provision of simulation software and related hardware for power market simulations, with a budget estimate of $0.15 million. The software is considered to be an advanced tool for simulating power market transactions and has a global footprint. Significant training of CPPA-G staff has been provided on the model and software tool under the ADB TA. A new IT Data Center equipped with relevant software and hardware as per international standards is also proposed, with a budget estimate of $2.20 million. The design, layout, equipment, and ERP applications for the new Data Center are based on the IT requirements for the functions envisaged for the Market Operator. Current IT governance capability at CPPA-G is sound, and the procurement process followed by CPPA-G was found satisfactory and as per PPRA rules. Consulting services for the detailed design of the CTBCM, its implementation, and HR, financial, legal, technical, commercial, policy, and regulatory support for the new power market are also proposed, with a budget estimate of $1.29 million. CPPA-G intends to engage a firm to provide a team of international and national consultants to deliver the scope of work covering design and implementation of the CTBCM. A workshop for senior staff of stakeholder entities at international venues on industry trends, challenges, risks, and mitigation strategies for the new power market is also proposed, with a budget estimate of $0.08 million. The proposed workshop is in continuation of the capacity building required for the new market model, and it is recommended that the detailed scope of the proposed workshop should be in line with the future functions and roles of CPPA-G and stakeholders. Online and on-campus short courses on competitive power market concepts at international universities are also proposed, with a budget estimate of $0.29 million. In addition to the workshops for the capacity development of senior staff at CPPA-G and stakeholder entities, enhanced functional capabilities needed for the new market require training of staff in specialized work functions related to the new environment.