REVISED FINAL REPORT November 2017 Task C: GECOL Institutional dev. and perform. improvement Deliverable 5: Final 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 C. 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. We have agreed with you that the report will be provided by you to GECOL for their consideration. 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This is a draft prepared for discussion purposes only and Please see should not be relied upon; the contents may still be subject to www.pwc.com/structure for amendment or withdrawal and our final conclusions and further details findings will be set out in our final deliverable planned for December 2017 Strategy& | PwC Prepared for The World Bank 1 The present document is the final deliverable of the Task C Task C project approach and current report focus 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 Present report 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 Task C focuses on GECOL (differently than Task A which addresses the Libyan institutions) Task A and C perimeters and timeframes Wave I Wave II Timeframe Past Short-term Medium / long-term 3 years 3+ years Today 2020/2021 Stakeholders Libyan institutions Legislation Task A perimeter Policy making Regulation Generation GECOL Transmission Task C perimeter Distribution & Supply See Task C deliverables for analysis of GECOL performance and action plan Source: Strategy& analysis Strategy& | PwC Prepared for The World Bank 3 Task C report is organized in 6 sections, each one related to one deliverable of the project Structure of the present report Task C final report structure Task C deliverables Chapters Content Strategy for institutional 2.1 development of GECOL Institutional development Summary of findings 2.2 Process mapping Recommendations and Processes restructuring action plan Manpower / Organizational 2.3 rationalization review Manpower 2.4 ERP system review IT Improving GECOL technical 3 performance Technical performance Financial performance 4.1 assessment Financial performance Customer service financial 4.2 performance Strategy& | PwC Prepared for The World Bank 4 The report focus on GECOL development & performance improvement with a 6yrs horizon (in alignment with Task A) Task C perimeter of analysis Electricity sector reform (Task A) Current electricity sector structure Wave I Wave II Jan 2018 Jan 2024 Current GECOL GECOL development & perf. improvement operating model (Task C) 6 years Areas / focus of the restructuring Generation Institutional IT development GECOL Technical Transmission Processes performance Financial Manpower performance Distribution & Supply Task A Perimeter Task C Perimeter Source: Strategy& analysis Strategy& | PwC Prepared for The World Bank 5 The Task C started with the review of the previous strategic objectives set by GECOL in its 2010-2015 strategic plan… GECOL’s 2010 Six Part Strategy – Objectives 1 2 3 4 5 6 Improve Reduce Build and Strengthen Influence Redeploy system commercial retain information sector resources performance losses capabilities resources policies OBJECTIVES • Generation • Commercial • Business • Compensation • Database • Regulatory expansion to Loss Processes and Benefits Improvement Strategy meet demand Assessment Reengineering Redesign • Data Handling Development • Generation • Streamlining • New Org. • Performance Processes (e.g., sector assets Customer Structure Roll Appraisal Implementation vision, energy improvement Processes Out System policy, • ERP System Redesign electricity theft • Transmission • Customer • Manpower Activation legal system Service Cultural Rebalancing • Career • GIS Rollout strengthening framework) Shift • Outsourcing Development • e-Management Plan Design • Outreach and • Distribution • Commercial Implementation Communication system Loss • Training strengthening Awareness Programs • Policy Redesign Compliance • Infrastructure • Demand-side and Mitigation management Upgrade • Collection Enforcement Source: GECOL Strategic Plan Update (2009) Strategy& | PwC Prepared for The World Bank 6 …and analyzed GECOL progress against such objectives (taking into account the adverse external conditions) GECOL’s 2010 Six Part Strategy – Targets 1 2 3 4 5 6 Improve Reduce Build and Strengthen Influence Redeploy system commercial retain information sector resources performance losses capabilities resources policies TARGETS • 18% Reserve • 9% commercial • 1.0 output • 100% career • 100% database • 100% margin losses productivity development coverage documented implementation perspectives on • No delay of • 7000 • 100% business • 100% GIS sector policy maintenance of connection process • 100% adequacy implementation issues generation backlog implementation training assets • 100% • No financial • 100% • 100% transaction impact of • 33% thermal outsourcing performance accuracy government efficiency implementation appraisal decrees within implementation • 100% data strategic plan • 2.8% • 100% job accuracy period transmission description losses development • 5.2% distribution losses Source: GECOL Strategic Plan Update (2009) Strategy& | PwC Prepared for The World Bank 7 The review confirmed that several objectives remain well behind completion High-level assessment of results (2010-2015) 1 2 3 4 5 6 Improve Reduce Build and Strengthen Influence Redeploy system commercial retain information sector resources performance losses capabilities resources policies Status Limited No No No progress progress progress N/A N/A progress Description • Capacity expan- • Commercial • GECOL • … • … • No documented sion was only losses have productivity per perspectives on partially fulfilled registered a FTE did not sector policy • Reserve margin dramatic improve, thus issues made has worsened, increase, failing to meet available while efficiency growing to ~60% the +40% target • Gov. decrees increased more instead of increase carried negative than expected decrasing to financial impacts • T&D losses only strategic plan on GECOL slightly improved 9% target Root-causes • Political turmoil • Political turmoil • FTE increase • … • … • Gov. decrees • Decreasing • Payment impacted CAPEX support exemption GECOL ability • Unclear GECOL • Decreasing to recover costs guidance service quality and control Source: GECOL Strategic Plan Update (2009) Strategy& | PwC Prepared for The World Bank 8 Task C has thus began with the refresh / up-date of the strategic priorities of GECOL… Need for new strategic priorities definition Analysis of progress against 2010-2015 strategic objectives Focus in next slide Need for new New strategic strategic priorities priorities & targets Baseline and + issues identification Sources: Strategy& analysis Strategy& | PwC Prepared for The World Bank 9 …and proposed six new strategic priorities, mostly in line with the objectives previously set by GECOL for 2011-2015 GECOL’s strategic priorities Task C focus / areas analyzed New strategic Old strategic objectives priorities identified (2011-2015) Institutional Ensure performance development accountability Processes Redeploy Processes improvement resources Build and Manpower Reskill and redeploy retain resources capabilities Area’s issues Strengthen IT Add value to IT information resources resources Technical Improve system Improve system performance performance performance Financial Improve financial Reduce performance sustainability commercial losses Sources: Strategy& analysis Strategy& | PwC Prepared for The World Bank 10 Task C strategic priorities were then translated into a series of measures where GECOL should focus in the next 6 years… GECOL’s new strategic priorities and measures New strategic Ensure Reskill and Processes Add value to IT Improve system Improve financial priorities performance improvement redeploy resources performance sustainability accountability resources • Reorganization • Pilot revised • HR strategy • Fix IT • Increase plant • Set cost • Accounting business development resources availability & reflective tariff unbundling processes • Manpower • Upgrade IT utilization • Metering roll • Functional • Roll-out new rebalancing and system • Complete out unbundling processes workforce • Add value to IT ongoing • Address • Validate current planning structure capacity electricity theft state • Corporate additions • Fight • Design target reskilling • Launch new insolvency MEASURES capacity state processes • Performance • Improve credit management expansion • Prioritize and collection projects mitigate risk • Succession • Control • Roll-out planning operating processes and expenses manage risk • Transition to operations Sources: Strategy& analysis Strategy& | PwC Prepared for The World Bank 11 …and for each measure, a series of related milestones to be achieved were also derived GECOL’s new strategic priorities and milestones Ensure Reskill and Processes Add value to IT Improve system Improve financial performance redeploy improvement resources performance sustainability accountability resources • Core Bus • Pilot processes • HR&O • Data center • Complete • Tariff covering separated implemented department repaired and generation, part of P&L • ICT, AFC, HR under MD upgraded transmission, costs and fuel • HR strategy in and E&P • New processes control, MV & subsidies place corporate core designed • ERP upgraded Distribution • Critical resource established map targets • Theft area map • Separated • Implementation • Manpower • New IT annual plan ready rebalancing plan governance • Customers accounts • Workforce database submitted planning in place MILESTONES • Independent • Capabilities skills • SMS/e-mail functional map billing in • Reskilling managers operation program appointed • GECOL Academy • GECOL’s • Appraisal system mobile app in place running • Succession See separate planning in place chapters for detailed milestones Sources: Strategy& analysis Strategy& | PwC Prepared for The World Bank 12 ILLUSTRATIVE The next chapters will summarize the issues identified for each focus area and the related recommended action plan Approach of the following chapters Focus areas analyzed Summary of findings Recommendations and action plan Institutional development Wave I Wave II Strategic Processes ! Area’s issues Action plan priorities Manpower Recommendations and action plan | Ensure performance accountability 6 years IT Activities Year n n+1 n+2 … Owner Plan a concentrated 3 year maintenance Resolve Generation BU and overhauling program backlog of Measures Carry out 7 overhauls of GT units, 3 overdue overhauls of ST units, 6 maintenance, Technical maintenance repair and replacement activities every 90% of suspended Generation BU year performance units back in service Plan Execute a timely maintenance program for maintenance running units (expect 6 GT units per year) Generation BU of running No new buildup of Financial units overdue maintenance performance Milestones Source: Strategy& analysis Strategy& | PwC Prepared for The World Bank 13 Institutional development Processes Manpower IT Technical performance Financial performance Back-up – Review of 2011-2015 GECOL 6 part strategy Strategy& | PwC Prepared for The World Bank 14 Findings Task C: Deliverable II (a) – Strategy for institutional development of GECOL In terms of institutional development, the report analyzed the current GECOL’s organizational structure… GECOL organization2 Up-date 12/6/2017 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 15 Findings Task C: Deliverable II (a) – Strategy for institutional development of GECOL ... Assessing its operating model along a number of criteria Criteria for the assessment of GECOL’s operating model I Clearly defined • Clear separation between BU, 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.) Source: Strategy& analysis Strategy& | PwC Prepared for The World Bank 16 Findings Task C: Deliverable II (a) – Strategy for institutional development of GECOL Several issues which currently limit GECOL’s efficiency and effectiveness were identified 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 ! ! ! ! ! ! Source: Strategy& analysis ! Target organizational dimension negatively impacted by related identified issue Strategy& | PwC Prepared for The World Bank 17 Recommendations and action plan | Ensure performance accountability Task C recommended that GECOL upgrades its operating model through a full re-organization Measures and activities Measures Activities Year 2021 2022 2018 2019 2020 2021 2023 2022 2023 Owner Separate Generation and Transmission into different BUs MD & Head of BUs Create new core ICT function (managed by CIO) reporting Core BUs MD & Head of ICT directly to MD separated Move IT away from network into ICT corporate core dept. with CIO & MD direct report to MD ICT corporate core established Move Communications unit under Transmission BU CIO, MD & Transmission head Group Generation, Transmission, Distribution MD & Head of BUs projects in an integrated E&P function Move Projects Planning & Studies to E&P function MD & Head of E&P Move Projects Accounting away from Contracts and Dev. MD & Head of E&P, Accounts within E&P function E&P corporate core Head of Contracts established Reorganizati Move Tenders & Contracts from Contracts & Dev. to Procurement MD & Head of on Contracts Create AFC function managed by CFO reporting to MD MD & CFO Move related units1 in the newly created AFC core function, MD & CFO led by a new CFO AFC corporate core established Consolidate in HR&O department (under MD) all the MD & Head of HR HR-related core functions leaving non-core HR activities HR&O corporate core within Support Services established