BUDGET MANUAL.pdf

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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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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