REVISED FINAL REPORT June 2017 Task C: Institutional development & performance improvement of GECOL Deliverable 2: Strategy for institutional development of GECOL report Disclaimer and copyright note This document has been prepared only for the International © 2017 Bank of Reconstruction and Development ("IBRD") and solely PricewaterhouseCoopers for the purpose and on the terms agreed with the IBRD in our LLP agreement dated 21 March 2017 relating to Task A. All rights reserved. In this The scope of our work was limited to a review of documentary document, 'PwC' refers to the evidence made available to us. We have not independently UK member firm, and may verified any information given to us relating to the services. sometimes refer to the PwC network. Each member firm We accept no liability (including for negligence) to anyone else is a separate legal entity. in connection with this document. 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Strategy& | PwC Prepared for The World Bank The present document is focused on the institutional development of GECOL Task C project approach and current report focus Present report 1 2 3 Financial 4 5 Customer service Project review Project Institutional performance performance and set-up Development assessment & improvement recommendation financial models 1.1 2.1 Strategy for 3.1 4.1 Improving financial 5.1 Tariff framework Findings review and Data collection institutional performance of review final report development customer service 1.2 2.2 Process mapping & 3.2 4.2 Methodology, Tariff structure Improving technical team and approach identification of gaps in set-up and reform performance validation staff, skills, perform. pathway 2.3 3.3 Manpower / org. Tools (excel model) rationalization review and trainings 2.4 ERP System review 6 Workshop & trainings 7 PMO (progress reporting) Source: Task C inception report Strategy& | PwC Prepared for The World Bank 2 In the latest revision of this report, the update of GECOL strategic priorities was moved to Task C final report Current report focus Present report Final report 1 2 3 Financial 4 5 Customer service Project review Project Institutional performance performance and set-up Development assessment & improvement recommendation financial models 2.1 Strategy for 5.1 Findings review and institutional final report development Review of 2010-2015 strategic plan Review of 2010-2015 strategic plan implementation status implementation status Moved to Updated strategic priorities Updated strategic priorities Scope of work Review of GECOL operating model (governance and organization) Inputs from Task C deliverables Options for GECOL operating model Source: Task C inception report Strategy& | PwC Prepared for The World Bank 3 Review of GECOL operating model (governance and organization) Recommendations for GECOL operating model Appendix – organizational benchmarking Strategy& | PwC Prepared for The World Bank The review of GECOL’s operating model is based on six criteria Criteria for the assessment of GECOL’s operating model I Clearly defined • Clear separation between BU, FINAL REPORT operating model corporate core and services VI Alignment with Strategic Priorities II • Alignment of organizational Alignment to best structure with industry best practices • Alignment with GECOL strategic priorities / practice pillars identified within GECOL institutional development strategy III Results • Operational and financial results accountability accountability IV • Efficiency of operating model Efficiency framework (e.g. no duplications, no fragmentation) V • Organization suitability to long- Preparation for term evolution process (e.g. future evolution unbundling, liberalization, etc.) Strategy& | PwC Prepared for The World Bank 5 Today GECOL is organized in 3 major “Operational Units”2 and several general departments GECOL organization Board of Directors Description Performance BoD Affairs Monitoring and Follow-up Monitors and controls the Media Internal Control Board of activities while leading the Directors company’s organizational Managing set-up Director Contracts Manages 3 BUs and several MD Office & Dev. Accounts Managing departments among which Strategic Plan PMO Legal Affairs Public Transmission Director the projects (engineering) Relations Southern Experts & Projects Planning and development accounts Cons. Office Generation Studies & Dev. Experts and Consultants Office Projects Distribution “Network” Manages the generation and Follow-up Eastern Experts & Projects Operations transmission business Electricity police1 Cons. Office “Network” “Business” Support “Business” Manages the distribution Operations Operations Services Operations and supply business Procurement Generation Distribution & Stores Responsible for accounting, Control General Services Support HR, procurement & general MV Networks Services services across the ICT Consumer Services Financial Affairs organization Department / sub- HR & Communication General department Transmission department or below 1) Electricity Police is not included within GECOL’s organization chart 2015 (unit collocation still to be confirmed by GECOL); within next slides, electricity police is thus excluded 2) Referred within the report as operational (or organizational) units as they seem not to own all levers of a BU/SBU (e.g. accountability on P&L, etc.); Source: Latest up-date of GECOL company organization chart 2015 (June 2017) Strategy& | PwC Prepared for The World Bank 6 The review has highlighted a few improvement areas Key improvement areas identified 1 2 Project(s) general 3 Performance 4 Operational departments, Planning Monitoring ICT Units Studies & Dev. & Financial affairs 5 6 Development 7 HR (&O) Accounts & Board of Contracts Directors Strategy& | PwC Prepared for The World Bank 7 1.1 Operational units Each “Operational Unit” covers two major activities, increasing complexity Organization structure of GECOL Operational Units “Business” Operations “Network” Operations Assistant Managing Assistant Managing Director Director Better with ERP Follow-up transmission or with Tripoli ICT Center ICT Digital Inf. & Doc. distribution? Western Technical Support Infrastructure Operations Planning Central Networks Consideration Communications MV Networks Technical Affairs Benghazi in next slides Area MV Networks Op. Studies & Protection Southern National Control Technical Affairs Green Mountain Control Western Reg. Control Eastern Substations Op. Eastern Reg. Control O&M Planning West. Substations Op. Installations West Tr. Net. Maint. Distribution Tehcnical Affairs Dev. & Automation Technical Affairs Emergency & Diesel Area distribution East Tr. Networks Maint. Transmission Dev. & Automation Western OHL Main. Installations Govt. & Co. ACCs Commercial Affairs Eastern OHL Main. Consumer Services CS Systems Commercial Losses Efficiency Tech. Affairs Req. (Procurement) Energy & Measurement Area Customer Services Power Plant Dept. Central Maintenance Generation Dev. & Automation Gas Plants Affairs Control & Protection Sy. St. & D. Plants Affairs Diverse and complex business activities (e.g. transmission & generation) under the control of the same assistant MD Strategy& | PwC Prepared for The World Bank 8 1.2 Operational units Furthermore, it is unclear whether the “Operational Units” have all the levers of a BU/SBU Key levers for BU/SBUs creation and accountability Full P&L accountability, within the strategic guidelines Do Business & Network and the capital allocation set by the corporate core Operations units own the typical levers of a BUs have direct responsibility