MP_DF_Pre_bid_PPT_17_Oct_2011

Distribution Franchisee – Pre bid conference

Madhya PradeshOctober 2011

Agenda

Franchisee Area profile

Request for proposal (RfP)

Timelines

Distribution franchisee agreement (DFA)

Illustrations

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10/17/2011Distribution Franchisee Scheme

Franchisee Area profile


Franchisee area

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Franchisee Area – Overview (2010-11)

Particulars Ujjain City Gwalior Town Sagar City

Area (Sq. Km) 92.68 174 205

RAPDRP towns Ujjain City Gwalior Town Sagar City

Consumers (Nos) 95,893 184,680 54,641

Input Energy (LUs) 3,886.96 10,313.15 1,635.67

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Total sales (LUs) 2,382.16 5,422.70 954.75

Distribution Losses (%) 38.71% 47.42% 41.63%

Rev. billed (Rs. Lakh) 12,973.80 33,249.89 5,467.48

Rev. collected (Rs. Lakh) 12,526.98 29,663.88 5,136.80

Collection Efficiency (%) 96.56% 89.21% 93.95%

AT&C Losses (%) 40.82% 53.09% 45.16%

Average Billing Rate (Rs. per Unit) 4.66 5.02 4.77

Request for Proposal (RfP)


RfP – Salient features

� Cost of RFP – Rs. 10,000/-

� Document Processing Fees – Rs. 50,000/-

� Performance Security – In the form of an unconditional, revolving and irrevocable letter of credit (“Letter of Credit” or “IRLC”) from any nationalized bank for an amount equal to the sum of the following:

1. Three and half (3.5) months estimated amount payable to the Distribution Licensee by the Distribution Franchisee based on the

Earnest Money Deposit (Rs. Cr.)

MPPKVVCL, MPMKVVCL, MPPKVVCL,

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by the Distribution Franchisee based on the Minimum Input Energy committed by the Distribution Licensee calculated at Input Rate for the first year of Contract Period as per the provisions of DFA, and

2. Three and half (3.5) times the amount of average monthly electricity duty billed by the Distribution Licensee in the Base Year for Franchisee Area;

MPPKVVCL,Indore

MPMKVVCL, Bhopal

MPPKVVCL, Jabalpur

Ujjain City Gwalior Town Sagar City

1.50 3.50 0.60

a) Experience in power sector

Experience in any of the following to be considered as eligibleexperience of working in the power sector:

I. Ownership of grid connected power generation project(s)having an aggregate installed capacity of at leasttwo hundred fifty (250) MW, which is either undercommercial operation, or under construction/development forwhich financial closure has been achieved, at least seven (7)days prior to the Bid Deadline;

DiscomName of

Franchisee Area

Minimum Annualcontract value

(Rs. Cr.)

Technical Criteria

Bidder needed to fulfill requirements stipulated below at (a), (b) and (c).

days prior to the Bid Deadline;

II. Holder of a power distribution or transmission licensefrom an appropriate commission under Section 14 of theElectricity Act, 2003 for a period of at least two (2) years as onseven (7) days prior to the Bid Deadline;

III. Construction and erection of power plant(s) for a state /central utility or transmission and/or distribution facilities(which should necessarily include sub-stations and/ortransmission and/or distribution lines) for a transmissionand/or distribution licensee with an annual contractvalue of not less than ....(as shown in the adjoiningtable) for every year over a period of three (3)financial years preceding the financial year in which bidsare invited;

ORSlide 8


MPPKVVCL, Indore

Ujjain City 130

MPMKVVCL, Bhopal

Gwalior Town 330

MPPKVVCL, Jabalpur

Sagar City 100

Selection criteria…Contd.

DiscomName of

Franchisee Area

Minimum Consumer Base (Nos)

MPPKVVCL, Indore

Ujjain City 96,000

Technical Criteria…Contd.

Experience in handling Consumer Base

The Bidder must have experience inhandling at least ….(as shown in the

adjoining table) number of customers, inretail supply / services in electricity / gas /water / telecom for each of the last two (2)

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Indore

MPMKVVCL, Bhopal

Gwalior Town 1,85,000

MPPKVVCL, Jabalpur

Sagar City 55,000

water / telecom for each of the last two (2)financial years preceding the year of BidDeadline.

Technical Criteria (a) in case of BiddingConsortium, to be met necessarily by theLead Member.