Separate the E&P division by Head of E&P dividing projects within each operational SBU Assign Projects Accounting to SBUs Head of E&P Create a new institutional relations unit within BoD BoD Chairman Create dedicated support services units for each BU if Option 1 is MD & Head of support selected BUs heads 1) Units to be migrated to AFC are: Performance Monitoring general dept. (from BoD), core activities of Financial Affairs (e.g. Financial Planning and Ledger & Fin. reports) and L/C Financing and Customs Clearance from Contracts and Development accounts; Source: Strategy& analysis Milestones Strategy& | PwC Prepared for The World Bank 18 Recommendations and action plan | Ensure performance accountability Task C: Deliverable II (a) – Strategy for institutional development of GECOL After separating Generation and Transmission GECOL shall be organized in 3 SBUs, with full performance accountability To be GECOL organization/management structure 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 Strategic Business Units • Sales and customer relations Sales • Meter reading (for supply only) • Customer service • Billing and collection Sources: GECOL (company organization chart 2015), Strategy& analysis Strategy& | PwC Prepared for The World Bank 19 Recommendations and action plan | Ensure performance accountability Task C: Deliverable II (a) – Strategy for institutional development of GECOL Moving IT outside the network BU, GECOL will create a core ICT function headed by the CIO, reporting directly to the MD To be GECOL organization/management structure 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 20 Recommendations and action plan | Ensure performance accountability Task C: Deliverable II (a) – Strategy for institutional development of GECOL Grouping projects into an integrated E&P center of excellence will speed-up projects implementation To be GECOL organization/management structure 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 21 Recommendations and action plan | Ensure performance accountability Task C: Deliverable II (a) – Strategy for institutional development of GECOL A full consolidation of the AFC function headed by a CFO will increase accountability on GECOL’s financial viability To be GECOL organization/management structure 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 22 Recommendations and action plan | Ensure performance accountability Task C: Deliverable II (a) – Strategy for institutional development of GECOL The Contracts and Development Accounts department will be split across different functions Contracts and Development Accounts split 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 23 Recommendations and action plan | Ensure performance accountability Task C: Deliverable II (a) – Strategy for institutional development of GECOL BoD will acquire a leaner and more effective structure, and be equipped with a Regulatory & Institutional relations unit To be direct reports to BoD Example of typical activities BoD Audit • Conduct active auditing on BU (financial, technical, administrative, etc.) (& compliance) • Define policies and procedures NEW Regulatory & Inst. Media BoD Affairs Internal control 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 • Formulate strategic objectives Documentation Strategic Comp. Records inspection Leadership • Review and approve corporate strategy Secretarial Internal and values, and ensure alignment Media Office Auditing Customer • Develop corporate image that fits with Advertising Identity services inspect. 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 24 Recommendations and action plan | Ensure performance accountability Task C: Deliverable II (a) – Strategy for institutional development of GECOL A new HR&O function directly reporting to MD will increase relevance of this function in GECOL’s org. structure To be GECOL organization/management structure 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 25 Recommendations and action plan | Ensure performance accountability Task C: Deliverable II (a) – Strategy for institutional development of GECOL The first reorganization will lead to corporate core AFC, ICT, HR&O and E&P departments, and clearly distinct BUs… GECOL to be organization (2021) Board of 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 26 Recommendations and action plan | Ensure performance accountability Task C: Deliverable II (a) – Strategy for institutional development of GECOL … However, in the long run higher, synergies might be realized if SBUs have full responsibility over projects To be GECOL organization/management structure 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 27 Recommendations and action plan | Ensure performance accountability After the first reorganization GECOL will decide between embedded or shared support services Reorganization options Organizational structure 2021 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 28 Recommendations and action plan | Ensure performance accountability If the embedded support services option is selected the organization will be more compact with more powerful SBUs GECOL embedded support services organization (2024) Option 1 BoD 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 29 Recommendations and action plan | Ensure performance accountability 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) Option 2 BoD 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 30 Recommendations and action plan | Ensure performance accountability Reorganization shall be coupled with a structured change management program… Change program phases 1 2 3 Define the change Drive the change Measure the change Leadership Education Strategy Alignment & Training Business Org & Talent Communications Alignment People Operating Culture Model Stakeholder Behavior Engagement Adoption Leading Lagging Focus in next slide Tailored program of interventions Clarity on what needs to change to Mechanisms to monitor progress ad drawing on formal and informal deliver the key business goals course correct as needed approaches Source: Strategy& Analysis Strategy& | PwC Prepared for The World Bank 31 Recommendations and action plan | Ensure performance accountability …which will drive change through 6 levers to achieve rational compliance and emotional commitment Drive the change measures • Align leaders on future vision and Leadership Education convey the case for change • Design and deploy training related • Enable leaders to actively and Alignment & Training to acquiring new skills and capabilities, learning new processes, visibly support and role-model policies, systems, etc. change • Build awareness and • Leverage existing culture; adjust understanding of the case for Org & Talent job roles, career paths, and behavior change, what it means and what Communications expectations; and link to individual people need to do differently Alignment performance management • Communicate behaviors changes • Incentivize and reinforce desired and how they should be exhibited behaviours formally and informally • Engage and energize stakeholders directly and indirectly; top-down • Identify critical behaviours that and bottom-up, informally and Stakeholder Behavior must be exhibited to create new formally Engagement Adoption mind-sets and increase adoption • Leverage change agents, • Determine performance outcomes exemplars, trusted nodes and key impacted by the behavior changes influencers Source: Strategy& Analysis Strategy& | PwC Prepared for The World Bank 32 Recommendations and action plan | Ensure performance accountability To ensure performance accountability, GECOL shall also pursue its accounting and functional unbundling by 2023 Measures and activities Measures Activities Year 2018 2019 2020 2021 2021 2022 2023 Owner Establish clear accounting system to allocate directly CFO and indirectly related BS and IS accounts to value chain activities Accounting Draft separated annual accounts (IS and BS) for each BU AFC function unbundling Submit separated annual accounts (IS and BS) for each AFC function value chain activity to the regulatory agency Sep. annual accounts submitted Select and appoint independent managers for each SBU MD & BoD Independent managers Functional appointed unbundling Provide SBUs managers with full authority over financial MD & BoD resources personnel Milestones 1) Units to be migrated to AFC are: Performance Monitoring general dept. (from BoD), core activities of Financial Affairs (e.g. Financial Planning and Ledger & Fin. reports) and L/C Financing and Customs Clearance from Contracts and Development accounts; Source: Strategy& analysis Strategy& | PwC Prepared for The World Bank 33 Institutional development Processes Manpower IT Technical performance Financial performance Back-up – Review of 2011-2015 GECOL 6 part strategy Strategy& | PwC Prepared for The World Bank 34 Findings Task C: Deliverable II (b) – Process mapping report Task C analyzed the 5 main business processes which were directly linked to the most pressing issues affecting GECOL Processes analysis overview Task A- Increasing costs Unbalanced tariff framework Electricity sector issues’ root Commercial losses Poor operating performance causes and poor collection 1 2 3 4 5 Analyzed CAPEX Invoicing Maintenance OPEX budget development Collection processes / billing budget Contracts and Financial Process Transmission development affairs Customers service department owner department accounts department department Source: Task A-Final report; PWC-Process mapping & identification gaps of staff skills and performance; Strategy& analysis Strategy& | PwC Prepared for The World Bank 35 Findings | 1 Maintenance Task C: Deliverable II (b) – Process mapping report The maintenance process was mapped within with the Transmission General department Transmission general department structure (2017) Managing Director Assistant Business Unit Department Network operations Focused on Sub-department maintenance activities Transmission General Assistant to the GM Darna extra high voltage Department maintenance sub- department Administrative Affairs Programming sub-department maintenance department Maintenance of Eastern Supplies sub-department Lines department Maintenance of Western Transmission Networks National Training & department Administration Maintenance of Eastern Transmission Networks Mechanization and department development department Maintenance of Western Lines department Technical affairs Maintenance of Central department transmission networks department Source: Latest up-date of GECOL company organization chart 2015 (June 2017); PWC-Process mapping & identification gaps of staff skills and performance Strategy& | PwC Prepared for The World Bank 36 Findings | 1 Maintenance Task C: Deliverable II (b) – Process mapping report GECOL currently uses three different types of maintenance approaches to support the network Overview of GECOL’s maintenance approaches Predictive – Corrective (breakdown) Preventive maintenance Condition Based maintenance maintenance • Regularly performed on an • Performed to predict when Performed when equipment failure equipment to check the likelihood equipment failure might occur occurs of its failing • Monitors the actual condition of Definition • Performed while the equipment is the asset to decide if still working, so that it does not maintenance needs to be done break unexpectedly • For all substations equipment • For all substations equipment • All failed equipment Application • For high voltage lines • For high voltage lines • For substations indoor feeders criteria used • For lines remote protection by GECOL • For load shedding scheduling Scheduled periodically (e.g. daily, Frequency Triggered by asset/equipment weekly, monthly, semi-annually, Triggered by asset/equipment failure condition annually, etc.) Source: PWC-Process mapping & identification gaps of staff skills and performance Strategy& | PwC Prepared for The World Bank 37 Findings | 1 Maintenance Task C: Deliverable II (b) – Process mapping report Maintenance activities are initiated by the maintenance programming dept. which prepares the yearly plan Maintenance plan sections 1. Substations preventive and predictive 2. Indoor feeders preventive maintenance maintenance  It includes preventive plan for the indoor  It includes predictive and preventive plan feeders in 80 substations in 2 regions for 97 substations in 12 areas in the year (Eastern & Western) in the year  It sets the maintenance period (starting  It sets the maintenance period (starting date and the end date) for each substation Substations date and the end date) for each substation Indoor feeders preventive preventive and predictive maintenance maintenance 5. Transmission lines preventive 3. Lines remote protection schedule and predictive maintenance  It includes preventive plan for 108  It includes predictive and high voltage lines in 2 regions preventive plan for 175 line (220 Transmission Lines Remote (Eastern & Western) in the year lines preventive & 400 kV) in 2 regions (Eastern & and predictive Maintenance protection  It sets the maintenance period Western) in the year testing  It includes cleaning plan for 154 maintenance Plan (starting date and the end date) for each substation lines (220 kV) in 2 regions (Eastern & Western) in the year  It sets the maintenance period (starting date and the end date) Load for each line 4. Load shedding testing schedule shedding schedule  It includes preventive plan for 63 substations in 12 areas in the 4 quarters  It sets the maintenance period (starting date and the end date) for each substation Source: Transmission department-2017 Maintenance plan; PWC-Process mapping & identification gaps of staff skills and performance Strategy& | PwC Prepared for The World Bank 38 Findings | 1 Maintenance Task C: Deliverable II (b) – Process mapping report Lack of costing, WO prioritization and ERP use have been identified as the most compelling issues of O&M practices Benchmark of existing vs. best practice workflow GECOL maintenance workflow process Maintenance Schedule WO Allocate WO Execute Feedback & Plan for next period to the teams WO Reporting Lack of: Lack of costing & • Costing reporting to finance Unscheduled • WO prioritization department through WO • ERP use ERP Best practices maintenance workflow process Schedule Feedback, Maintenance Calculate & Prioritize Allocate WO Execute WO costing & Plan Authorize cost WO to the teams WO for next period reporting Allocate WO Unscheduled to local WO contractors Continuous Improvement Carried out through ERP Source: PWC-Process mapping & identification gaps of staff skills and performance; Strategy& analysis Strategy& | PwC Prepared for The World Bank 39 Findings | 2 OPEX budgeting Task C: Deliverable II (b) – Process mapping report The OPEX budgeting process was mapped within the financial affairs department Financial affairs department structure (2017) Managing Assistant Director Department Financial affairs general Sub-department department Assistant to GM for Assistant to GM for Regional financial Assets management financial planning regions accounting departments General ledger & financial reporting Accounting department Material accounting sub- Materials accounting department Financial planning department Fuel accounting sub- department Budget sub-department Administrative affairs Financial follow up sub- department Strategic finance sub- department Key responsibility: Budget preparation Finance sub-department Risk management sub- department Costing sub-department Source: Latest up-date of GECOL company organization chart 2015 (June 2017); PWC-Process mapping & identification gaps of staff skills and performance Strategy& | PwC Prepared for The World Bank 40 Findings | 2 OPEX budgeting Task C: Deliverable II (b) – Process mapping report The OPEX budget today is split in 7 categories dealing with expenses related to operations and small investments OPEX budget categories OPEX budget Categories I II III IV V VI Financial VII Material & expenses & Small Salaries Fuel Maintenance Other services spare parts power investments1 purchases • Chemicals • Spare parts for generation/ transmission/ • Buildings • Travel • Customs, • Basic Salaries distribution maintenance expenses maritime • Cars and • Benefits • Heavy/Light stations services • Lodging expenses vehicles • Overtime fuel • Spare parts • Vehicles and allowances • Bank • IT equipment • Social • Natural gas for vehicles cars • Ports and expenses • Trainings security • Lubricants and cars maintenance airport • Power • Spare parts services expenses purchase for street lighting • Fuel and oil for vehicles and cars 1) Small capital expenditures that require investment within the annual budgeting period Source: PWC-Process mapping & identification gaps of staff skills and performance; Strategy& analysis Strategy& | PwC Prepared for The World Bank 41 Findings | 2 OPEX budgeting Task C: Deliverable II (b) – Process mapping report Key issues identified in the OPEX budget process are items ranking, target setting and the limited role of the committee As-is GECOL opex budgeting process workflow Limited role of the Budget Oversee the progress in the process but have no say in the budget approval budget committee in committee the process Preparation phase Completion phase Budget approval before No: send back for receiving modifications Government General Review/ confirmation Assembly approve • Lack of prioritization Yes • Missing targets & Yes operational Finalize allocation Review/ MD efficiency factors & determine approve reserves Financial Requests Consolidates and Develops Amend Issue final Finalize Planning budget to estimates GECOL’s draft estimated budget budget Department Cost centers salaries OPEX budget budget Estimates budget No: Send back Allocate budget requirements for modifications End Cost centers across (excl. salaries) departments Lengthy and manual process The opex budget is compiled using Excel and does not use GECOL ERP system (using excel and not ERP) Other Organizational coordination The finance departments in each area increased from 7 in 2010 to 15 in 2017 creating coordination complexity complexity identified issues Challenging budget follow up Budgets are separated for the areas making follow up challenging and resulting in diseconomies of scale and increase in costs Lack of transparency & GECOL budgeting process lacks transparency between the different departments and accountability accountability of budgeting execution Source: PWC-Process mapping & identification gaps of staff skills and performance; Strategy& analysis Strategy& | PwC Prepared for The World Bank 42 Findings | 3 CAPEX budgeting Task C: Deliverable II (b) – Process mapping report The CAPEX budgeting process was mapped with the Contracts & Development and Planning Studies departments Contracts and development and Planning studies department structure (2017) Managing Assistant Director Department Sub-department Contracts and Planning & Studies Development Accounts Assistant to GM for Assistant to GM for administration administration Department is directly Assistant to GM for Assistant to GM for linked (responds) to the information and development Government archive Strategic planning LC’s and finance Economical research and studies Customs Standards and new technology Projects Accounting Technical research and studies Contracts Technical planning Source: PWC-Process mapping & identification gaps of staff skills and performance; Strategy& analysis Strategy& | PwC Prepared for The World Bank 43 Findings | 3 Capex budgeting Task C: Deliverable II (b) – Process mapping report The issues related to the CAPEX process is the limited control over sums and priorities of GECOL As-is capex budgeting workflow process Government PM/CBL Review Yes Yes & Budget accept Ministry of Template Planning No: send back for modifications Review Issue Final MD & CAPEX Budget accept Contracts Prepare draft No: send back Distribute Distribute Amend draft & dev. Budget Template CAPEX Budget CAPEX budget for modifications Final CAPEX GECOL accounts against template Budget Planning Provide next year budget Provide next year revised and requirements of planned budget requirements of End studies projects from Master plan planned projects Provide status and next Projects year budget of on-going (G,T & D) projects Limited power over setting priorities in the budget allocation process Identified No control over Development Projects Budget from GECOL issues Difficulties in budget estimation due to long lead time of infrastructure projects Delays in budget finalization Source: PWC-Process mapping & identification gaps of staff skills and performance; Strategy& analysis Strategy& | PwC Prepared for The World Bank 44 Findings | 4 5 Invoicing and collection Task C: Deliverable II (b) – Process mapping report The invoicing and collection processes were mapped within the Consumers services department Consumers services (2017) Assistant Managing Business Unit Director Department Sub-department Business operations Tripoli consumer service Western consumer service Follow up on bank Consumer services Central instalments and salaries consumer service Area consumer Benghazi consumer Debt recovery Commercial Affairs services service Southern consumer Commercial Affairs service Government & Green Mountain Companies ACCs consumer service Gharyan consumer service Jafara Commercial Losses consumer service Tarhuna consumer service Energy & Zliten consumer service Measurement Mergab consumer service Tobruk Consumer Services consumer service Systems West Coast consumer service Mountain consumer service Source: Latest up-date of GECOL company organization chart 2015 (June 2017); PWC-Process mapping & identification gaps of staff skills and performance Strategy& | PwC Prepared for The World Bank 45 Findings | 4 Invoicing Task C: Deliverable II (b) – Process mapping report GECOL meter-to-invoice is today highly dependent on manual work of meter readers As-is meter-to-invoice process Process Process step/activity Description • Metering department sets a route plan for all meter readers defining the areas Route plan that they need to visit and the time plan • The plan is installed on a Hand Held Unit (HHU) • The meter readers will conduct a visit to all meters assigned to them and will get the reading of the meters on the handheld system Meter reading and • GECOL doesn’t estimate the consumption of any missing readings inspection • Meter readers will also inspect the meters and report back whether any visible Meter manipulation to the meter was made reading Process • Once back in the headquarters (or branch), customer information will be Export data uploaded to the billing system or the local database by the debt recovery division • Billing department will prepare the bill and do bill verification (applicable tariff, unreasonable consumption, etc.) Generate invoice • Generate bill • Update AR • Meter readers will visit again the customers to deliver the invoice, also it can be Invoice delivery delivered by email and soon by SMS Invoicing Process • Quarterly for residential customers Time frame • Monthly for others ( Commercial, Industrial, Agricultural) Source: PWC-Process mapping & identification gaps of staff skills and performance; Strategy& analysis Strategy& | PwC Prepared for The World Bank 46 Findings | 4 Invoicing Task C: Deliverable II (b) – Process mapping report Manual readings, no estimation of consumption, duplication of visits are the key issues in this process As-is meter-to-invoice process Multi period invoicing: Send SMS to Issue invoices customer invoicing is performed every Consumer Set route plan for all prepare the bill and four months for residential do bill verification Or services/ readers and upload customers customer file on the (applicable tariff, commercial unreasonable reader HHU1 affairs consumption, etc.) Manual and missing readings Upload meter Visit the customer Customer reading Route Distribute Meter premises Yes Duplication meter is into the HHU and complet invoices to Reader as specified in the of number accessible inspect meter ed customers reader route of visits to condition the customer No No Yes No estimation of Consumer consumption if meter reading is Upload customer services/ information from the not feasible debt HHU to the billing End recovery system or the local database division Other issues Lack of installation Meters are not installed to all GECOL’s customers, hence GECOL does not issue invoices to customers identified of meters not having meters not directly • The system is not fully automated across all regions and different billing systems exist across regions related to Not fully automated • Lack of integration between local databases and ERP: revenues are collected manually and the the process billing system auditing employees record it in the accounting system (costly and time consuming exercise) 1) Hand Held Unit (HHU) Source: PWC-Process mapping & identification gaps of staff skills and performance; Strategy& analysis Strategy& | PwC Prepared for The World Bank 47 Findings | 5 Collection Task C: Deliverable II (b) – Process mapping report Customers can settle their position in several ways, each one corresponding to a different collection process As-is customers settling facilities Process Process step/activity Description Processes flowcharts Customers pay the invoice in cash in GECOL’s Cash branches Customers pay the invoice by checks in GECOL Bank Checks branches Invoice amount is deducted directly from customer Preauthorize bank Invoices bank account based on a prior arrangement collection methods Preauthorize Invoices of GECOL employees are deducted from salary their salaries (GECOL employee) Customers pay the invoice through LYD prepaid LYD pre-paid card card Institutions invoices are settled (netted) through the Netting general budget Source: PWC-Process mapping & identification gaps of staff skills and performance; Strategy& analysis Strategy& | PwC Prepared for The World Bank 48 Findings | 5 Collection Task C: Deliverable II (b) – Process mapping report Yet, if customers do not settle voluntarily their positions, no penalties or disconnection policy are in place As-is collection process Consumer services/ Register payment on debt GECOL billing End recovery system division GECOL Payment by cash or cash box bank check No penalties for delayed payments Yes Receive the Settle Lack of Customer invoice position End No disconnection policy Lack of incentives for settling positions Source: PWC-Process mapping & identification gaps of staff skills and performance; Strategy& analysis Strategy& | PwC Prepared for The World Bank 49 Findings Task C: Deliverable II (b) – Process mapping report Overall, we identified several issues/areas of intervention on the key processes identified Organization IT related Identified issues related 1 2 3 4 5 OPEX CAPEX Invoicing/ Processes Maintenance budgeting budgeting billing Collection Lack of prioritization Not fully automated Lack of ranking/ among OPEX items Limited power over billing system & no prioritization to setting priorities in No penalties for integration across determine order of Organizational the