on: BU/SBU? Propose budgets • Capital spending within the limits approved in the budget Manage CAPEX • Cost and revenues • Staffing and deployment of personnel Manage P&L BUs are required to: • Prepare and submit opex and capex Maintenance Manage Personnel budget, for approval by MD / BoD planning • Propose improvement initiatives and new Operations Maintenance projects, again for approval by MD / BoD planning planning • Proposing KPIs and performance targets Operations to evaluate results planning • Taking corrective actions to align performance with objectives Operational Business Unit Unit as a “Profit Centre” Strategy& | PwC Prepared for The World Bank 9 2 Project(s) general departments & Planning, Studies & Dev. Projects & Engineering departments are divided in several units: is this the most efficient solution? Direct reports to MD Projects/engineering Managing Director capabilities divided in (MD) different departments Tenders & Contracts Contracts L/C's Financing Managing Director & Dev. Accounts Customs Clearance Office Sub Dept. Projects Accounting Strategic Plan PMO Strategic Planning Public Relations Econ. Research. & Studies Dept. Southern Experts & Planning Technical Planning Tripoli Health Services Cons. Office Studies & Dev. Tech. Research & Studies Western Dept. Experts and Consultants Office Standards & New Tech. Central Follow up Dept. Eastern Experts & Benghazi Cons. Office Generation Steam Plants Projects Projects Follow-up Southern Projects GAS & CC Plants Projects Imports & Stores Follow-up Green Mountain Experience Distribution Development Projects Zliten Projects Legal Opinions & Proceedings Engineering Dept. Legal Affairs West Coast Legal Experience Area Distribution Projects Mountain Cases & Seizures Follow-up Substation Projects Transmission Gharyan Net. & Cables Projects Projects Engineering Jafara Tobruk Mergab High number of Network Operations Business Operations Support Services general departments reporting to MD Strategy& | PwC Prepared for The World Bank 10 3 Performance monitoring & financial affairs The organization seems to lack a proper “AFC” (accounting, financial management and control) core function GECOL organization / management structure Board of Tech. Perf. Monitoring Directors Performance Fin. Perf. Monitoring BoD Affairs Monitoring and Follow-up Admin. Perf. Monitoring Media Internal Control Administrative Affairs Office Managing Some activities Director performed by these Contracts units are pertinent MD Office & Dev. Accounts Strategic Plan PMO to finance Public Legal Affairs Relations Strategic Planning Southern Experts & Transmission Cons. Office Projects Econ. Research. & Studies Experts and Planning Consultants Office Studies & Dev. Technical Planning Generation Follow-up Tech. Research & Studies Eastern Experts & Projects Cons. Office Distribution Standards & New Tech. Projects Lack of a finance and Network Business Support controlling unit Operations Operations Services responding to MD under CFO leadership Procurement Generation Distribution & Stores Accounting Control MV Networks General Services Fixed Assets & Insurance ICT Consumer Services Financial Affairs Gen. Ledger &Fin. Reports Financial Planning Transmission HR & Communication Materials Accounting Strategy& | PwC Prepared for The World Bank 11 4 ICT ICT is embedded in Network Operations, despite its support and core corporate nature GECOL Organization / management structure Managing Director (MD) “Network” Assistant Operations Managing Director Mixture of support and ICT core corporate Control Transmission Generation activities National Control Technical Affairs Efficiency Tech. Affairs ICT Center Western Reg. Control Dev. & Automation Power Plant Dept. Technical Support Eastern Reg. Control Installations Dev. & Automation Networks Op. Studies & Protection West Tr. Net. Maint. Control & Protection Sy. ERP Follow-up Req. (Procurement) Technical Affairs East Tr. Networks Maint. Digital Inf. & Doc. Eastern Substations Op. Western OHL Main. Central Maintenance West. Substations Op. Eastern OHL Main. Gas Plants Affairs Infrastructure St. & D. Plants Affairs Communications Strategy& | PwC Prepared for The World Bank 12 5 Organization & structuring, HR & Communication HR&O are not differentiated between services and corporate core, the last ones not reporting to the MD GECOL Organization / management structure Managing Director (MD) “Support” Assistant Services Managing Director Certain functions are core corporate Procurement HR & Financial Affairs General Services & Stores Communication Accounting Training & HR Procurement Vehicle O&M Development FA & Insurance Building & Facilities Stores Employee Affairs O&M Materials Accounting Real Estate & Housing Communication & Mgmt. collaboration Ledger & Fin. reports Medical affairs General Safety department Structure Design & Financial Planning Documentation & Development Policies and HR planning Publications Jobs & Careers Organization & Development Structuring Process Considerations in Reengineering previous slides Recently moved Administrative affairs within HR&C (before and follow-up under BoD) Strategy& | PwC Prepared for The World Bank 13 6 Contracts & dev. Accounts function Roles and responsibilities of the Contracts & Dev. Accounts function should be reconsidered GECOL organization / management structure Board of Directors Includes activities that Performance pertain both to finance BoD Affairs Monitoring and Follow-up and procurement Media Internal Control Managing Tenders & Contracts Director Contracts L/C's Financing MD Office & Dev. Accounts Customs Clearance Legal Affairs Strategic Plan PMO Projects Accounting Public Transmission Relations Southern Experts & Projects Experts and Cons. Office Planning Consultants Office Studies & Dev. Follow-up Generation Department is apparently not directly Eastern Experts & Projects responding to MD: Cons. Office Distribution • Reports to the Libyan government Projects (function was originally part of the duties of the Ministry in 2005) Network Business Support • Communicates directly with the projects Operations Operations Services departments Procurement • Has duty to manage GECOL CAPEX Generation Distribution & Stores budget (completely separated from Control MV Networks General Services GECOL operating budget and outside of GECOL FS: once project is finalized, a ICT Consumer Services Financial Affairs committee is formed to transfer the Asset to GECOL’s FS, with parallel equity Transmission HR & Communication increase)1 1) In addition to the CAPEX committee, the management of CAPEX and its related transfer in GECOL balance sheet is also subject to the approval of a General Auditor Bureau and financial controller of the state treasury; for the past 3 years, no CAPEX committee took place (with consequent no transfer of assets within GECOL FS) Strategy& | PwC Prepared for The World Bank 14 7 Misalignment of MD-BoD responsibilities The BoD is unusually staff-intensive and has responsibilities that are not typical for such entity Direct reports to BoD Activities performed Board of Directors pertain to finance and not to BoD core responsibilities Internal Control General Performance Monitoring BoD Affairs Media Dept. Dept. and Follow-up Administrative Affairs & Assistant Manager Office Tech. Perf. Monitoring Financial Inspection Services Investigation & Complaints Archives Publishing Fin. Perf. Monitoring Meeting Affairs Awareness and Admin. Perf. Monitoring Technical Inspection rationalization Follow-up & Computer Documentation Administrative Affairs Office Administrative Inspection Records Secretarial Office Media Internal Auditing Customer Services Advertising Inspection Projects inspection Managing director ~600 FTEs Unusually staff- intensive Source: Latest up-date of GECOL company organization chart 2015 (June 2017); GECOL data collection ID17 Strategy& | PwC Prepared for The World Bank 15 In summary, a number of organizational issues seem to limit GECOL’s efficiency and effectiveness Summary of issues Criteria for the assessment of GECOL’s operating model I II III IV V VI Clearly defined Preparation Alignment Alignment vs. Results operating Efficiency for future with Strategic best practices accountability Identified Issues model evolution Priorities 1.1 BU “concentration” ! ! ! ! 