DiscomName of

Franchisee Area

Manpower Strength (on regular roles)

MPPKVVCL,


b) Manpower Strength

The Bidder must have manpower strength of atleast …. (as shown in the adjoining table)number of employees on the regular roles of theBidder in any one (1) of the last two (2) financialyears preceding the year of Bid Deadline.

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10/17/2011

Distribution Franchisee Scheme

MPPKVVCL, Indore

Ujjain City 190

MPMKVVCL, Bhopal

Gwalior Town 370

MPPKVVCL, Jabalpur

Sagar City 110

The Technical Criteria (b) to be met by

(i) bidder, in case of the Bidder being aBidding Company, on its own or through itsParent Company / Affiliate(s).

(ii) any member on its own or jointly with one ormore members of the Consortium, in case of aBidding Consortium. In addition, the LeadMember can also take recourse to its ParentCompany / Affiliate(s) for meeting this criteria.



c) Blacklisting by any Department / Undertaking of Governmentof Madhya Pradesh or any State Government or Government ofIndia or debarred by Court of Law:

Bidder or any Member of the Bidding Consortium, mandated not to beblacklisted by any department or undertaking of any State Government or

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10/17/2011


blacklisted by any department or undertaking of any State Government orGovernment of India or debarred by any Court of Law from doing any businessactivity.

Technical Criteria (c) to be met by all members in case of BiddingConsortium.


Financial Criteria

Bidder required to meet following financial requirements:

a) Net Worth : The Bidder must have a Net Worth of at least ….(as shown in thetable below) as per the unconsolidated audited annual accounts for any two (2) ofthe three (3) financial years preceding the year of Bid Deadline.

b) Net Cash Accrual : The Bidder must have a Net Cash Accrual of at least ….(asshown in the table below) as per the unconsolidated audited annual accounts forany two (2) of the three (3) financial years preceding the year of Bid Deadline.any two (2) of the three (3) financial years preceding the year of Bid Deadline.

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Name of Franchisee Area

Ujjain City Gwalior Town Sagar City

Net worth(Rs. Cr.)

100 170 100

Net Cash Accrual (Rs. Cr.)

30 80 10


c) Turnover (Sales from core activities):

The Bidder must have an annual turnover of at least ….(as shown in the adjoining table) for any two (2) of the three (3) financial years preceding the year of Bid Deadline, as per the unconsolidated audited annual accounts.

Discom Name of Franchisee

Area

Turnover (Rs. Cr.)

MPPKVVCL, Indore

Ujjain City 130

MPMKVVCL, Gwalior Town 330annual accounts.

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MPMKVVCL, Bhopal

Gwalior Town 330

MPPKVVCL, Jabalpur

Sagar City 100

All Financial Criteria (a), (b) and (c) in case of a Bidding Consortium to be metindividually and collectively by the members in proportion to their equity stake in theproposed SPV.

Only Lead Member permitted to use the credentials of its Affiliate(s) / Parent Company tomeet the required Financial Criteria.


� Bidders required to quote Input Rate(exclusive of electricity duty and subsidy)for each year of the contract period.

� Bidders must ensure that Input Rate(s) quoted in the Price Bid must be suchthat ratio of minimum quoted Input Rate to maximum quoted Input Rateduring the Contract Period shall not be less than 0.70 (point seven zero).

Price bid

� In addition, the quoted Input Rate(s) for each year of the Contract Period mustbe more than the Input Rate quoted in the previous year.

� The Qualified Bidder with the maximum Levelised Input Rate in the Price Bidwill be selected for the award of the Project. The Distribution Licensee’s decisionin this matter shall be final and binding on the Bidder.

� Any conditional Price Bid will be rejected.

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Timelines


Due Dates

S. No. Activities Due Dates

1 Commencement of sale of RFP 05thOctober, 2011

2 Pre Bid Conference 15thOctober, 2011

3 Last date for receiving queries/clarifications 18th October, 2011

4 Issue of Final RFP and DFA 31st October, 2011

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Issue of Final RFP and DFA 31 October, 2011

5 Last date for sale of RFP 11thNovember, 2011 upto 17:00 Hrs

6 Last date of submission of Bid (Bid Deadline) 14thNovember, 2011 upto 14:00 Hrs

7 Opening of Technical Bids 14thNovember, 2011 at 16:00 Hrs

8 Opening of Price Bid (Tentative) 24thNovember, 2011 at 16:00 Hrs

9 Issue of Letter of Award (Tentative) 01stDecember, 2011

10 Execution of Distribution Franchisee Agreement

(Tentative)25th January, 2012

Timeframe for appointment of DF

Issue of Letter

of Award

Signing

of DFA

Create

SPV

Completion of

Condition Precedent

0 20 45 180

180 days

Hand

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Acceptance

of LOA by

DFA

Condition

Precedent for DF

(Documentation)