budget allocation delayed payments local billing databases maintenance coordination process and ERP complexity Missing targets & Lack of meters operational No control over Missing cost and Development installation Lack of efficiency factors budgeting info Projects Budget from disconnection policy Lengthy and manual GECOL Multi-period process invoicing (using excel not ERP) Issues Challenging budget Difficulties in budget Underutilized ERP follow up estimation due to Manual and missing Lack of incentives for functionalities long lead time of meters readings settling positions Limited role of the infrastructure projects budget committee in No estimation of the process consumption if meter Budget approval reading is not feasible before receiving Gov. Delays in budget confirmation finalization Duplication of number of visits to the customer (for meter reading and for collection) Lack of transparency and accountability Source: PWC-Process mapping & identification gaps of staff skills and performance; Strategy& analysis Strategy& | PwC Prepared for The World Bank 50 Recommendations and action plan | Processes improvement Task C: Deliverable II (b) – Process mapping report We designed the TO BE maintenance process, proposing several solutions to address the issues highlighted Proposed solutions 1 2 3 4 5 OPEX CAPEX Invoicing/ Processes Maintenance budgeting budgeting billing Collection To be processes • Once received both scheduled and unscheduled work orders, critically rank them according to the asset failure consequence on GECOL • Include maintenance cost & budget information in P maintenance report • Request approval on budget from finance Proposed department before sending wo to maintenance team solutions • Use ERP to: – Issue PM schedule (list of work orders based on maintenance plan) – Issue scheduled work orders – Compute & monitor costs • Explore the possibility of working with local contractors to increase efficiency of maintenance Source: PWC-Process mapping & identification gaps of staff skills and performance; Strategy& analysis Strategy& | PwC Prepared for The World Bank 51 Recommendations and action plan | Processes improvement Task C: Deliverable II (b) – Process mapping report The TO BE OPEX process introduce ranking, efficiency targets, ERP us and a wider role of the budget committee Proposed solutions 1 2 3 4 5 OPEX CAPEX Invoicing/ Processes Maintenance budgeting budgeting billing Collection • Set up prioritization plan to rank different OPEX items To be processes and separate what must be done now and what can be done later • Set targets and efficiency factors for OPEX expenditures • Increase role of budget committee, which together with P MD shall: – Set prioritization policy and targets Proposed – Enforce efficiency factors solutions • Use ERP to: – Gather data and prepare requests – Estimate electricity and water production, fuel and other requirements (Generation dept.) – Estimate Distribution and Consumer services requirements – Estimate manpower changes and other requirements • Discuss with the Government before finalization Source: PWC-Process mapping & identification gaps of staff skills and performance; Strategy& analysis Strategy& | PwC Prepared for The World Bank 52 Recommendations and action plan | Processes improvement Task C: Deliverable II (b) – Process mapping report We recommended to transform the CAPEX budget into a 3-5 years plan with revisions carried out on an annual basis Proposed solutions 1 2 3 4 5 OPEX CAPEX Invoicing/ Processes Maintenance budgeting budgeting billing Collection To be processes • Transform the CAPEX budget into a 3-5 year plan P approved and committed by the Government with a revision carried out on an annual basis Proposed • Include risk identification/assessment and monitoring to solutions ensure risk mitigation • Make risk identification an iterative process involving the project team and other key stakeholders (i.e. MD/MP/CB) Source: PWC-Process mapping & identification gaps of staff skills and performance; Strategy& analysis Strategy& | PwC Prepared for The World Bank 53 Recommendations and action plan | Processes improvement Task C: Deliverable II (b) – Process mapping report Invoicing and collection shall include penalties for late positions settling and a new disconnection policy Proposed solutions 1 2 3 4 5 OPEX CAPEX Invoicing/ Processes Maintenance budgeting budgeting billing Collection To be processes • Collect and maintain customer master file to include all GECOL customers connected to the grid • Estimate reading based on set parameters when customer meter is not accessible • Introduce penalties for late positions settling P • Introduce disconnection policy against non-paying customers based on specific criteria (e.g. number of unpaid invoices) Proposed • Introduce a wider array of payment channels to make solutions payment more agile for customers, also exploring the possibility of engaging third party merchant processors • Work closely with the Government to advertise and make people aware of changes in collection policies including fees, timelines and disconnection • Send reminders to non paying customers and consequently disconnect electricity in line with the disconnection policy in force Source: PWC-Process mapping & identification gaps of staff skills and performance; Strategy& analysis Strategy& | PwC Prepared for The World Bank 54 Recommendations and action plan | Processes improvement GECOL shall first test the implementation of the 5 processes analyzed at the beginning of 2018 Measures and activities Measures Activities Year 2018 2019 2020 2021 2022 2023 Owner Test solutions identified in the design phase for the 5 Department in charge analyzed processes of the process Pilot revised Assess improvement against previous performance Department in charge business and if any identify areas of improvement of the process processes Finalize solutions based on results of the pilot test Department in charge of the process Roll-out new Roll-out processes Department in charge processes Pilot processes of the process implemented Milestones Source: PWC-Process mapping & identification gaps of staff skills and performance; Strategy& analysis Strategy& | PwC Prepared for The World Bank 55 Recommendations and action plan | Processes improvement Task C: Deliverable II (b) – Process mapping report GECOL should also extend the process reengineering activities towards other departments and areas… Business process reengineering approach Analysis and design Implementation Validate current Design target state Prioritise processes Plan Roll out processes Transition to state processes and mitigate risk Implementation and manage risk operations • Define list of key • Agree criteria for • Identify critical to • Agree • Monitor success • Monitor processes to be bespoke vs. quality and risk implementation via live scorecard performance analysed standard process steps approach (parallel • Train the trainer during bedding-in • Agree process processes • Review existing etc.) • Assess location period taxonomy, value • Filter current state operational risk • Define high readiness for roll- • Measure process streams and into bespoke and events benefit, low risk out adoption and metrics for target standard • Assess the risk of quick-wins • Deploy selected benefits processes • Design processes disruption to • Determine current pilots and quick- realisation • Review existing and iterate with business as usual processes impact wins to capture • Confirm handover processes and users from implementing • Determine training benefits check-list and identify gaps • Document processes and change • Run BAU weekly provide “close- • For each gap, processes • Develop risk approach back-fill plan out” document complete the • Determine mitigation plans • Determine • Document • Agree a process inventory exception and • Determine optimal success metrics detailed continuous • Agree focus areas error handling process locations values procedures improvement and conduct time scenarios • Forecast expected • Determine • Roll-out framework with and motion • Agree metrics for volumes and deployment processes per focus on studies (incl. target service headcount by schedule and agreed sequence exception, error workload requirements location BAU back-fill rates balancing) • Prioritise process • Create • Discuss further • Develop process rollout by location implementation improvement standardisation plan opportunities hypotheses Source: PWC-Process mapping & identification gaps of staff skills and performance; Strategy& analysis Strategy& | PwC Prepared for The World Bank 56 Recommendations and action plan | Processes improvement Task C: Deliverable II (b) – Process mapping report … With the target to launch the implementation of several new (prioritized) processes by 2019 Measures and activities Measures Activities Year 2018 2019 2020 2021 2022 2023 Owner Define key processes to be analyzed GECOL management & External consultants Validate Agree value streams metrics for target processes GECOL management & current state External consultants Conduct time and motion studies External consultants (including workload balancing) Agree criteria for bespoke vs standard processes GECOL management & Design target External consultants state Design processes and iterate with users External consultants processes New processes Document processes designed External consultants Identify prioritization criteria for rollout and External consultants Prioritize and review operational risk mitigate risk Develop risk mitigation plans External consultants Plan Agree implementation approach and define quick wins GECOL management & implementati External consultants Implementation on Create implementation plan plan ready External consultants Document detailed procedures External consultants Train the trainer External consultants Roll-out & HR processes Deploy selected pilots and quick wins Department in charge and manage of the process risk Roll-out processes as per agreed sequence Department in charge of the process Monitor performance during bedding-in period Department in charge Transition to of the process operations Confirm handover check-list and provide Dept. in charge closed-out documents & External consultants Milestones Source: PWC-Process mapping & identification gaps of staff skills and performance; Strategy& analysis Strategy& | PwC Prepared for The World Bank 57 Institutional development Processes Manpower IT Technical performance Financial performance Back-up – Review of 2011-2015 GECOL 6 part strategy Strategy& | PwC Prepared for The World Bank 58 Findings Task C: Deliverable II (c) – Manpower/organizational rationalization review Task C carried-out a manpower sizing exercise, assessing the distribution of staff and resources across GECOL … FTE evolution (2010-2017)1 CAGR %, 2010-17 45,582 Total +4.2% 41,662 41,824 40,116 38,316 36,163 34,272 35,040 Distribution +4.0% Supply +3.8% Support +4.8% Generation +4.4% Transmission +4.2% 2010 2011 2012 2013 2014 2015 2016 2017(2) 1) Different data sources: 2010-2015 data received by GECOL on 31/10/2017; 2017 data received by GECOL on 05/04/2017 2) Data excluding police and collaborators received on 05/04/2017 Source: GECOL data collection ID17; PWC-Manpower/Organizational Rationalization Review; Strategy& analysis Strategy& | PwC Prepared for The World Bank 59 Findings Task C: Deliverable II (c) – Manpower/organizational rationalization review …and confirming the magnitude of GECOL staff unbalance, especially when compared to regional peers Manpower benchmark / comparison 16 1,078 Distribution & Supply Generation Net 8 Avg. Avg. generation 6 Customers/ 317 4 (MWh) / Dept. FTEs 160 Dept. FTEs 47 GECOL ONEE EEHC Sonelgaz GECOL ONEE EEHC Sonelgaz Libya Morocco Egypt Algeria Libya Morocco Egypt Algeria 0.7 16% Transmission 11% 0.4 Support Dept. FTEs FTEs in 0.3 7% Avg. / Km Avg. support (%) 0.1 2% GECOL ONEE EEHC Sonelgaz GECOL ONEE EEHC Sonelgaz Libya Morocco Egypt Algeria Libya Morocco Egypt Algeria Note: Data for GECOL refers to 2015 Source: GECOL data collection ID1; GECOL data collection ID17; GECOL data collection ID24; GECOL data collection ID36; ONEE Annual Report 2016; EEHC Annual Report 2015/2016; Sonelgaz Annual Report 2016; PWC-Manpower/Organizational Rationalization Review; Strategy& analysis Strategy& | PwC Prepared for The World Bank 60 Findings Task C: Deliverable II (c) – Manpower/organizational rationalization review The manpower and skills assessment has identified four key issues affecting GECOL Identified manpower and skills issues Issues Description Increasing • Manpower increased annually by 4% between 2010 and 2015 staff & low • Productivity ratio is among the worst across regional peers productivity • Technical skill gaps identified in all business units Skills • Succession planning issues are not addressed leading in the future to critical shortage knowledge loss Limited role • HR and organization are grouped under support services even though certain of HR functions are corporate core department • HR function influence on manpower and skill set is very limited Lack of clear HR • No clear HR strategy in place & training • Hiring follows no strategy and increasing manpower without a clear plan strategy • No clear training/reskilling strategy in place Source: PWC-Manpower/Organizational Rationalization Review; Strategy& analysis Strategy& | PwC Prepared for The World Bank 61 Findings | Increasing staff & low productivity Task A: Deliverable II– Rapid assessment of the sector performance Since 2010, the number of FTEs has been constantly growing