1.2 Limited levers for effective BU management ! ! ! ! ! 2 Fragmentation of engineering & projects ! ! 3 Lack of a strong AFC function ! ! ! ! ! 4 Sub-optimal set-up of ICT ! ! ! ! 5 HR&O responsibilities partially outside MD area ! ! ! ! ! 6 Unclear role of Contracts & Development Accounts ! ! ! BoD overstaffed and 7 including functions typically under MD ! ! ! ! ! ! ! Target organizational dimension negatively impacted by related identified issue Strategy& | PwC Prepared for The World Bank 16 Review of GECOL operating model (governance and organization) Recommendations for GECOL operating model Appendix – organizational benchmarking Strategy& | PwC Prepared for The World Bank GECOL shall consider a phased approach to evolve its “Operational Units” into (Strategic) Business Units Recommendations for institutional development Issue identified Development strategy 1.1 BU “concentration” Creation of separate Business Units / Strategic Business Units Impacted unit Recommendation 1.2 Limited levers for effective BU management Wave I Wave II Fragmentation of Network Short term Long term Operations (1-3 years) (>3 years) engineering & projects • Separate generation and • Split into 3 SBUs, fully Business Lack of a strong AFC transmission (3 BUs) accountable: Operations function – Generation • Transform into separate BUs, – Transmission Generation with full accountability on – Distribution & Supply Projects technical and financial Sub-optimal set-up of ICT • Incorporate within each BU performance Transmission (now SBU) its related Projects, Projects • Move the Communications unit planning studies & HR&O responsibilities from ICT to the Transmission development functions partially outside MD area Distribution BU Projects Unclear role of Contracts & Development Accounts Planning Studies & Dev. BoD overstaffed and including functions Contracts & typically under MD Dev. Accounts Deep-dived in following slide Strategy& | PwC Prepared for The World Bank 18 Wave I In the short term GECOL shall separate Generation and Transmission to achieve full performance accountability Recommendation deep-dive Example of typical activities MD • Execute operation of assets and/or installations O&M & • Execute investigations and analyses technical • Analyze technical support affairs • Coordination and execution of Distribution maintenance Generation Transmission & Supply • Resolution of day-to-day tech. problems Generation Transmission Distribution • Manage budget spending • Personnel staffing and deployment Control MV Networks Operations • Prepare (& submit) budget for approval Management & • Propose operational targets (KPI) Planning • Plan O&M strategy Consumer Communication Services • Take corrective actions to align performance with objectives • Sales and customer relations Sales • Meter reading (for supply only) • Customer service • Billing and collection Strategic Business Units Sources: GECOL (company organization chart 2015), Strategy& analysis Strategy& | PwC Prepared for The World Bank 19 A BU-based organization would be aligned with regional benchmarks of integrated utilities (e.g. Morocco) Regional benchmark Headquarter Casablanca Corporate Center CEO Footprint National Business Units Internal Operations Shared Services Audit Control Employees 9,148 Regional Units Revenues (2015) 2,732 $Mn Security, Environment Communication and Quality Business Model Electricity Gas Generation / Development Finance and Commercial HR, Comm. & Procurement Business Units Up-stream P Transmission / Strategy and Financial Mid-stream P HR Production Transmission Distribution Planning Management Downstream P Projects Training and Engineering Management Operations Rural Program Control Competences Gas Turbines Transportations Electrification Organizational Model Production Development Projects Hydro & No. of No. direct Risk Communicati Renewables System Regional Renewables Regional Regional departments reports to CEO Management on Media Operations Operations Distribution Direction Distribution Distribution Corporate Operations Regional 4 4 Gas Projects Legal Affairs Procurement Regional Center Direction Kénitra Regional Transmission Transmission Transmission Business 3 1 Engineering & Units Operations Realization IT Mohammedia Shared 3 3 Projects Services Participation & Sales & Operations Total 10 8 Partnerships Marketing Jerada Source: ONEE corporate website, Strategy& analysis Strategy& | PwC Prepared for The World Bank 20 International benchmarks (e.g. Greece) have already progressed with the legal unbundling of TSO and DSO International benchmark1 Board of Directors Internal Audit Headquarter Athens (Greece) Business Units CEO Support Services Footprint National Strategy Office of the Regional Units Department Executive Employees 10,431 Legal Energy Trading Revenues (2015) 6,306 $Mn Department Department Corp. Affairs & Media Relations Communication Business Model Electricity Gas Deputy CEO Deputy CEO Generation / Up-stream P Finance Support Mines Division Generation Division Supply Division Transmission / Division HR Division Operations Mines Central Gen. Planning & Supply Planning & Mid-stream P HR & Materials & Accounts Department Organization Dept. Purchasing Dept. Support Dept. Megalopolis lignite Performance Dept. Generation HR HR Department Large Customers Downstream P Financial center Department Department Planning & Training IT Department Organizational Model Department W. Macedonia Generation Control Dept. Retail Dept. Exploitation Environment Dept. No. of No. direct Risk Occupational Facilities & Real Management Health & Safety Estate Services W. Macedonia Ops. Thermal Projects departments reports to CEO Department Dept. Dept. Support Eng. Construction Business Investor Tests, 3 1 Thermal Power Units Relations & Research & Plants Operations Treasury Dept. Standards Support Hydroelectric 9 8 Services Generation Total 12 9 Generation Material & Purchasing Islands Generation 1) Does not include holding subsidiaries IPTO (TSO) and HEDNO (DSO) Department Source: PPC Corporate Social Responsibility and Sustainability Report 2015, Strategy& analysis Strategy& | PwC Prepared for The World Bank 21 Structuring the organization under separate BUs would also lay the foundations for the future unbundling process Typical unbundling phases No Fully unbundling unbundled Legal unbundling Accounting Management Ownership Fully Integrated Unbundling Unbundling Partial Full Unbundling • Highly concentrated • Separate accounting • Creation of BUs still Spin-off of TSO / The holding manages TSO/DSO ownership • No BUs • Clear allocation of managed by the DSO as separate different separated is separated from other • No separate costs (transfer prices) integrated company legal entities (with legal entities activities accounting • Full accountability of • Full responsibility on assets remaining P&L and operational within a single holding • United accountability performance performance balance sheet) Partially Fully integrated Fully integrated Fully integrated Holding Holding A Integrated Group BU Shared Services Generation / Generation Generation Co. Generation Co. BU Distribution BU Generation Transmission BU Trading BU Shared Services Trading Co. BU Supply TSO BU Transmission BU Distribution BU Generation Transmission Supply Co. BU Trading BU Supply DSO Distribution / Supply Co. Supply Distribution Trading Co. S.S. Co. Supply Supply Co. Holding B Shared Services Shared Services S.S. Co. TSO TSO Progressive Liberalization Strategy& | PwC Prepared for The World Bank 22 In short term, GECOL may create a core corporate Engineering & Projects center of excellence Recommendations for institutional development Issue identified Development strategy BU “concentration” Progressive creation of an Engineering & Projects Center of Excellence Impacted unit Recommendation Limited levers for effective BU management Wave I Wave II Fragmentation of Short term Long term 2 (1-3 years) (>3 years) engineering & projects Generation Projects • Group all “Projects” • Projects assigned to their Lack of a strong AFC departments in a single related SBU to increase Transmission Engineering & Projects (E&P) technical accountability function Projects function with full accountability • Except for the strategic to deliver major projects Distribution planning (AFC function), Sub-optimal set-up of ICT – Synergies among Projects Planning Studies & Dev. are Gen/Trans./Distr. (on assigned to each SBU revenues, capabilities, etc.) HR&O responsibilities – Planning, Studies & Dev. • Contracts & Dev. Accounts partially outside MD area Planning included in the function, to related activities assigned to Studies & Dev. support strategic analyses, their natural owners: Unclear role of Contracts FS and project planning – Tenders & contracts to 6 & Development Accounts Procurement (services) Contracts & – L/C Financing and Strategic Dev. Accounts1 BoD overstaffed and Planning to AFC including functions typically under MD Deep-dived in 1) Remains standalone (as of today) until the AFC function is not fully established following slide Strategy& | PwC Prepared for The World Bank 23 Wave I Wave II A centralized Eng. & Projects dpt. will be key to speed-up the projects/investments implementation in the short term Recommendation deep-dive Example of typical activities MD • Support MD, BUs, AFC and Government Planning & in planning and budgeting activities Budgeting related to projects • Evaluate projects economics Engineering & (major) Projects • Promote innovation • Perform engineering and technical Engineering support to business Projects Planning Generation Transmission Distribution • Assess maintenance needs and performs accounting1 Studies & dev.2 Projects Projects Projects reliability studies Eco. Research Steam Plants Substations Projects • Act as “owner’s engineer” in relationships & Studies Projects Projects Follow-up with EPC contractors Technical Gas & CC Net. & cables Imports & • Project management services Planning Plants Projects projects Stores • Supervise projects implementation Tech. Res. Development • Monitor projects budget realization Engineering Project & Studies Projects Management • Manage and control project specification, Standards & Engineering Services schedule, quality, contract and New Tech. Dept. construction costs (Tracking, Area Distr. control, etc.) • Drive operation and construction Projects excellence across projects • Obtain permits and ensure regulatory and Corporate Core legal compliance throughout projects implementation • Develop projects reports for MD 1) From Contracts and development accounts department; 2) Strategic Planning from Planning Studies & dev. is moved under AFC function; Sources: GECOL (company organization chart 2015), Strategy& analysis Strategy& | PwC Prepared for The World Bank 24 Wave I Wave II … However, in the long run higher synergies might be realized if SBUs have full responsibility over projects Recommendation deep-dive MD Distribution & Generation Transmission AFC Supply Generation Transmission Distribution Strategic planning Planning studies & Consumer Control dev. Services Corporate Core Generation Planning studies & MV Networks Projects dev. Steam Plants Planning studies & Distribution & Projects dev. Supply Projects Gas & CC Plants Projects Transmission Projects Follow-up Projects Imports & Stores Development Projects Engineering Dept. Strategic Business Units Area Distr. Projects Sources: GECOL (company organization chart 2015), Strategy& analysis Strategy& | PwC Prepared for The World Bank 25 Wave I Contracts and Development Accounts activities will be assigned to their natural owners across different functions Recommendation deep-dive As is Contracts & Development Accounts To be split of activities across functional Department structure owners MD MD Contracts and Engineering & Support AFC Development Accounts (major) Projects Services Assistant to GM for administration Projects LC’s and Procurement Accounting finance Assistant to GM for development Customs Tenders and clearance contracts LC’s and finance Activities related to AFC Support Customs clearance Corporate Core Services Activities Projects Accounting related to E&P Tenders and Activities Contracts related to procurement Strategy& analysis Strategy& | PwC Prepared for The World Bank 26 GECOL shall gradually create a strong Accounting, Financial management & Control core function Recommendation for institutional development Issue identified Development strategy BU “concentration” Creation of an Accounting, Financial management & Control (AFC) core function Impacted unit Recommendation Limited levers for effective BU management Wave I Fragmentation of Short term Performance (1-3 years) engineering & projects Monitoring & • Move and group the Performance Monitoring general department Follow-up (from BoD) and the core function activities of Financial Affairs (e.g. Lack of a strong AFC 3 Financial Planning and Financial Reporting departments) into a new function Financial Accounting, Financial management and Control core function Affairs • Consolidate into the AFC general department all the remaining Sub-optimal set-up of ICT financially-related core functions: – Strategic planning from the “former” general department “Planning Studies & Development”) HR&O responsibilities Planning – L/C financing and Projects Accounting from the general partially outside MD area Studies & Dev. department Contracts & Dev. Account) Unclear role of Contracts Contracts & & Development Accounts Dev. Accounts BoD overstaffed and including functions typically under MD Deep-dived in following slide Strategy& | PwC Prepared for The World Bank 27 Wave I In the short term, the AFC function (and CFO) will become fully accountable for GECOL’s financial viability Recommendation deep-dive MD Example of typical activities • Establish financial strategy and policies Strategic • Perform capital structuring activities Support Finance • Engages and finalizes CAPEX budget AFC with Government (in alignment with MD) Services CFO Strategic • Design accounting policies, procedures Procurement PMO Strategic Accounting and guidelines • Lead accounting and financial reporting Contracts & L/C’s Financing General services Development Accounts Customs clearance General ledger & Accounting Strategic • Monitoring strategic plan KPI / scorecard financial reports • Tracking & up-date strategic plan PMO Financial planning & Financial Planning reporting1 Materials accounting Fixed assets & insurance • Consolidate and monitor budget strategy HR support and planning development Tech. Perf. Monitoring Budget, Planning • Supervise / monitor BU budget Performance Fin. Perf. Monitoring and Control management and control Monitoring & Follow-up Admin. Perf. Monitoring • Assess financing solutions Administrative Affairs Office • Develop expenditure management policy Strategic Planning Treasury and standard operating procedures for BUs • Manage cash flows Corporate Core Support Services 1) Includes corporate core activities from Financial Affairs (i.e. Ledger and Financial reports and Financial Planning); Sources: GECOL (company organization chart 2015), Strategy& analysis Strategy& | PwC Prepared for The World Bank 28 ICT should have a core corporate role within the organization Recommendation for institutional development Issue identified Development strategy BU “concentration” Creation of a higher-profile ICT cross-functional general department Impacted unit Recommendation Limited levers for effective BU management Wave I Fragmentation of Short term (1-3 years) engineering & projects • Adjust the ICT function profile by: Lack of a strong AFC – Create a higher-profile ICT general department (and CIO) function ICT standalone from any BU, fully accountable for strengthening GECOL ICT resources and the provision of IT services across all BUs 4 Sub-optimal set-up of ICT – Move the ICT function away from the Network operations business unit into an ICT corporate core department with direct report to the HR&O responsibilities Communica- MD (led by a CIO) partially outside MD area tions – Move the Communications unit from ICT to the Transmission SBU Unclear role of Contracts – Move the Telecommunication unit within the newly created ICT & Development Accounts function BoD overstaffed and including functions typically under MD Deep-dived in following slide Strategy& | PwC Prepared for The World Bank 29 Wave I The ICT (and CIO) core function shall be accountable to provide ICT services and strengthen its resources Recommendation deep-dive Example of typical activities MD • Perform maintenance of IT Software and hardware/software Applications • Manage the IT application system Management • Manage IT supplier relationships and contracts ICT • Ensure service efficiency for user CIO End-user workplace, telephony, printer services, Services etc. • Users requests / issues resolution Networks ERP Follow-up ICT Center ERP • Ensure IT system deployment Digital Information Follow-up • Conduct ERP implementation Infrastructure & Documentation Telephones Methods and • Manage internal and external IT Technical Support Communication communications From BoD • Formulate IT policies and standards From Network Architecture • Perform IT planning & budgeting activities Operations and • Design IT strategy & procedures Infrastructure Management • Ensure business continuity Corporate Core and • Conduct IT quality assurance Development • Plan and manage IT development in alignment with corporate objectives Sources: GECOL (company organization chart 2015), Strategy& analysis Strategy& | PwC Prepared for The World Bank 30 GECOL shall create a HR “core” function under MD control Recommendation for institutional development Issue identified Development strategy BU “concentration” Establishment of an HR&O core function Impacted unit Recommendation Limited levers for effective BU management Wave I Fragmentation of Short term (1-3 years) engineering & projects HR & Communication • Move “Organization and Structuring” functions of the HR & Lack of a strong AFC Communication department under the MD responsibility (creating a function new HR&O general department) • Consolidate into the HR&O general department all the remaining HR- related core functions: Sub-optimal set-up of ICT – Policies & HR Planning from the general department “HR & Communication” within “Support Services Organizational Unit” HR&O responsibilities • Leave the non-core HR activities within “Support Services 5 partially outside MD area Operational Unit” Unclear role of Contracts & Development Accounts BoD overstaffed and including functions typically under MD Deep-dived in following slide Strategy& | PwC Prepared for The World Bank 31 Wave I In the short term, the HR&O function will be accountable for GECOL operating model effectiveness Recommendation deep-dive Example of typical activities MD • Design organizational structure to deliver Support Organization against strategic objectives HR&O Design • Manage corporate culture and change Services management Procurement Organization & HR & • Manage manpower planning and ensure Structuring Dept. Communication Planning & organization effectiveness General services Staffing Structure Design & Policies and HR • Establish recruiting policies and procedures Development Planning Department Accounting Jobs & Careers Training & HR Development Development Process HR support • Set compensation and payroll policies Compensation Reengineering • Design benefits structure Employee Affairs Comm. & collaboration • Pursue career development planning and Talent talent management Medical affairs development department • Establish training policies and procedures Corporate Core Support Services Sources: GECOL (company organization chart 2015), Strategy& analysis Strategy& | PwC Prepared for The World Bank 32 Wave I Reorganization in wave I will create a Support Services unit, accountable for different support transactional activities Recommendation deep-dive Example of typical activities MD • Administer compensation and payroll services HR • Implement health and safety measures support Services • Execute internal communication and Support collaboration initiatives Services • Manage purchasing and material storage • Pursue vendor management and Procurement contracting services Procurement General services HR support Accounting • Monitor commodity prices and align strategy to get optimum pricing Procurement Vehicle O&M Employee Affairs Accounting Stores Building & Comm. & FA & Insurance • Preparation of financial reporting Facilities O&M collaboration General • Costing accounting / general accounting Accounting Real Estate & Medical affairs Materials Services • Customer invoicing and collection of Tenders & Housing Mgmt. department Accounting accounts receivable Contracts General Customs Safety Clearance • Perform maintenance activities of offices Documentation & and facilities Publications Others • Handle housing and building management and maintenance • Transportation services and vehicles O&M • Employees security / safety Sources: GECOL (company organization chart 2015), Strategy& analysis Strategy& | PwC Prepared for The World Bank 33 AFC, ICT and HR&O as separate “core corporate” functions are also an international standard International benchmark BoD Headquarter Rome (Italy) Corporate Center Chairman Footprint Multinational Business Units Shared Services CEO Employees 67,914 Regional Units Admin & Revenues (2015) 84,064 $Mn European Financial Affairs Control HR and Business Model Communication Organization Regulatory, Electricity Gas Environment & Internal Audit Generation / Innovation Legal and Corporate Up-stream P P Affairs Transmission / Mid-stream Global Global ICT Procurement Downstream P P Infrastructures Organizational Model Global Renewable and Global Global Trading Upstream Gas Generation Energy network No. of No. direct ITALY departments reports to CEO Corporate 7 7 IBERIA Center Business 5 5 LATIN Units AMERICA Shared 2 2 Services EAST Total 14 14 EUROPE Source: Enel Sustainability Report 2015, Strategy& analysis