TECHNICAL ASSISTANCE COMPLETION REPORT

Division: Energy Division

TA No., Country and Name Amount Approved: $600,000

TA 7073-IND : Developing the Power System Master Plan for Bihar Revised Amount: $624,000

Executing Agency Source of Funding: Amount Undisbursed: Amount Utilized:

Bihar State Electricity Board (BSEB) TASF-Others $3,374 $620,626

TA Approval TA Signing Fielding of First Consultant: TA Completion Date

Date: 4 April 2008 Date: 20 Oct 2008 12 January 2009 Original: 31 Jan 2009 Actual: 31 Dec 2010
Account Closing Date
Original: 31 Jan 2009 Actual: 29 Feb 2012
Description

Background: During discussions for the country operations business plan 2008–2010, the Government of India requested
technical assistance for developing the power system master plan in Bihar. ADB approved the captioned TA in April 2008.

Rationale: Bihar, with a population of 90 million and a per capita income of around $160, remains one of India’s poorest
states and its power sector is also under-performing. Per capita consumption of electricity in Bihar was approximately 100
kilowatt-hours (kWh) per annum in FY2007, compared with a national average of over 700 kWh. In FY2008, Bihar faced
energy shortages of 28% and peak power shortages of 16%. However, the true extent of unserved and suppressed
electricity demand is difficult to gauge as supply has been irregular for so long. Despite the clear need, no coherent plan
was in place for development of the power system in Bihar, and Bihar State Electricity Board (BSEB) did not have long-term
planning capability. In the absence of a planning framework, capacity additions were made in an ad hoc manner in
response to the availability of funding. A formalized master plan was urgently needed to ensure that all proposed capital
investments are part of a long-term and structured plan.

Expected Impact, Outcome and Outputs

Expected Impact & Outcome: The TA's expected impact is optimal development of Bihar’s electricity generation,
transmission, and distribution networks. The expected outcome is a comprehensive power system master plan to provide
the blueprint for development of the power system in Bihar. The master plan will coordinate and sequence generation,
transmission, and distribution expansion to ensure that network expansion is economically efficient. It will also provide a
realistic framework for system loss reduction.

Expected Outputs:
(i) a detailed long-term (10-year) demand forecast for Bihar at the power substation level, with demand disaggregated
between main consumer groups;
(ii) a series of realistic long-term generation capacity expansion scenarios, with consideration given to prospects for in-state
generation development as well as generation sourced from outside of Bihar;
(iii) a series of least-cost transmission expansion plans, matched to the generation expansion scenarios developed;
(iv) an assessment of the amount and timing of generation and transmission investments for each system development
scenario;
(v) an estimate of distribution investment costs to meet demand growth;
(vi) a program of distribution loss reduction initiatives;
(vii) a targeted loss reduction program, with an assessment of returns expected from investments in terms of technical and
nontechnical loss reduction;
(viii) institutional reform recommendations for BSEB to develop capacity to implement and revise the power system master
plan as necessary;
(ix) a power system analysis software program and equipment (computers); and
(x) a detailed 5-year program of capital works.

Relevance of TA design: The TA design was relevant as BSEB had previously been addressing investment needs in an ad
hoc manner, and thus a master plan was viewed as an important first step. Consultant TORs were appropriate as they
involved determining the projected electricity demand growth in Bihar, followed by separate generation, transmission and
distribution investment plans to meet this demand. Implementation arrangements were also appropriate as the EA and
beneficiary of the system planning training was BSEB, the entity responsible for making such investments. The timing was
highly relevant as this master plan was finalized as ADB’s loan program was in the design stage, such that the loan project
investments were confirmed to be consistent with a least-cost investment plan. The implementation schedule was not
realistic, however, as it envisaged consultant mobilization soon after TA approval, which was impossible due to the lead
time needed for TA letter signing, followed by the lengthy consultant selection process.

Delivery of Inputs and Conduct of Activities

The consultants, SNC-Lavalin International Inc., Canada, signed their contract on 27 November 2008 and mobilized on 12
January 2009. The original contract duration was 10 months. Two major contract variations were requested by the
Government, which lead to two TA extensions.

The expected inputs included 11 person-months of international and 9 person-months of national consulting services
including a team leader-power system planning engineer, a hydropower expert, a thermal generation expert, and two each
of transmission engineers, distribution engineers, and power economists.

There were two major contract variations requiring two TA extensions. First, the Ministry of Power, Government of India
requested additional work consisting of (i) reviewing the detailed project reports (DPRs) for the upcoming ADB loan (Loan
2681-IND: Bihar Power System Improvement Project, approved 19 October 2010) to ensure consistency with the
master plan and to update cost estimates. This required 0.25 person-months of additional work by the team leader, and 1.5
additional person months spread across 3 national consultants, with a cost increase of $20,959 funded by contingency
funds.

A further contract variation was needed to revise and rewrite the DPRs, as it became apparent upon DPR review that (i)
many substation upgrades outlined in the DPRs did not match the design of the actual substations to be upgraded and thus
needed revision, (ii) certain transmission and distribution substation designs were deemed inadequate and needed
redesign, and (iii) equipment lists and cost estimates would thus need revision for these components. This additional work
required 2 person months of the international consultant (team leader) and a total of 5.5 person months (spread across
three persons) of national consulting work with a cost increase of $73,000 to be funded via contingency funds as well as a
portion of unallocated funds.