Submission of

Performance

Guarantee

0

10

20 Days

Completion of

Joint Audit

Survey

30

45 180

70 270

60 days 90 days

Hand

Over

of DF

Area

Distribution franchisee agreement (DFA)


DFA – Key Definition

Definition Details

Affiliate

“Affiliate” shall mean a Company that either directly or indirectly controls oris controlled by oris under common control witha Company and “control” means ownership by one Company of at least twenty six percent (26%) of the paid-up capital of the other Company. Any bank or financial institution shall not be considered as an Affiliate;

“Parent Company” shall mean a company that holds at least fifty one percent (51%) of the Parent Company

“Parent Company” shall mean a company that holds at least fifty one percent (51%) of the paid-up equity capital directly or indirectly, in the Bidding Company (in case of a single company) or in the Member (in case of a Bidding Consortium), as the case may be

Effective Date

Shall mean the date intimated by the Distribution Licensee to the Distribution Franchisee to commence its operations as per the Distribution Franchisee Agreement and which shall not be earlier than fulfillment of conditions precedent as per Article 4.3. Such date shall also be considered as the handing over date of the Franchisee Area by the Distribution Licensee.

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DFA – Supply of Energy

Principle of agreement Details

Article 2.1.2 (i) – DF supply obligation

DF to ensure twenty four (24) hours of power supply to the Consumers subject to availability of Input Energy from the Distribution Licensee

Article 5.1.1 – Minimum Input Energy

DL to make available Minimum Input Energy at Input Point(s) on an annualized basis. If the first and last year of the Contract Period is a part of any financial year, the Minimum Input Energy for that period shall be determined on the basis of Input Energy during the corresponding period of the year which has been considered for determination of the Minimum Input Energy.

Furthermore, the annual Minimum Input Energy to be apportioned for each month of a Contract Year on the basis of proportion of actual Input Energy for the corresponding month of the immediately preceding Contract Year. Monthly proportion of Input Energy month of the immediately preceding Contract Year. Monthly proportion of Input Energy for the Base Year provided in the respective DFA.

Article 5.1.3 – Demand Forecast

DF to submit yearly demand forecast as per Annexure IX, sixty (60) days prior to the commencement of each Contract Year. Such demand forecast by the DF should necessarily factor in energy requirement for meeting the supply hours as prescribed by DL as per the provisions of Article 2.1.2(i).

Article 5.1.4 – Availability of Power

DL to confirm the availability of power seven (7) days prior to the commencement of the corresponding month in the ensuing Contract Year. DL shall endeavour to meet any additional requirement projected by the DF over and above the Minimum Input Energy, subject to availability of energy.

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DFA – Other Key FeaturesPrinciple of agreement

Details

Article 10.7 –Duties & Taxes

Any amendment(s) in existing taxes, duties and levies or introduction of any new tax(es) by any Government Instrumentality after the Effective Date, not recovered through retail tariffs, to be borne by DL.

Article 14.1 –Mandatory

Metering:

• DF to achieve 100% Metering in the franchisee area at the consumer end, and complete metering of all distribution transformers and 11kV feeders within the first two (2) years of the contract period.

• DF to achieve 100% metering at all distribution transformers and 11kV feeders within the first nine (9) months of the contract period in the franchisee area.

Consumer Services: Mandatory Capex

Consumer Services:

• DF to establish and operationalise at least one (1) call centre with adequate work station capacity, which shall be operated 24/7 for recording and coordinating technical & commercial complaints of the consumers in the Franchisee Area at least thirty (30) days prior to the end of Transition Period.

• DF also to undertake necessary capital investment to mandatorily achieve minimum levels of performance in respect of consumer services as mandated.

Article 26.1 –Selection of Independent Auditor

DF to provide a panel of five (5) Independent Auditors initially on the date of signing of DFA and subsequently, three (3) months before the expiry of the term of the Independent Auditor. The DL shall select one (1) from among this panel as the Independent Auditor within thirty (30) days from the date of submission of the panel by the DF.

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Minimum Capital Investment

� The DF shall submit its proposal within the Transition Period for the entire capital investment on the Distribution System inclusive of mandatory capital investment mentioned for meeting the future load growth, reduction in the AT&C Losses, improvement in the quality of supply and Consumer services in the Franchisee Area and replacement of Distribution Assets.