Strategy& | PwC Prepared for The World Bank 34 Finally, GECOL shall focus on adjusting (and right-sizing) its BoD Recommendation for institutional development Issue identified Development strategy BU “concentration” Adjustment (and right-sizing) of BoD role & responsibilities Impacted unit Recommendation Limited levers for effective BU management Current unit / Wave I Wave II Fragmentation of function Short term Long term (1-3 years) (>3 years) engineering & projects • Streamline & right-size BoD, re- • Creation of a leaner and more Lack of a strong AFC allocating the non-typical efficient BoD, including a new function functions (Performance & ad-hoc general department Monitoring) dealing with Regulatory and Performance Institutional Relations themes Sub-optimal set-up of ICT & Monitoring HR&O responsibilities Regulatory & partially outside MD area Institutional Relations Unclear role of Contracts & Development Accounts BoD overstaffed and 7 including functions typically under MD Deep-dived in following slide Strategy& | PwC Prepared for The World Bank 35 Wave II In the longer term, the BoD shall reflect a leaner and more effective structure, set-up in four units Option deep-dive Example of typical activities BoD Audit • Conduct active auditing on BU (financial, technical, administrative, etc.) (& compliance) • Define policies and procedures NEW Regulatory & Inst. Internal Media BoD Office Audit relations • Review and approve corporate governance mission and structure Assistant Adm. Affairs & Financial • Conduct and approve the assessment Manager Office Services Inspection Corporate of MD performance Governance Publishing Archives Investigation & • Review, validate and monitor level 1 Complaints appointment, compensation and Awareness and Technical development Meeting Affairs Rat. Inspection Follow-up & Administrative Documentation Strategic • Formulate strategic objectives Comp. Records Inspection Leadership • Review and approve corporate strategy Secretarial Internal Auditing and values, and ensure alignment Media Office CS Inspection • Develop corporate image that fits with Advertising Identity the company’s values and communicate Projects identity to the public and employees inspection • Agree on / set capital spending criteria Capital and parameters • Approve capital and operating plan and major investments and divestitures Sources: GECOL (company organization chart 2015), Strategy& analysis Strategy& | PwC Prepared for The World Bank 36 In the short term the reorganization will create 4 corporate core units, 3 BUs and separate Support services GECOL to be organization (2021) Board of Wave I Wave II Directors BoD Affairs Internal Control Media Managing Corporate Core Director ICT Center MD Office ERP Follow-up Technical Support Follow up Digital Inf. & Doc. ICT Networks Public Relations Infrastructure Experts and Telephones consultants office Legal Affairs Strategic PMO Performance Monitoring Planning Studies & dev. Distribution projects and Follow-up E&P Transmission projects Financial planning & Projects Accounting AFC Generation projects reporting1 Contracts & Dev, accounts Organization & Structuring Strategic Planning2 HR & O Dept. HR & Communication Business Distribution & Services Generation Transmission Support Units Supply Services Generation Transmission Distribution Procurement General Services Control MV Networks Reorganization Customer changes to be Accounting HR support Communications further deep-dived Service 1) Includes corporate core activities from Financial Affairs (i.e. General ledger and financial reports, Financial Planning and Fixed assets and insurance); 2) Strategic Planning unit from the Planning Studies & development division; Sources: GECOL (company organization chart 2015), Strategy& analysis Strategy& | PwC Prepared for The World Bank 37 After the first reorganization GECOL will decide between embedded or shared support services Wave II reorganization options Organizational structure Wave I Wave II 2021 Option 1 Option 2 OR Option 1 Option 2 Embedded support services Enterprise shared services Move shared services units below business units to Clustered shared services separated from corporate empower BU managers and prepare for an holding core and BUs in order to outsource non value added structure activities in the near future Business Units Distribution & MD Generation Transmission Supply Embedded support services Corporate Core Generation Transmission Distribution & Supply HR & Procurement Procurement Procurement AFC ICT Organization Generation HR Transmission HR Distribution & Supply Services Services HR Services Business Units Enterprise shared services Generation Transmission Distribution & Supply Generation Transmission Accounting Accounting Accounting General Procurement Services Generation General Transmission Distribution & Supply Distribution & Services General Services General Services Supply HR Services Accounting Source: Strategy& analysis Strategy& | PwC Prepared for The World Bank 38 If the embedded support services option is selected the organization will be more compact with more powerful SBUs GECOL embedded support services organization (2024) Wave I Wave II BoD Option 1 Option 2 Regulatory & Inst. BoD Office relations Internal Media Control MD MD Office Corporate Core Legal Affairs HR & AFC ICT Organization Business Units Distribution & Generation Transmission Supply Generation Transmission Distribution & Supply Procurement Procurement Procurement Generation HR Transmission HR Distribution & Supply Services Services HR Services Generation Transmission Distribution & Supply Accounting Accounting Accounting Generation General Transmission Distribution & Supply Services General Services General Services Source: Strategy& analysis Strategy& | PwC Prepared for The World Bank 39 On the other hand, if the shared support services is selected a clear division of roles between CC, SBUs and SS will emerge GECOL enterprise shared services organization (2024) Wave I Wave II Option 1 BoD Option 2 Regulatory & Inst. BoD Office relations Internal Media Control MD MD Office Legal Affairs Corporate Core (CC) Shared Services (SS) HR & Support AFC ICT Organization Services Procurement General Services Strategic Business Units (SBUs) HR Services Accounting Distribution & Generation Transmission Supply Source: Strategy& analysis Strategy& | PwC Prepared for The World Bank 40 Review of GECOL operating model (governance and organization) Recommendations for GECOL operating model Appendix – organizational benchmarking Strategy& | PwC Prepared for The World Bank A quick benchmarking study aimed to clarify six organizational design matters for GECOL Organizational design topics assessed Focus Initial questions / Benchmarking objective Business Units How are the business units of a utility company typically set-up? Is it a standard practice to group separation different activities into an integrated BU (e.g. transmission with generation)? Shared Services Are shared services consolidated in dedicated functional units providing support activities to all consolidation business units? Core corporate Are projects/engineering placed within BUs or separated under a dedicated EPC/Engineering role of projects / functional centre? engineering Procurement How it is normally structured and to who it normally responds the procurement function of a utility function firm? Is the ICT typically organized as a separate department or is it consolidated within other support Standalone ICT services/business units? Organizational Who normally owns the responsibility of organizational