leading to a low productivity with respect to regional peers # FTEs evolution (2010-15, ‘000) Productivity benchmark (2015) GWh / FTE Although having a lower 45 +4.0% 18 17.2 share of its total FTEs in 41.7 40.1 generation, GECOL has still 40 38.3 16 a worse productivity than 35.0 36.2 peer countries 35 34.3 14 12 11.7 30 25 10 9.5 8.21 20 8 15 6 5.0 10 4 5 2 0 0 2010 2011 2012 2013 2014 2015 Morocco Jordan Algeria Libya Egypt Generation FTEs share 19% 20% 17% 10% 20% vs. total Note: includes Sonelgaz, ERC, CEGCO, SEPGCO, AES, QEPCO, ONEE-BE, Masen, and EEHC Generation Companies; 1) Updated with new data received Source: GECOL data collection ID13, GECOL data collection ID17, Strategy& analysis Strategy& | PwC Prepared for The World Bank 62 Findings | Increasing staff & low productivity Task C: Deliverable II (c) – Manpower / organizational rationalization review Overstaffing is especially evident in support units, distribution and supply BUs Results of benchmarked KPIs # Supply department # Distribution department # Support activities (Customers per FTEs) (Customers per FTEs) (% FTEs) +72% 352 +270% 17% 16% 16% 294 205 202 +151% 181 7% 79 77 64 2008 2010 2015 Average 2008 2010 2015 Average 2008 2010 2015 Average peer peer peer GECOL group GECOL group GECOL group GECOL is highly overstaffed in Distribution & Supply department and it employs double the number of FTEs in support services activities with respect to the average of regional peer companies Source: PWC-Manpower/organizational rationalization review; Strategy& analysis Strategy& | PwC Prepared for The World Bank 63 Findings | Increasing staff & low productivity Task C: Deliverable II (c) – Manpower / organizational rationalization review Furthermore, despite the general over-staffing, the analyses at department level has also underlined lack of personnel GECOL manpower need assessment results # Support Units need only 25% of current staff according minus 75% to regional benchmarks Overstaffing # # Supply Unit should be Distribution Unit needs only reduced by 75% according to minus 75% 25% of staff according to benchmarks regional benchmarks Understaffing # # Currently Generation is Transmission Unit is more or staffed in line with regional less in line with regional benchmarks but increase in plus 200% plus 30% average but according to best future capacity needs sharp practice could be also increase of staff increased by 30% Strategy& | PwC Prepared for The World Bank 64 Findings | Skills shortage Task C: Deliverable II (c) – Manpower / organizational rationalization review Although the number of technicians and engineers across departments might suggest a proper skills distribution… Skills distribution (2015) 4,217 4,159 27,486 159 266 905 404 1,007 2,671 438 100% Generation Transmission Distribution Generation Transmission Distribution Financial HR General ICT O&M O&M O&M Projects Projects Projects Affairs Services Others Services (manual) Financial Drivers Technician Software Engineers Admin Source: PWC-Manpower/Organizational Rationalization Review; Strategy& analysis Strategy& | PwC Prepared for The World Bank 65 Findings | Skills shortage Task C: Deliverable IV (b) – Improving GECOL technical performance …bottom up interviews highlighted skill gaps in all departments and aging staff in generation and transmission Evidence from interviews # # # # # Generation Transmission Control MV network Distribution • Shortage in • Maintenance Lack of skills in: Lack of skills in MV Lack of skills in technical positions engineers have no • Advanced EMS Voltage O&M Distribution O&M despite the overall skills to maintain functionalities especially in: especially in: overstaffing at and repair DCS • DMS functionality • Cable works • Substation DC GECOL systems • Substation DCS • Substation DC systems • Minimal training • Loss of developed systems systems • Transformers (sufficient only for skills in jointing • Substation • Transformers maintenance Lack of ordinary daily and termination modeling and maintenance • Preventive skills operations) on new of 220kV cables data entry • Preventive maintenance units that have • Usage of 11kV maintenance come into service control room and over the last 5 facilities years • O&M staff • Aging linesman not approaching physically able to retirement age perform the • Not supported by demanding work of enough younger overhead lines engineers and maintenance technicians to Aging apprentice under staff them and learn from their experience and skills Source: PWC-Manpower/Organizational Rationalization Review; Strategy& analysis Strategy& | PwC Prepared for The World Bank 66 Findings | Limited role of HR department Task C: Deliverable II (c) – Manpower/organizational rationalization review HR and Org. role/importance is limited by their position under support services not responding directly to MD HR & Communication structure (2017) Managing Business Unit Director Department Sub-department Support services HR & Communication Training & HR Organization & development Structuring Employee affairs Structure Design & Development Communication & Jobs & Careers collaboration Development Medical affairs department Process Reengineering Policies and HR planning Administrative affairs and follow-up Source: Latest up-date of GECOL company organization chart 2015 (June 2017); Strategy& analysis Strategy& | PwC Prepared for The World Bank 67 Findings | Limited role of HR department Task C: Deliverable II (c) – Manpower/organizational rationalization review HR function and human capital agenda should have a corporate core importance ILLUSTRATIVE HC agenda pillars Operating Model 1 2 Human capital planning Management • Organizational design 1 Operating Model Management • Workforce planning • Processes & decision rights • Strategic Resourcing management 2 Human Capital Planning 3 4 5 6 3 Culture alignment 5 Talent management • Culture management • Talent development • Change management • National development program • Employee engagement and communication Culture Leadership Talent Performance Alignment Development Management & Rewards 4 Leadership development 6 Performance management • Assessment and development • KPIs management • Succession planning • Appraisals managament • Global mobility • Compensation & benefits 7 HR Management 7 HR Management • Recruiting • Personnel Services Source: Strategy& analysis Strategy& | PwC Prepared for The World Bank 68 Findings | Lack of clear HR & training strategy Task C: Deliverable II (c) – Manpower/organizational rationalization review GECOL also lacks of a comprehensive HR strategy cascading from organizational business strategy and culture HR strategy cascade ILLUSTRATIVE BoD Business Strategy and Culture What the firm wants to achieve and how Organizational Competencies Individual What firm employees need to know capability and do engagement Processes and Organization Skills and Structures How to organize in order to achieve strategic goals Passion Comprehensive HR Strategy How the firm drives and reinforces desired competencies and behaviors Talent Learning and Succession Performance Value Acquisition Development Management Management Propositions Missing at GECOL Source: Strategy& analysis Strategy& | PwC Prepared for The World Bank 69 Recommendations and action plan | Reskill and redeploy resources Task C: Deliverable II (c) – Manpower / organizational rationalization review The recommendation has focused on a conservative set of actions rather than a sharp rightsizing Recommended resizing approaches Wave I Wave II Immediate actions Mid-term actions Immediate actions starting from 2018 focusing on Mid-term actions starting upon successful completion of reskilling as top priority immediate actions (i.e. indicatively from 2020 to be completed by 2025) Start immediately to reassign especially Re-Skilling Reallocate technicians to other departments like the generation department Offer buyout solutions for non core Incentivize Leverage current resources to fill unmet businesses like Health Service, Driver, Retrain Buyouts Translation etc. needs in the generation department Institute a hiring freeze as more than Incentivize to Ask employees to take voluntary lay- Freeze hiring 12% are aged below 30 and more than leave offs 40% aged below 40 Prepare an early retirement package for Temporarily or permanently terminate Early employees aged over 60 (2% of total Dismiss employment for a group of employees Retirement FTEs) especially in D&S Train managers and staff professionals Start GECOL to be hired inside but also outside the Academy company Source: PWC-Manpower/organizational rationalization review; Strategy& analysis Strategy& | PwC Prepared for The World Bank 70 Recommendations and action plan | Reskill and redeploy resources Task C: Deliverable II (c) – Manpower/organizational rationalization review GECOL shall focus on strengthening its HR role, org. and strategy, preparing to re-balance its manpower situation... Measures and activities Measures Activities Year 2018 2019 2020 2021 2022 2023 Owner Consolidate in HR&O department (under MD) all the MD/Head of Centralize HR HR-related core functions leaving non-core HR activities HR department HR activities under MD within Support Services Same as institutional development action plan Develop a comprehensive HR strategy including: Head of workforce planning, learning & development, HR HR strategy performance management, succession planning, development talent acquisition Negotiate/ approve HR strategy BoD HR strategy in place Freeze hiring Head of HR Reassess manpower needs for each business process Critical resource map Head of HR Manpower Develop manpower rebalancing plan Manpower rebalancing plan Head of HR rebalancing & workforce Assess legal implications and constraints Head of HR planning Deploy re-sizing plan Head of HR Workforce Develop a structured workforce planning process planning in place Head of HR driving the hiring process Targets One shot activity Source: PWC-Manpower/organizational rationalization review; Strategy& analysis Strategy& | PwC Prepared for The World Bank 71 Recommendations and action plan | Reskill and redeploy resources Task C: Deliverable II (c) – Manpower/organizational rationalization review …and in parallel will need to focus on launching a corporate- wide reskilling and training plan through targeted programs Measures and activities Measures Activities Year 2018 2019 2020 2021 2022 2023 Owner Assess current employees capabilities and skill-set HR dept. Define future skill needs HR dept. Match current capabilities with future needs to identify gaps Capabilities & skills map HR dept. Prepare & launch a training and reskilling program to fill HR dept. identified gaps Reskilling program Develop a general training policy Head of HR Approve training policy BoD Estimate training budget Head of HR Negotiate, review and approve training budget BoD Corporate reskilling Centralize training activities in the GECOL training academy HR dept. GECOL Academy Open the academy to external parties HR dept. Academy opened To 3rd parties Set up an online platform for e-training HR dept. Develop executive development plan for executives training HR dept. Continuous executive and BoD training HR dept. Introduction of training incentives schemes (e.g. trainee programs, HR dept. talent schemes) Establishment of international exchange training programs HR dept. Targets DETAILED TRAINING INITIATIVES FOR SBUs IN THE TECH. IMPROV. ACTION PLANS One shot activity Source: PWC-Manpower/organizational rationalization review; Strategy& analysis Strategy& | PwC Prepared for The World Bank 72 Recommendations and action plan | Reskill and redeploy resources Task C: Deliverable II (c) – Manpower/organizational rationalization review GECOL shall also introduce a performance management and succession planning Measures and activities Measures Activities Year 2018 2019 2020 2021 2022 2023 Owner Set up a clear performance appraisal system Head of HR Appraisal system in place Annually appraise performance and provide feedback All departments coordinated by HR Performance management Link performance to pay, career development and Head of HR & MD succession planning Launch mentoring programs (e.g. pairing between experienced All departments employees and more junior ones) to monitor, support and coach coordinated by HR performance improvement Define succession priorities Head of HR Design succession program Head of HR Succession program in place Identify key positions and potential successors Head of HR Succession Gather performance, potential and aspiration data Head of HR planning Assess and plan development needs of potential Head of HR Successors for key positions Assess and plan development needs of the organization Head of HR Manage development needs of potential successors for Head of HR key positions Targets Source: PWC-Manpower/organizational rationalization review; Strategy& analysis Strategy& | PwC Prepared for The World Bank 73 Institutional development Processes Manpower IT Technical performance Financial performance Back-up – Review of 2011-2015 GECOL 6 part strategy Strategy& | PwC Prepared for The World Bank 74 Findings Task C: Deliverable II (d) – ERP system review In terms of IT, Task C has focused on the analysis of the functionalities of the ERP system of GECOL Current GECOL MIS1 IFS ERP 2 Logistics module 3 Human resources 4 Enterprise asset and payroll module management module  Work Order  Inventory  HR Management  Purchasing  Payroll  Maintenance 1 Finance Module  Accounts  Fixed Assets Payable  General Ledger  Accounts  Budgeting Receivables  Billing