� Such investment plan shall factor in a minimum investment of (as shown in table below) by the DF over the first five Contract Years, subject to an investment of at least ten percent in each of these Contract Years

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Discom Name of Franchisee Area Minimum Capex(Rs. Cr.)

MPPKVVCL, Indore Ujjain City 70

MPMKVVCL, Bhopal Gwalior Town 170

MPPKVVCL, Jabalpur Sagar City 30

Indicative areas of capital investment by DF

S. No Particulars

1 New 33/11kV Substation

2 Uprating and Upgradation of existing 33/11kV substations

3 Formation of Ring Mains System for existing as well as new 33/11kV substations

4 Additional 11kV feeders and establishment of ring main system for 11kV network

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4 Additional 11kV feeders and establishment of ring main system for 11kV network

5 Reactive Power Management

6 Revamping of Distribution Transformer(DTRs)

7 IT and Communication System

8 Call Center

9 Customer Service Centre

Consumer Services and SoP for DF (Eg. Gwalior)

Parameters

Desired Status

At end of 36 months from Effective Date



SAIFIAt a value of 100 or lower

At a value of 75 or lower


SAIDI At a value of 90 or lower At a value of 60 or lower


Customer service centre (Nos.) Atleast 4 Atleast 6 Atleast 6

Replacement of failed distribution transformer(s) within time-limits specified by applicable MPERC Regulations

100% 100% 100%

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MPERC Regulations

Consumer Indexing (%) 100% 100% 100%

Rectification of Normal Fuse-off calls within time-limits specified by applicable MPERC Regulations

95% of the cases or as per applicable MPERC Regulations



No. of days required for providing response to Consumer query (days)

4 days or as per applicable MPERC Regulations



Cases of billing mistakes resolved within time limits specified by applicable MPERC Regulations

100% 100% 100%

Faulty meter cases resolved within time-limits specified by applicable MPERC Regulations

100% 100% 100%

AT & C Loss Reduction targets

� DF to achieve YoY AT&C Loss levels as shown.

� On achievement of AT&C Loss reduction targets,

� DF to be paid an incentive of 2% of the loan converted into grant;

� On non-achievement of AT&C Loss reduction targets

i. Penalty (as shown in the figure below) to be levied on the DF

ii. If DF opts to undertake the RAPDRP contracts prematurely terminated / cancelled by the DL, then DF liable to pay penalty as provided in the original contract, in addition to (i) above.

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1%

3%

5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5%

15% 15% 15% 15% 15% 15%14%

13%12%

11%10% 10% 10% 10%

0%

2%

4%

6%

8%

10%

12%

14%

16%

2nd 3rd 4th 5th 6th 7th 8th 9th 10th 11th 12th 13th 14th 15th

RAPDRP Target Loss Level & Penalty

Penalty as percentage of cash lost due to non – achievement of target AT&C Loss level Target AT&C Loss level

Illustration – Ongoing Works

Ongoing Capital Works

Terminated / cancelled

DF responsible for Programme Management

Same terms & conditions will be applicable as in the Original

Contract, including incentives / penalties applicable in the RAPDRP

contract

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If DF undertakes to complete the balance capital work

Subsidy and ED

Provision for Subsidy

� Subsidy offered by GoMP or GoI or any other agency on any category

of Consumers to be retained by the Licensee;

Provision for ED

�DF responsible for the payment of ED to the State Government on �DF responsible for the payment of ED to the State Government on

billed basis;

�DF required to submit documentary evidence in support of such ED

payment;

� In case of any default of payment for these, Licensee shall have the

right to invoke the Performance Security.

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Licensee Employees

Deputation of DL employees

� During first 3 months from the effective Date

� DL to make available all existing employees to work in the franchisee area, as prior to Effective Date;

� DL liable for payment of salaries & all employee related expenses of all such employees.

� Thereafter, on the request of the DF,

� DL to make available such employees, who are willing to work with the DF, ondeputation for a minimum period of three (3) years or such extended period asdeputation for a minimum period of three (3) years or such extended period asconsidered appropriate;

� DL employees provided the option of reverting back at any time to the DL on giving three (3) month notice to the DF;

� DF has the right to send back any employee on deputation with it at any time, giving a notice period of one (1) month in exceptional cases and with due justification;

� During the period of deputation, DF shall pay the entire cost of DL’s employees;

� DF also mandated to contribute towards the terminal liabilities of the DL’s employees on deputation with DF during the period of deputation;

� DL employees not to lose their seniority in the DL due to such deputation with the DF;

� DF to extend transition assistance for a period of 90 days after the expiry date.