structure? BoD, CEO or the separate HR structure function unit? Strategy& | PwC Prepared for The World Bank 42 The company sample analyzed varied in size, geographical spread and value chain focus… Regional benchmark sample size Electricity value chain focus Distribution Size (#FTEs) Generation Transmission &Sales 68,000 Enel P P ENEL 66,000 PPC P P P 14,000 ONEE-BE P P P STEG 12,000 PPC CEGCO P SEC 10,000 JEPCO P ONEE 8,000 STEG P P P 6,000 SEC P P P 4,000 GPDCo MJEC P JEPCO 2,000 GPDCo P CEGCO 0 MJEC 0 500 1,000 1,500 2,000 2,500 84,500 Revenues (Mn USD) National Footprint International Footprint Source: Corporate Annual Reports, Corporate websites, Strategy& analysis Strategy& | PwC Prepared for The World Bank 43 … Each at different stages of maturity in terms of unbundling process Unbundling evolution stages No Fully unbundling unbundled Accounting Management Partial Fully Ownership Fully integrated Unbundling Unbundling Legal Unbundling Legal Unbundling Unbundling BUs integrated managed Accounting BU managed by the 2 legal entities,1 solely The holding manages Network ownership is by the integrated unbundling integrated company - focuses on TSO different separated legal separated from other company – no separate Still one legal entity management. Assets still entities activities (minimum requirement) accounting on the holding balance sheet EHC1 JEPCO / CEGCO ONEE-BE PPC2 STEG SEC ENEL 1) The Electricity Holding Company SAOC (EHC) is a joint stock company that holds the Government’s shares in eleven companies engaged in the procurement, generation, transmission and distribution of electricity and related water services (among which MJEC and GPDCo) 2) PPC SA holds 100% stakes in both IPTO S.A, responsible for the management, operation, maintenance and development of the Hellenic Electricity Transmission System and its interconnections, and HEDNO S.A., responsible for the management, operation, development and maintenance of the Hellenic Electricity Distribution Network Source: Corporate Annual Reports, Corporate websites, Strategy& analysis Strategy& | PwC Prepared for The World Bank 44 The quick benchmarking study results in number of useful takeaways Organizational benchmarking results Focus Lessons learnt from organizational benchmarking Business Units Number of BUs normally matches the number of core value chain operating activities performed by separation the company (e.g. merge between transmission and generation is not common practice) Shared Services Shared services are always separated from BUs and are either consolidated under the leadership of consolidation a deputy CEO or kept in separate functional departments under different managers Core corporate Projects / engineering are normally found within dedicated EPC centres OR Business Development role of projects / departments. However, they are also found within their respective BUs engineering Procurement Procurement is normally found either within the supply chain & logistics general department, within a function technical support general department, or when present, within a dedicated EPC / engineering centre ICT general Industry standard is to organize ICT as a separate support service core function or general department department. Sometimes ICT is also consolidated within the finance department Organizational Organization structure function is normally a responsibility of the CEO /MD through an HR & structure function Organization core function Strategy& | PwC Prepared for The World Bank 45 ENEL International benchmark BoD Headquarter Rome (Italy) Business Units Chairman Footprint Multinational Support Services Employees 67,914 Regional Units CEO Admin & Revenues (2015) 84,064 $Mn European Financial Control Affairs Business Model Electricity Gas Communication Generation / HR and Organization Up-stream P P Internal Audit Transmission / Mid-stream Regulatory, Legal and Environment & Corporate Downstream P P Innovation Affairs Global Organizational Model Global ICT Procurement No. of No. direct departments reports to CEO Infrastructures Global Renewable Global Upstream Business and Global 5 5 Generation Energy Trading Gas Units network Support Italy 9 9 Services Iberia Total 14 14 Latin America Unbundling Status East Europe Ownership Unboundling Source: Enel Sustainability Report 2015, Strategy& analysis Strategy& | PwC Prepared for The World Bank 46 PPC International benchmark1 Board of Directors Internal Audit Headquarter Athens (Greece) Business Units CEO Footprint National Support Services Strategy Office of the Employees 10,431 Regional Units Department Executive Revenues (2015) 6,306 $Mn Legal Energy Trading Department Department Business Model Corp. Affairs & Electricity Gas Media Relations Communication Generation / Deputy CEO Deputy CEO Up-stream P Transmission / Mid-stream P Finance Support Mines Division Generation Division Supply Division Division HR Division Operations Mines Central Gen. Planning & Supply Planning & Downstream P HR & Materials & Accounts Organization Purchasing Support Dept. Performance Dept. HR Department Organizational Model Department Dept. Dept. Megalopolis lignite Generation HR Large Customers Financial center Department Department No. of No. direct Training departments reports to CEO Planning & IT Department Department W. Macedonia Generation Control Dept. Retail Dept. Business Exploitation Environment Dept. Risk Occupational Facilities & Real 3 1 Units Management Health & Safety Estate Services W. Macedonia Ops. Thermal Projects Department Dept. Dept. Support Eng. Construction Support 9 8 Investor Tests, Services Thermal Power Relations & Research & Plants Operations Total 12 9 Treasury Dept. Standards Hydroelectric Generation Unbundling Status Generation Material & Purchasing Islands Generation Fully Legal 1) Does not include holding subsidiaries IPTO (TSO) and HEDNO (DSO) Department Unbundling Source: PPC Corporate Social Responsibility and Sustainability Report 2015, Strategy& analysis Strategy& | PwC Prepared for The World Bank 47 ONEE-BE Regional benchmark Headquarter Casablanca Business Units CEO Footprint National Support Services Internal Operations Employees 9,148 Regional Units Audit Control Revenues (2015) 2,732 $Mn Security, Business Model Communicatio Environment n Electricity Gas and Quality Generation / Up-stream P Finance and HR, Comm. & Transmission / Development Commercial Procurement Production Transmission Distribution Mid-stream P Operations Engineering Rural Downstream P Strategy and Financial Transportatio HR Gas Turbines Electrification Planning Management Training and ns Projects Organizational Model Projects Competence Renewables System Regional No. of No. direct Management Regional Regional Program s Operations Operations Distribution departments reports to CEO Control Distribution Distribution Production Developmen t Business Hydro & Operations Regional Regional 3 3 Risk Communicat Regional Units Renewables Kénitra Transmission Transmission Management ion Media Transmission Support Direction 7 7 Operations Services Gas Projects Mohammedia Legal Affairs Procurement Total 10 10 Direction Engineering & Operations Jerada Unbundling Status Realization IT projects Participation Sales & Management and Marketing Unbundling partnerships Source: ONEE corporate website, Strategy& analysis Strategy& | PwC Prepared for The World Bank 48 CEGCO Regional benchmark Board of Headquarter Amman (Jordan) Business Units Directors Internal Audit Footprint National Support Services CEO Employees 988 Regional Units Revenues (2015) 638 $Mn HSE Tendering Business Model Electricity