System ERP MAIN MODULE ERP SUB MODULE BILLING SYSTEM Note: Project Scope of Work did not require the definition of a major IT infrastructure review but only requested the review of the ERP functionalities 1) Management Information System Source: PWC-ERP system review; Strategy& analysis Strategy& | PwC Prepared for The World Bank 75 Findings Task C: Deliverable II (d) – ERP system review The analyses identified a number of issues where GECOL shall focus going forward Summary of ICT issues identified Key issues identified Finance • No evidence of cash flow functionalities installed • Required review and update of basic data (e.g. inventory parts, etc.) Logistics • Required system upgrade ERP Enterprise Asset • Bugs when delivery installed Management IT framework components • Required standardization of prompt names of fields in Arabic and English Systems • Lack of storage space for some fields Human resources • Impossibility to change GECOL’s roles and payroll • Lack of data validity, completeness and accuracy • Lack of utilization of document management in IFS to save employee documents • Shrinking billing rollout INDRA Billing system • Lack of integration between other regions and GL Systems integration • Lack of integration of EAM and other modules (i.e. logistics, financial and HR) • Components obsolete and degraded Infrastructure • UPS system out of service from 2012 • Several OPGW network break points identified Governance • Lack of IT governance and written policies and procedures • Lak of training Users • Lack of system functionalities awareness • Lack of utilization by sub-users Source: PWC-ERP system review; Strategy& analysis Strategy& | PwC Prepared for The World Bank 76 Recommendations and action plan | Add value to IT resources The report recommended that GECOL maintains / upgrades its IFS/INDRA, adding (or correcting) some functionalities IT Recommendations overview Our recommendation Rationale • ERP systems currently in use at • The system uses oracle GECOL represents one of the technology, which makes the data best practices in the utilities structure available and industry modifications can be implemented • Our recommendation is thus to • The system has minimum number maintain the current ERP system of bugs and functionality meets and to: requirements to certain extent 1. Upgrade current release of • The system can be up-graded application IFS/INDRA • GECOL staff has a good 2. Add more functionalities knowledge of the systems and can use them 3. Correct and develop some functionalities and • Other skills required to maintain integration and upgrade the system can (and shall) be obtained through partners and suppliers • The general feedback of GECOL on the different modules meets or exceeds expectations Source: PWC-Manpower/organizational rationalization review; Strategy& analysis Strategy& | PwC Prepared for The World Bank 77 Recommendations and action plan | Add value to IT resources Task C: Deliverable II (d) – ERP system review The recommendation focused on GECOL upgrading its IFS with additional customization IT recommendations • Allow auto reconciliation in GL module through e-access to bank information and transactions • Use the recruitment functions which will simplify the hiring of new employees by supporting all hiring processes from the Optimize personnel requisition to the final transfer of data to the employee file inside the IFS HR current • Activate the submission of the proposals, invoices through e- ERP functionalities procurement (portal) IT framework components • Apply scheduling and resourcing in the work order/preventive Systems maintenance to ensure utilization of existing resources and customer satisfaction through providing the service on time and enhance the overall equipment effectiveness • Electronic transfer of items to the purchase order especially INDRA when there is a purchase order with more than 100 items to be entered • Implement cash flow management module which will help Systems integration GECOL in managing cash flows more efficiently • Implement e-customer service through AR module, allowing New payment of invoices online Infrastructure functionalities • Implement the employee self service (ESS) which allows employees to update their personal information such as (phone numbers, addresses, passport number etc.) and apply online Governance for HR requests (leave, certificate) • Implement Business Intelligence (BI) module on top of ERP IFS which help in better analytics on data and help decision making Users Source: PWC-Manpower/organizational rationalization review; Strategy& analysis Strategy& | PwC Prepared for The World Bank 78 Recommendations and action plan | Add value to IT resources Task C: Deliverable II (d) – ERP system review Task C also suggested an integration between metering and revenue recognition in the billing system IT recommendations • Allow auto payment of bills for customers with bank accounts authorization provided • Allow customers to enquire online on bills and settle outstanding payments Optimize • Develop consolidation reports that shows any differences in: – Metering and billing current – Electricity consumed and electricity generated and ERP functionalities compare variances with accepted standard rates – Revenue values generated from billing and scenario build IT framework components Systems based on electricity rate change with metering to ensure proper system calculation of bill amount with the correct electricity price INDRA Policies and • Develop policy, procedures and functional documentation Systems integration procedures and enroll across all regions to ensure unified standards Infrastructure Governance Users Source: PWC-Manpower/organizational rationalization review; Strategy& analysis Strategy& | PwC Prepared for The World Bank 79 Recommendations and action plan | Add value to IT resources Task C: Deliverable II (d) – ERP system review GECOL shall also solve its integration problems by building all requirements into the system IT recommendations Work orders • Work in developing integration between work orders and and employees which help in fixing current challenges employees ERP • Build complete rules between modules which help business IT framework components integrity such as fixed asset management where purchasing Systems Rules between integrates with fixed assets and resulted JV such as orders depreciation automatically calculated in FA module and posted to GL. Until we reach to disposal of asset INDRA Reporting • Work on consolidation on reporting from different systems to consolidation ensure revenue recorded and collected Systems integration Infrastructure Develop • Develop or modify integration programs that link billing to integration ERP to ensure reconciliation and revenue recognition from programs billing into ERP Governance Users Source: PWC-Manpower/organizational rationalization review; Strategy& analysis Strategy& | PwC Prepared for The World Bank 80 Recommendations and action plan | Add value to IT resources Task C: Deliverable II (d) – ERP system review In terms of IT infrastructure and users, a complete upgrade of the latter and training of the former are required IT recommendations • Detailed assessment required to develop complete solution for the infrastructure which should cover all aspects of the Specialist existing data center such as servers, cooling, UPS, anti-fire analyses systems, location, facility, risk mitigation, stability, space and environment, physical security and access control ERP Oracle • IT framework components Upgrade of Oracle 10g to Oracle 12c Systems upgrade IT infrastructure • Develop operational process and life cycle strategy INDRA strategy Systems integration • Study the possibility of moving the data center on cloud Consider located to safe location (e.g. at least tier 3 data center) to cloud take advantage of high availability, greater connectivity, Infrastructure increased scalability and heightened security that is beyond introduction the means of most companies to create in-house Governance • Define a corporate wide training program to ensure correct Capabilities & employee master data entered to the system and then review training the system calculation of leave entitlement to ensure proper Users leave balances. Source: PWC-Manpower/organizational rationalization review; Strategy& analysis Strategy& | PwC Prepared for The World Bank 81 Recommendations and action plan | Add value to IT resources Task C: Deliverable II (d) – ERP system review GECOL shall first repair existing resources, then upgrade systems and finally add value to the whole infrastructure Measures and activities Measures Activities Year 2018 2019 2020 2021 2022 2023 Owner Step 1 Repair data centers: IT dept. Fix IT • Restore network in the east region Data centers repaired resources • Achieve a robust building with certain level of protection Introduce a new transmission media network IT dept. Step 2 Upgrade existing data center: IT dept. • Provide a suitable environment for equipment Data center upgraded (i.e. proper cooling and uninterrupted power supply) • Increase performance of DC system Upgrade IT • Ensure stability by upgrading current servers and storage systems Upgrade current ERP applications( e.g. provide latest functionality IT dept. and proper support on IFS ERP and INDRA) ERP upgraded Deploy ERP training program to achieve proper use of the system IT dept. and increased productivity Step 3 Invest in new access layer (new branches, 120 nodes) IT dept. Add value to Develop a new disaster recovery site to: IT dept. IT structure • Ensure business continuity and • Ensure future stability and proper awareness of new systems governance or modification on existing processes or functionalities Revise IT governance IT dept. New IT governance Milestones Source: PWC-ERP system review; Strategy& analysis Strategy& | PwC Prepared for The World Bank 82 Institutional development Processes Manpower IT Technical performance Financial performance Back-up – Review of 2011-2015 GECOL 6 part strategy Strategy& | PwC Prepared for The World Bank 83 Findings Task C: Deliverable IV (b) – Improving GECOL technical performance In terms of technical performance, Task C carried-out a review of GECOL performance and identified several issues Poor operating performance issues Covered in more detail in next slides1 # # # # MV & Sector Generation Transmission Control Distribution Deficient asset Issue / Damaged Failure of Overdue installation and concern substations and communication maintenance maintenance identified overhead lines links practices O&M Improve maintenance of Incorrect and unsafe overhead lines & O&M practices S/S2 DC systems Transformers failures Inadequate fuel Operational and 30kV network supply deficiencies earthing Delayed investment Delayed capacity Delayed substation Delayed control Delayed and replacement expansion projects rehab. programs projects investments projects Skills shortage Poor sector operating performance 1) For further detail, see “Task C – 4.2. Improving GECOL technical performance report; 2) Substations (S/S) Source: Improving GECOL technical performance report, Strategy& analysis Strategy& | PwC Prepared for The World Bank 84 Findings | Overdue maintenance Task C: Deliverable IV (b) – Improving GECOL technical performance In the past years, GECOL was unable to cope with its plants maintenance needs: in ’17, 34 units were pending overhaul… Generating units overhauls (2010-20171) 34 31 28 27 Number of units to be 19 overhauled 16 16 (Backlog + 11 Due in year “Due in year”) From previous year From 2+ years Backlog 20103 2011 2012 2013 2014 2015 2016 Nov. 2017 Units actually overhauled2 Avg. units 7 7 8 overhauled 6 5 6 2 3 5.5 Due in year 20103 2011 2012 2013 2014 2015 2016 2017 “Due in year” From previous year actually N/A 0% 14% 50% 38% 0% 0% 0% From 2+ years overhauled4 1) Generating units overhauls up to November 2017; 2) Overhauls are considered in the year of their completion; 3) No clear identification of backlog was available for 2010; 4) “Due in year” overhauled units divided by total overhauled units; Source: Awardbrand - Improving GECOL technical performance report, Strategy& analysis Strategy& | PwC Prepared for The World Bank 85 Findings | Overdue maintenance Task C: Deliverable IV (b) – Improving GECOL technical performance …accounting for a total installed capacity with maintenance issues ranging between 5.2 GW and 6.7 GW Evolution of due for overhaul units nameplate capacity (GW, 2010-2017) Nameplate capacity of units requiring complex and less complex maintenance3 6.7 Detailed assessment of generating units capacity with complex and less complex 5.2 maintenance requirements in Generation capacity 4.2 review excel file2 3.9 43% 3.5 3.0 18% 26% 60% 16% 19% 2.0 1.9 62% 1.5 10% 59% 70% 23% 74% 5% 58% 38% 33% 23% 30% 16% Due in year 16% From previous year 20101 2011 2012 2013 2014 2015 2016 Nov. Dec. From 2+ years 2017 2017 Backlog 1) No clear identification of backlog was available for 2010; 2) Data provided in December 2017 by GECOL generation department task force created ad hoc for the capacity assessment of the generation fleet; 3) Less complex maintenance includes both overhauls and units that require replacement of parts but not a complete overhaul (replacement of pumps, bearings, etc.); Source: Awardbrand - Improving GECOL technical performance report, Strategy& analysis Strategy& | PwC Prepared for The World Bank 86 Findings | Inadequate fuel supply Task C: Deliverable IV (b) – Improving GECOL technical performance GECOL’s P/S is also adversely affected by several