Slide 28


Thank You...

Illustrations

Slide 30


Illustration – Penalty for delay in Mandatory Capital Works

Sr.

No. Month

Total

Contracted

amount of the

mandatory

works (Rs.)

Work done

by end of

the period

Amount spent

for the Work

done (Rs.)

Cost of

Balance

mandatory

works ( Rs.)

Penalty

as per

Article

14.2

1 April 10

5,00,00,000 80% 4,00,00,000 1,00,00,000

2 May 10

3 June 10

4 July 10

5 August 10 5,00,00,000 80% 4,00,00,000 1,00,00,0005 August 10

6 September 10

7 October 10

8 November 10

9 December 10 1,50,000

10 January 11 0 90% 4,50,00,000 50,00,000 75,000

11 February 11 0 100% 5,00,00,000 0 0

12 March 11 0 0 0 0 0

Total (T) 2,25,000*

* The total penalty shall not be more than 50 lacs. ( 50% X 1,00,00,000= 50 lacs) or T <= 50% x

10000000

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Illustration – Penalty for delay in Mandatory Capital Works

1,00,00,000Cost of Balance Mandatory Work after Scheduled Date (B)

2,25,000Total Penalty (T)

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2,25,000Total Penalty (T)

(T) <= 50% x (B)= 50,00,000 Maximum Penalty (C)

Arrear Recovery

Arrears prior to Effective Date

• DF authorized to retain the amount collected

• DF not obliged to collect any

Arrear Pre-Franchisee Handover

Management of Arrear during Franchisee Operation

Franchisee Arrear Post Discom Takeover

DF responsible for Collection

Arrears on Expiry of DF Contract

Contract Period Discom Period

EFFECTIVE

DATE

Discom Period

EXPIRY DATE

(Classified as Connected and

Disconnected Arrears)

• DF not obliged to collect any surcharge due after the Effective Date.

• DF responsible for collection of any amount recoverable.

• Incentive @25% of such recoveries to be paid by DL to DF rest to be retained by DL.

The DF shall make available the list of Consumers with arrears as on the Expiry Date.• DF permitted to collect Amounts due from the Consumer from the billing cycle ending on any date prior to the Expiry up to a maximum period of three (3) months after the Expiry Date

Recovery on account of audit and vigilance checking D

F responsible for Collection

Arrears on Expiry of DF Contract

Arrears under litigation on the Effective Date

DL responsible for

Collection

• The arrears shall not to be dealt with by the DF; it shall continue to be the responsibility of the Licensee

• Responsibility to recover and retain shall rest with DL

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Illustration - Financial Criteria (Bidding Company)

Bidding Company

Net Worth: Cr. 170

Turn Over: Cr. 330

And / Or

Net Cash Accrual: Cr. 80

Parent Company

Affiliate 2Affiliate ...n

Affiliate 1

Networth: 170 Cr.Net Cash Accrual: 80 Cr.

Turnover: 330 Cr.

And / Or

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Illustration – Financial Criteria (Consortium)

Consortium

Lead Member(51% Proposed equity)

Member A(25% Proposed equity)

Net Worth: 170 Cr. Turn Over: 330 Cr.

Net Cash Accrual: 80 Cr.

Member C(24% Proposed equity)(51% Proposed equity)

Parent Company

Affiliate 2Affiliate ...n

Affiliate 1

(25% Proposed equity)

Networth: 42.5 Cr.Net Cash Accrual: 20 Cr.

Turnover: 82.5 Cr.

Networth: 40.8 Cr.Net Cash Accrual: 19.2 Cr.

Turnover: 79.2 Cr.

Networth: 86.7 Cr.Net Cash Accrual: 40.8 Cr.

Turnover: 168.3 Cr.

And / Or

Slide 35Distribution Franchisee Scheme

(24% Proposed equity)

Technical Criteria

Tech. Crit. (b) –Manpower Strength

Tech. Crit. (a) – Power Sector Experience / Customer Base

Handling

Tech. Crit. (c) -Blacklisting

Technical Criteria

Handling

To be met by Bidding Company/Lead Member of the Consortium

1) In case of Bidding Company, to be met by Bidding Company and/ or its Affiliates / Parent company 2) In case of the Bidding Consortium, to be met by any or all members. Further, recourse can be taken to the affiliates / parent of the Lead member

To be met by Bidding Company/ All members of the Bidding Consortium

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10/17/2011


MP_DF_Pre_bid_PPT_17_Oct_2011

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Transcript of MP_DF_Pre_bid_PPT_17_Oct_2011