All initial master plan activities were successfully carried out, including demand forecasts, generation, transmission and
distribution system build-out plans. Each of these was separately presented to BSEB management as sequentially
completed, culminating in the final seminar added to the end of the TA. Gathering the required data for these analysis
proved difficult, though the consultant was, with ADB approval, was able to adjust work load and assign some lower cost
staff for this work. The added work scope was also successfully carried out and played an integral role in successful
processing of the ADB loan project. The consulting firm showed flexibility in adjusting their team and work plan to
accommodate the additional scope.

One notable consequence to the scope additions was they consumed the TA’s ‘cushion’ of unallocated and contingency
funds. Since the remuneration portion of the consultant’s contract was denominated in Canadian dollars, the additional
work, combined with a 19% appreciation of the Canadian dollar versus the U.S. dollar during the TA, necessitated seeking
approval for $24,000 of additional funds.

There were 6 review missions during implementation, two solely dedicated to this TA and 4 that combined TA discussions
with loan processing activities.

Performance Ratings: ADB’s performance is rated satisfactory as it adequately supervised TA implementation and
responded quickly to Government’s requests for added scope of work. The performance of the EA was satisfactory, as TA
implementation went smoothly. The performance of the consultants was highly satisfactory, as their output was of excellent
quality regardless of data gathering challenges and the additional scope.

Evaluation of Outputs and Achievement of Outcome

The TA was successful in achieving the outcome as Bihar now has a comprehensive power system master plan for future
sector development.

All planned TA outputs were effectively delivered. Consultant reporting outputs included an inception report, a load forecast
report, a generation planning report, a midterm report, a transmission planning report, a distribution planning report, and a
final comprehensive report combining these into a single power system master plan including recommended institutional
reforms. These plans were of high, professional quality.

Consultant training outputs included specific training on load forecasting, generation, transmission and distribution planning
training, which included use of power system planning software. A total of 17 BSEB officers received training and
expressed satisfaction with its quality and content.

Hardware/software outputs turned over to BSEB included 5 laptop computers equipped with Microsoft office and antivirus
software, and also physical CD’s and two stand alone licenses each of power system planning software packages including
the following: distribution analysis, geographic overlay, switching optimization, secondary network analysis, power system
analysis framework, power flow analysis, fault analysis and transient stability analysis.

Additional outputs resulting from scope changes included a detailed report on the DPR review for the upcoming ADB
project, revised and updated DPRs for 4 distribution system 4 transmission system investment components. These
including revised bills of quantity, detailed cost estimates and analysis, updated line diagrams of Bihar’s transmission
network and various distribution circles, and updated designs for three substations. All these outputs were delivered on
time and of high quality.

Overall Assessment and Rating

The TA was successful, as for the first time Bihar has a fully articulated least-cost power system master plan, and BSEB’s
capacity has been enhanced on planning activities including use of power system planning software. Furthermore, the
added scope contributed to successful preparation of the investment components to be funded by the ADB loan project.
Overall, the TA has contributed to the sustainability of the Bihar power sector.

Major Lessons

Power system master plans require sufficient data on the existing state of the system (especially the distribution system)
and power demand data in each distribution circle (e.g. area). In an environment of a low capacity EA utility company,
much of this data either does not exist or is not centrally maintained, requiring field visits to various distribution center
locations. Budgets and TORs for future master plans should not underestimate this task and thus allocate extra time and
personnel for data gathering functions.

Further, the consultant contract was partially delineated in a non-U.S. dollar currency, and due to sustained depreciation of
the U.S. dollar, the contract cost increased over time against the TA’s U.S. dollar-denominated budget. The cushion that
could have absorbed this increase was partially consumed by the additional scope added to the consultant’s contract at the
request of the Indian government, thus necessitating supplementary funds. Since these scope additions were necessary,
this situation proved unavoidable. However, in future TAs, the potential for funding shortfalls should be noted and thus
monitored for large and long-duration consulting contracts in non-U.S. dollar currencies.

The TA closing process was lengthy in part due to delays in receipt from the consultant of the final statement of
expenditures and claims (FSEC) and other required closing items. It is recommended that before the consulting work ends,
the project officer review outstanding items with the firm and list down action items and outstanding documents and
records. This could have enabled more timely closing of the TA.

Recommendations and Follow-Up Actions

Power system master plans are not static plans, but must constantly evolve as the on-the-ground situation changes. Power
system planning thus needs to be an ongoing exercise ingrained into the working culture of utility companies. Due to
starting from a low base, capacity development of BSEB should continue in the future through additional assistance. As has
been done in other underperforming states, ADB envisages ongoing loan and TA assistance over time in order to bring
Bihar’s power sector up to the performance levels of other states and beyond.

Prepared by: _ Andrew Jeffries_____ Designation: ___Senior Energy Specialist _____

In preparing any country program or strategy, financing any project, or by making any designation of or
reference to a particular territory or geographic area in this document, the Asian Development Bank does
not intend to make any judgments as to the legal or other status of any territory or area.