fuel supply constraining factors Fuel supply constraining factors today Generating unit Fuel transportation / supply Ship unloading Pipeline Truck by land through sea Lack of Weather Logistics & Pressure conditions security Depending on fuel Smaller units are taken External factors such Impractical for large transportation offline to ensure as bad weather and plants requiring a sufficient pressure to unfavorable waterways constant stream of Fuel supply bigger units constrain cargos trucks constraining HFO Limited size of tank farms requires factors Limited storage constant stream of fuel and prevents Depending on the capacity from having a buffer to cover periods of type of fuel LFO shortages in supply Less important units switched to LFO so Gas Gas availability more sensitive units can operate on gas Going forward, NOC has estimated a decrease of local gas available for power generation after up-stream uses and non-thermoelectric demand further possibly affecting availability of gas units currently under construction Identified fuel supply issues Note: Improving GECOL technical performance report has identified in 600MW the available capacity directly connected to fuel supply constraining factors today Source: Awardbrand - Improving GECOL technical performance report, Strategy& analysis Strategy& | PwC Prepared for The World Bank 87 Findings | Overdue maintenance & Inadequate fuel supply Task C: Deliverable IV (b) – Improving GECOL technical performance Combined overdue less complex maintenance and fuel constraints are the cause of 2.0GW unavailable power Breakdown of GECOL unavailable capacity1 (GW, 2017) 10.8 10.2 0.5 1.1 8.7 1.2 7.4 2.0 0.1 GW 1.4 0.6 5.3 Libya GECOL Capacity Avg. Theoretical Unavailable Unavailable Max Unavailable Unavailable Available nameplate nameplate ready for unavailable max power power due to power for available power power due to power capacity capacity retirement3 power due from complex other/ power after requiring fuel supply 20171 20172 to ambient installed maintenance5 unknown less complex less constraints conditions4 capacity reasons maint. and complex fuel maint.5 1) Includes third party power stations: Sarir MMRA and Misurata Steel; 2) Includes GECOL main power stations and ready for retirement units; 3) Updated ready for retirement capacity agreed with GECOL in December 2017; 4) Unavailable power due to ambient conditions was assumed to be equal to be 0 for steam turbines and equal to nameplate times a derating factor of 12.5% for gas turbines; 5) Maintenance was classified as less complex maintenance if it can be solved within a short period of time (max 4 months; for example gas turbines whose maintenance is recurring every 3-4 months) while overhauls on steam units and all maintenance requiring more than 4 months was considered complex maintenance; Source: Awardbrand - Improving GECOL technical performance report, Strategy& analysis Strategy& | PwC Prepared for The World Bank 88 Findings | Overdue maintenance Task C: Deliverable IV (b) – Improving GECOL technical performance With a worse situation in the eastern region since 43% of capacity is lost due to lack of less complex maintenance Units requiring less complex maintenance3 (MW, 2017) % Nameplate lost due to lack of % Nameplate lost due to lack of WEST1 21% less complex maintenance EAST1 43% less complex maintenance 0 200 400 0 200 400 MW MW MisurataGT-31 MisurataGT-32 Benghazi North 2GT-31 MisurataST-1 ZawiaGT-11 SarirGT-1 ZawiaGT-12 ZawiaGT-13 ZawiaGT-14 SarirGT-3 ZawiaGT-15 Western MountainGT-12 Benghazi North 2ST-30 Western MountainGT-13 Western MountainGT-14 Benghazi North 1GT-14 Western MountainGT-16 Khoms 1GT-03 Khoms 1GT-04 Benghazi North 1GT-13 ZawiaST-10 ZawiaST-20 ZweitinaGT-11 Available power ZawiaST-30 Average unavailable Tripoli SouthGT-11 due to ambient conditions2 Tripoli SouthGT-12 KufraGT1 Unavailable power Tripoli SouthGT-13 requiring less complex maintenance3 Tripoli SouthGT-14 KufraGT2 Unavailable power Tripoli SouthGT-15 for other/unknown reasons 1) West includes Western, Southern, Tripoli and Central regions, while East includes Wahat, Benghazi and Eastern regions; 2) Unavailable power due to ambient conditions was assumed to be equal to be 0 for steam turbines and equal to nameplate times a derating factor of 12.5% for gas turbines; 3) Maintenance classified as less complex if it can be solved within a short period of time (max 4 months); Source: Awardbrand - Improving GECOL technical performance report, Strategy& analysis Strategy& | PwC Prepared for The World Bank 89 Findings | Damaged transmission and overhead lines Task C: Deliverable IV (b) – Improving GECOL technical performance Damages to transmission substations and overhead lines did also present some issues Damaged substations and overhead lines Substations Overhead lines 13 Total # 400kV Total length of substations 86 + 99 overhead lines 14,458 220kV (km) 2,290 Out of service 6 6% Needing replacement of 25 old switchgears With damaged / Damaged power 9 old transformers Out of service 819 components overhead lines (6%) (km) Not in service 23 earthing 15 (1%) resistors 49% 220 kV 400 kV Source: Awardbrand - Improving GECOL technical performance report, Strategy& analysis Strategy& | PwC Prepared for The World Bank 90 Findings | Improve maintenance of overhead lines and S/S DC system Task C: Deliverable IV (b) – Improving GECOL technical performance Execution of the transmission maintenance plan is often interrupted by a large number of unscheduled work orders Maintenance plan completion rates (2012-2015) Maintenance of transmission lines Cleaning of transmission lines Completion Completion Rate (%) Rate (%) -5% 100 92 100 83 78 -3% 80Highest 73 80 completion rate 68 60 due 60 51 maintenance 44 46 contacted out to 40contractors local 40 20 20 0 0 2012 2013 2014 2015 2012 2013 2014 2015 Completion rate of lines maintenance work orders Completion rate of cleaning work orders Maintenance of transmission lines was negatively affected by: Cleaning of transmission lines decreased due to: • Threats to security • Threats to security • Rising number of unscheduled/unplanned maintenance work • Aging GECOL’s linesmen no longer physically capable to orders perform the demanding overhead lines maintenance activity • Lack of tools in particular service vehicles (cranes, forks • Lack of required equipment (e.g. water tankers, self utility vehicles, etc.) propelled or pulled by other vehicles, water pumps and lengths of hosepipe) Source: Awardbrand - Improving GECOL technical performance report, PWC-Process mapping & identification gaps of staff skills and performance; Strategy& analysis Strategy& | PwC Prepared for The World Bank 91 Findings | Failure of communication links Task C: Deliverable IV (b) – Improving GECOL technical performance Issues with communication links inhibit an effective control of the network, also increasing operational risk Status of NCC/TRCC SCADA availability and quality of data 100% 76% Unavailable data 36% 7% 6% 27% 24% Total OPGW Problems Telecom RTU/DCS1 Other reasons Availble necessary data equipment data problems • Problems with contacts, relays, • Defects in some Functioning transducers & part of the problems to the other data RTU/DCS Cut and broken terminal equipment sources Reasons for data • Problems with OPGW conductors to which the fiber • Problems with unavailability the interface and fiber optic cables are wiring/ bad protocols connected at each contacts • Incompatibility line end • RTU not yet in the equipment commissioned/ in service 1) Remote Terminal Units (RTU) / Digital Control Systems (DCS); Source: Awardbrand - Improving GECOL technical performance report, Strategy& analysis Strategy& | PwC Prepared for The World Bank 92 Findings | Deficient asset installation and maintenance practices Task C: Deliverable IV (b) – Improving GECOL technical performance Data show a sharp increase in feeder outages after 2011 mainly due to several installation incorrect practices Number of feeders interruptions evolution Reasons for 30kV cable1 network failures (2007-2016) Laying cables with excessive Fault rate tension, without controlling the Pre-2011 Post-2011 per km tension torque and without using (2016)2 2,682 rolling pulleys -4% +16% Metallic screens of single core 1% cables bonded to the ground at 2,097 both ends regardless of cables 1,954 1,803 1,811 ! lengths 7% Fatal incorrect practices in cable 1,481 Deficient termination grounding installation (e.g. connecting aluminum to copper, 1,126 practices grounding tails connected in the wrong places) Cross-bonding and single-point 14% bonding of single core cables not applied Solidly grounded transformers 2007 2008 2009 2012 2014 2015 2016 resulting in fault current exceeding 5kA 11kV feeders 66kV feeders 30kV feeders (above the max specification of cable screens) 1) Single core cables 1x630mm2 (N2XSAY 1X630 R/V 18/30 kV); 2) Total length considered: 11kV 51152km, 66kV 8853km, 30kV 12174km Source: Awardbrand - Improving GECOL technical performance report, Strategy& analysis Strategy& | PwC Prepared for The World Bank 93 Recommendations and action plan | Improve system performance Task C: Deliverable IV (b) – Improving GECOL technical performance Task C has then proposed a detailed action plan for GECOL to restore its technical performance and service quality Detailed issues, measures and milestones # GENERATION IMPROVEMENT ACTION PLAN # Generation Measures Milestones issues • Resolve backlog of overdue maintenance • 90% of suspended units back in service Overdue • Plan maintenance of running units • No new buildup of overdue maintenance 1 • • maintenance Retire old units List of units to be retirement approved • Ensure availability of 3rd party plants • 250 MW added to grid • Zero unavailable capacity due to fuel supply Inadequate fuel • Protect fuel supplies to P/S and address fuel • Supply Sarir P/S with gas 2 problems • Full implementation of fuel quality control supply procedures • Updated generation expansion plan • Complete under construction projects • RFP for first round of new generation projects • Update load forecast and generation expansion Delayed capacity issued 3 plan expansion projects • Obari completed (4x125 MW online) • Tender new generation capacity • Gulf completed (3x350 MW online) • Complete EDM system • Fully functioning EDM • Certification program for P/S O&M personnel in • Solve lack of O&M competences place 4 Skills shortage • Solve Generation BU understaffing • All P/S operation shifts adequately staffed with qualified personnel Source: Awardbrand - Improving GECOL technical performance report, Strategy& analysis Strategy& | PwC Prepared for The World Bank 94 Recommendations and action plan | Improve system performance Task C: Deliverable IV (b) – Improving GECOL technical performance By addressing overdue maintenance, GECOL will increase its capacity availability and recover several “suspended” units # GENERATION IMPROVEMENT ACTION PLAN Measures and activities Measures Activities Year 2018 2019 2020 2021 2022 2023 Owner Resolve Plan a concentrated 3 year maintenance and Generation BU backlog of overhauling program overdue Carry out 7 overhauls of GT units, 3 overhauls of ST units, 6 Generation BU maintenance maintenance, repair and replacement activities each year 90% of suspended units back in service • Prioritize operating units based on operating conditions, Generation BU Plan maintenance needs and importance to the grid maintenance • Draft a comprehensive maintenance program for operating units of running • Allocate the necessary budget units Execute timely maintenance program for running units Generation BU (expect 6 GT units per year) No new buildup of overdue maintenance Review GECOL’s power plants retirement policy Generation BU & MD Assess the financial viability of old units continued maintenance Generation BU & Retire old and upkeep and set retirement dates for non viable old units AFC units Approve list of units to be retired BoD/GA List of units to be retired approved Retire all very old and unviable units (i.e. ready for retirement units) Generation BU Write off retired assets from GECOL’s books AFC dept. Ensure avail. Negotiate with Libyan Steel Co. for overhaul of units Generation BU of 3rd party (possibly carry out overhauls on their behalf for 2/3 units) 250 MW P/S added to grid Continue Continue executing the previously established maintenance Generation BU improving program for running units O&M Continue with timely retirement of old and unviable units Generation BU Milestones Source: Awardbrand - Improving GECOL technical performance report, Strategy& analysis Strategy& | PwC Prepared for The World Bank 95 Recommendations and action plan | Improve system performance Task C: Deliverable IV (b) – Improving GECOL technical performance Securing fuel supply, will allow GECOL to further increase its capacity availability # GENERATION IMPROVEMENT ACTION PLAN Measures and activities Measures Activities Year 2018 2019 2020 2021 2022 2023 Owner Work with the Government to protect fuel convoys Generation BU & to P/S especially in remote regions Government Work with local communities to engage in protecting Generation BU & fuel supply lines Local communities Assess which plants could benefit from increased fuel tanks Generation BU capacity to act as a buffer for delayed or unsuitable fuel deliveries Protect fuel Tender and contract additional fuel tanks Generation BU supplies to Zero unavailable capacity P/S and due to fuel supply address fuel Work with the Government and Gas Transport & Distribution Co. Generation BU, problem