Gas Assets Exec. PR& Press Generation / Mgmt. Directorate Up-stream P Transmission / COO Mid-stream Downstream O&M Executive Supply HR Financial IT Management Chain Mgmt directorate Controller Organizational Model Procureme Compensatio Finance No. of No. direct Power Optimization Support nt n & Benefits departments reports to CEO Inventory Plants Directorate Services Learning & Business Planning Accounting 1 1 Optimizatio Central Development Units n Electric Maint Support Organizatio Risk 11 4 Central Services nal Dev. Management Mechanical Total 12 5 Maint Attraction & Central Retention Unbundling Status Workshop Employee Planning & Relations Business Ownership Attraction Unboundling Source: CEGCO Annual Report 2015, Strategy& analysis Strategy& | PwC Prepared for The World Bank 49 JEPCO Regional benchmark Board of Headquarter Amman (Jordan) Business Units Directors Internal Audit Auditors Footprint National Support Services General Manager Employees 2,529 Regional Units Revenues (2015) 1,428 $Mn Legal Financial Business Model Consultancy Manager General Warehouse Electricity Gas Accounting Accounting Generation / Department Section Up-stream Budget, Subscribers Transmission / Statistics and Collections Costs Section Mid-stream Asst. Technical Asst. Technical Asst. Technical Downstream P Administrative Manager for Manager for Areas & Manager for Planning & Studies Manager Operations Technical Affairs Organizational Model Planning & No. of No. direct Personnel Computer Meter Supplies & Transmission Studies Amman 1st departments reports to CEO Department Center Checking & Warehouse & Execution Department Area Dept. Maintenance Department Department Business Monitoring & Health Issue & 1 1 Controlling Insurance Shareholder Amman 2nd Emergency Execution Units Center Section Area Dept Section Distribution Section Section of Support 7 5 Training Workers Public Electrical Subscribers Civil Services Amman 3rd Section Safety Relation & Maintenance Bills Engineering Sections Information Area Dept Section Section Total 8 6 Offices Zarka Area Tenders Main Stations Salaries Transportatio Dept Maintenance Section Sections Unbundling Status Section n Section Section Mechanical Registry Maintenance Ownership Section Unboundling Source: JEPCO corporate website, Strategy& analysis Strategy& | PwC Prepared for The World Bank 50 STEG Regional benchmark Headquarter Tunis (Tunisia) Business Units Board of Footprint National Support Services Directors Strategic Employees 12,7491 Regional Units Planning CEO Revenues (2015) 2,198 $Mn Secretary of the Market Equipment Business Model Commission Internal Audit Direction Electricity Gas Cooperation Organization Generation / and external relations HR and Information Up-stream P P Systems Transmission / Central Services Management Financial and Mid-stream P P Accounting Department Control Services Downstream P P Electronuclear Central Technology IT Organizational Model No. of No. direct Citizens Legal and General departments reports to CEO Relations Assurance Affairs Office Business 4 4 Planning & Units Sales Support Studies 17 17 Services Total 21 21 Electricity Gas Production & Production & Distribution Unbundling Status Transmission Transmission Fully Integrated 1) Data refers to 2014 Source: STEG Annual Report 2014, STEG Corporate Website, Strategy& analysis Strategy& | PwC Prepared for The World Bank 51 Saudi Electricity Company Regional benchmark CEO Internal Audit Headquarter Riyadh (KSA) Business Units ISO&Kingdom Footprint National Support Services Shared Planning Services Kingdom Planning Employees 37,769 Regional Units Front Office System Operation Planning Back Office Revenues (2015) 10,931 $Mn Business Support Principal Buyer Business Model EPCM Trading Engineering IPP & Renewables Electricity Gas Fuel Supply & Agreements Procurement Generation / Projects Up-stream P EPCM Business Support Transmission / Strategic Planning Strategic Planning & HR HR Planning & Policies Mid-stream P Economic Analysis Generation Distr.&Customer Business Planning Recruit. & Talent Mgmt. Downstream P Services Regulatory Affairs & Perf. Rem. & Performance Generation Unit A O&M Systems Monitoring Organization Development Organizational Model R&D Generation Unit B Engineering & Planning No. of No. direct Public Affairs Generation Unit C Distr.& Customer Serv.1 Finance departments reports to CEO Generation Unit D Retail Services Comm. Strategy & Brand Financial Planning Business Engineering & Projects Business Support Internal Communication 3 3 Corp. Finance & Treasury Units New Business External Communication Transmission Control & Reporting Support Development Corp. Supply Chain Media Communication 12 12 Digital Communication Services Maintenance New Business Corporate IT Transmission Dev. Strategy CSR Total 15 15 Planning Investor Relations Investment & Incubation Corporate Engineering Investment Management. Legal Services Unbundling Status Transmission Environment Operations Corporate IT Quality Business Support Investor Relations Organization Development Fully Legal Enterprise Risk Unbundling 1) By regions: South, East, Central, West and North Source: SEC Generation Contractors Summit 2015, SEC Annual Report 2015, Strategy& analysis Strategy& | PwC Prepared for The World Bank 52 Majan Electricity Company (MJEC) Regional benchmark Board of Directors Headquarter Muscat (Oman) Business Units International Footprint National Support Services Legal Affairs Audit Employees 409 CEO Regional Units Technical HSSE Revenues (2015) 292 $Mn Advisor Business Model Regulatory & HR & Admin. Financial Planning & Customer Distribution Electricity Gas Planning Affairs Control Asset Mgmt. Affairs O&M Generation / Corporate Compensatio Network Up-stream Finance Projects O&M Planning n & Benefits Planning Transmission / Mid-stream Regulatory Learning & Asset Procurement Technical IT Compliance Development strategy Contracts Services Downstream P Talent Performance Control Distribution Management Reporting Center Design Al.Buraimi Organizational Model Admin. No. of No. direct Distribution Affairs- GIS DH departments reports to CEO Muscat Admin. Distribution Business 2 2 Affairs-NB NB Units Shared Admin. 8 8 Affairs-Ibrl Services HR Total 10 10 Operations Section Unbundling Status Employee Relation Communicati on & Fully Legal Branding Unbundling Source: MJEC Annual Report 2015, Strategy& analysis Strategy& | PwC Prepared for The World Bank 53 Al Ghubrah Power & Desalination Company Regional benchmark Board of Directors Legal Advisor Headquarter Al Azaiba (Oman) Business Units Regulatory Footprint National Support Services CEO Compliance Employees 224 Regional Units HSE HSSE Revenues (2015) 105 $Mn Compliance Risk Management Business Model Security HR Section Electricity Gas Generation / IT HR & Support Finance Accounts Up-stream P Services Department Mgmt. Report & Admin. Budget Transmission / Mid-stream Communication Downstream Technical Plant Organizational Model Support Dept. Operations No. of No. direct Asset Projects/Deco Procurement Maintenance Operations departments reports to CEO Inventory Management mmissioning Section Dept. Dept. Business 2 1 Plant Mechanical Operations Units Planning Projects Consumable Section Section Support 7 4 Services Decommissio Plant Spare Electrical Chemical Quality ning Procurement Section Section Total 9 5 Admin. Procurement I&C section Performance Unbundling Status & Proc. Office Service & Corrosion Section Fully Legal Unbundling Source: Al Ghubrah Power & Desalination Annual Report 2015, Strategy& analysis Strategy& | PwC Prepared for The World Bank 54