to resolve contractual issues for the completion Supply Sarir P/S with gas Government & Gas of Entisar-Sarir pipeline Transport & Distr. Co. Provide key P/S with fuel analysis lab equipment and train staff Generation BU Full implementation of fuel quality control procedures Continuous implementation of fuel quality control procedures Generation BU Establish a joint NOC/GECOL commission to oversee and resolve GECOL & NOC supply problems to individual P/S Milestones Source: Awardbrand - Improving GECOL technical performance report, Strategy& analysis Strategy& | PwC Prepared for The World Bank 96 Recommendations and action plan | Improve system performance Task C: Deliverable IV (b) – Improving GECOL technical performance Completing under construction units and tendering for new generation capacity will then enable GECOL to meet demand # GENERATION IMPROVEMENT ACTION PLAN Measures and activities Measures Activities Year 2018 2019 2020 2021 2022 2023 Owner Complete Complete Obari power station and connect to power network Generation BU under ensuring fuel supply Obari completed (4x125 MW online) & E&P1 construction Complete Gulf Power Station Generation BU projects Gulf completed (3x350 MW online) & E&P Contract to renew 20-year load forecast study and Generation BU Update load regularly update and extend load forecast study forecast and generation Based on updated load forecast, contract for 20-year Generation BU expansion generation expansion study considering also optimal Updated generation expansion plan & E&P plan generation mix and regularly update and extend generation expansion plans (first annually and later biannually) Tender, contract and execute first generation of new plants Generation BU (either autonomously or through IPPs) RFP for first round of new projects issued & E&P Tender new Finalize arrangements for 4 new power stations (ensure funding, Generation BU generation finalize contracts, assess local support needs to ensure rapid & E&P capacity completion) Execute first generation of previously tendered new Generation BU plants (either autonomously or through IPPs) New capacity& E&P added to grid Procure any remaining materials or replacement for EDM system Generation BU Complete installation of EDM meters and telemetry station to ensure Generation BU Complete new network installation are correctly metered EDM system Define departments responsibilities for maintenance and servicing Business Units and for reporting of operating results Fully functioning EDM Milestones 1) Engineering and Projects Department Source: Awardbrand - Improving GECOL technical performance report, Strategy& analysis Strategy& | PwC Prepared for The World Bank 97 Recommendations and action plan | Improve system performance Task C: Deliverable 2.2 – Process mapping & identification of gaps in performance To carry-out its investment process, GECOL shall also review and strengthen its investment planning process… Investment planning process Process steps GECOL E&P department to establish policies for to be organizational structure Project selection capital investment planning (i.e. eligibility criteria setting criteria; prioritization criteria) Actors directly dealing with the Government for financing Managing E&P to provide BUs with schedules and Director Provision of requests forms, each requiring information for calendar, forms project ranking and instructions AFC Bus to assess progress of ongoing projects Project requests and prepare and submit projects proposals to preparation E&P dept. Engineering & Projects Provides Review projects E&P to review all BUs project proposals criteria for according to the predetermined criteria cost-efficient Submit requests projects project prioritization requests Prioritize projects E&P to prioritize projects through least cost Business units planning methodology requests Focus in next slide Draft the Master Plan from the projects final Distribution list arranged by priority order according to the Generation Transmission Draft Master Plan & Supply criteria used in the scoring process Sources: Strategy& analysis Strategy& | PwC Prepared for The World Bank 98 Recommendations and action plan | Improve system performance Task C: Deliverable 2.2 – Process mapping & identification of gaps in performance …Using consistently a least-cost-planning methodology Least-cost planning methodology ILLUSTRATIVE Supply/demand balance Option selection GW Load 12 A Option forecast 10 study 8 ! Need for Negative investment 6 reserve B Option in new + 4 margin resources 2 Existing 0 resources C Option 2017 2018 2019 2020 Select option with lowest: Forecasted demand (peak demand) ℎ Forecasted unvailable capacity 1 = Forecasted available capacity ℎ Through least cost planning methodology GECOL shall identify the least cost mix of resources that would deliver sufficient power to meet projected increases in demand for electricity without unplanned terminations (i.e. ensuring a reliable service) 1) Long-run marginal cost including additional investment cost, O&M costs and fuel costs; Sources: Strategy& analysis Strategy& | PwC Prepared for The World Bank 99 Recommendations and action plan | Improve system performance Task C: Deliverable IV (b) – Improving GECOL technical performance Under highly aggressive assumptions GECOL should be able to re-establish an acceptable service quality by 2019 … Generation expansion plan (2017-2030) Best case scenario GW 20 21 ! Start 19 20 contracting +20% Positive reserve process of next margin1 if contracting generation of 17 of next generation ! P/S +67% of P/S starts by 15 Aggressive 14 2021 at the latest recovery of 13 unavailable 12 capacity3 Planned 10 9 Under construction & 7 contracted Recovered unavailability +64% 5 Phase outs4 5 Existing available Demand (A-Slow political stability)2 Demand 0 (B- Continuous political instability)2 2017 2018 2019 2020 2021 2022 2023 2026 2027 2030 1) Computed as (Available capacity-Peak demand)/Peak demand; 2) Peak demand at generation; 3) Assuming GECOL will be able to carry out each year 15 overhauls of units overdue from past years + all overhauls of newly due units. All overdue unit overhauls and major maintenance are supposed to be cleared by 2020; 4) Conventional steam turbines that approached their retirement age but have been overhauled are assumed to have an extended life up to 2030, gas turbines to 2025. Other units are retired at their planned decommissioning year; Sources: GECOL data collection ID4, Awardbrand - Improving GECOL technical performance report, Strategy& analysis Strategy& | PwC Prepared for The World Bank 100 Recommendations and action plan | Improve system performance Task C: Deliverable IV (b) – Improving GECOL technical performance …however under more pessimistic (realistic?) assumptions, load shedding will continue to be an issue Generation expansion plan (2017-2030) Worst case scenario GW 20 More prudent recovery of unavailable -37% Negative reserve 15 capacity with respect to best case scenario, but margin1 12 12 Still aggressive with 11 11 -13% ! respect to GECOL hist. 10 performance 3 10 10 9 Under construction & 7 contracted3 7 Recovered unavailability3 +39% 5 Phase outs 5 Existing available Demand (A-Slow political stability)2 Demand 0 (B- Continuous political instability)2 2017 2018 2019 2020 2021 2022 2023 2026 2027 2030 1) Computed as (Available capacity-Peak demand)/Peak demand; 2) Peak demand at generation; 3) Assumes GECOL will be able to carry out each year 4 overhauls of units overdue from past years + all overhauls of newly due units Sources: GECOL data collection ID4, Awardbrand - Improving GECOL technical performance report, Strategy& analysis Strategy& | PwC Prepared for The World Bank 101 Recommendations and action plan | Improve system performance Task C: Deliverable IV (b) – Improving GECOL technical performance GECOL shall also address its generation dept. understaffing problem through qualification of non-technical personnel # GENERATION IMPROVEMENT ACTION PLAN Measures and activities Measures Activities Year 2018 2019 2020 2021 2022 2023 Owner Introduce additional local or abroad training for Generation BU all new P/S and generating units & HR Solve lack of Agree with gas turbine OEMs of major fleets on establishing Generation BU, O&M dedicated training facilities to provide a certified world class Certification program for O&M training HR & OEM competences training program for P/S maintenance engineers and technicians P/S O&M personnel in place facilities in place Include training in scope of overhaul service providers and set up Generation BU, development programs at each related P/S HR & OEM Map shortages in generation department staffing Generation BU & HR Determine skills and specialization requirements to fulfill identified Generation BU Solve opened positions & HR Generation Develop multi-year years training programs to qualify non-technical Generation BU BU or unqualified personnel to fulfill workforce needs in All P/S operation shifts & HR understaffing generation and other departments adequately staffed with qualified personnel Implement previously developed 1 or 2 years training Generation BU programs to qualify non-technical or unqualified personnel to & HR First round of fulfill workforce needs in generation and other departments trainees qualified Milestones Source: Awardbrand - Improving GECOL technical performance report, Strategy& analysis Strategy& | PwC Prepared for The World Bank 102 Recommendations and action plan | Improve system performance Task C: Deliverable IV (b) – Improving GECOL technical performance Within Wave 1, GECOL will also address its key transmission system issues Detailed issues, measures and milestones # TRANSMISSION IMPROVEMENT ACTION PLAN # Transmission Measures Milestones issues Damaged • Repair out of service substations • All substations back in service 1 substations and • Repair damaged overhead lines • All transmission lines in service overhead lines Delayed • Commission all stations 2 substations rehab. • Rehabilitate / replace old assets • Overhaul all 220kV substations programs • All resistors connected Transformers • Reconnect 30kV earthing resistors • Systematic analysis of all future failures of grid 3 failures and 30kV • Investigate transformers failures components instituted network earthing • Improve transformers preventive maintenance • Oil analysis laboratories fully operational Improve • All 220 & 400KV lines regularly inspected and maintenance of • Improve lines maintenance 4 • Improve substation DC1 system maintenance maintained overhead lines & • All DC systems inspected and maintained S/S2 DC systems • Improve O&M staff knowledge and competences 5 Skills shortage • Train new generation of overhead linesmen • Certified new linesmen • Develop capabilities for live line maintenance 1) Direct Current (DC); 2) Substations (S/S) Source: Awardbrand - Improving GECOL technical performance report, Strategy& analysis Strategy& | PwC Prepared for The World Bank 103 Recommendations and action plan | Improve system performance Task C: Deliverable IV (b) – Improving GECOL technical performance Repairing out of service substations and damaged overhead will improve the overall grid reliability # TRANSMISSION IMPROVEMENT ACTION PLAN Measures and activities Measures Activities Year 2018 2019 2020 2021 2022 2023 Owner Assess the conditions/ requirements of each of the Transmission BU out of service substations & E&P Repair out of Set a prioritized repair, rehabilitation or replacement program for Transmission BU service out of service substations & E&P substations Procure materials not available in GECOL stock Transmission BU Repair/replace and reconnect to power network Transmission BU All substations back in service Assess the conditions/ requirements of each of the out of Transmission BU service overhead 220kV and 400kV lines & E&P Repair Set a prioritized repair, rehabilitation or replacement program Transmission BU damaged for out of service overhead lines & E&P overhead lines Procure materials not available in GECOL stock Transmission BU Repair overhead lines and reconnect to power network Transmission BU All transmission lines in service Milestones Source: Awardbrand - Improving GECOL technical performance report, Strategy& analysis Strategy& | PwC Prepared for The World Bank 104 Recommendations and action plan | Improve system performance Task C: Deliverable IV (b) – Improving GECOL technical performance Old transmission switchgears will need to be substituted, as they require large maintenance and replacement of parts # TRANSMISSION IMPROVEMENT ACTION PLAN Measures and activities Measures Activities Year 2018 2019 2020 2021 2022 2023 Owner Resume replacement program of 6 air blast 220Kv substations Transmission BU Commission Replacement & E&P all stations completed Arrange necessary shutdowns with control center Transmission BU & E&P Arrange overhaul schedule for overdue 220kV SF6 substations Transmission BU & E&P Procure required materials Transmission BU Rehabilitate/ & E&P replace old assets Carry out overhauls Transmission BU Overhaul all 220kV substations & E&P Arrange overhaul schedule for old 220kV overhead lines Transmission BU & E&P Procure required materials Transmission BU & E&P Execute overhauls/outsource works (as needed) Transmission BU Old 220kV overhead lines overhauled & E&P Milestones Source: Awardbrand - Improving GECOL technical performance report, Strategy& analysis Strategy& | PwC Prepared for The World Bank 105 Recommendations and action plan | Improve system performance Task C: Deliverable IV (b) – Improving GECOL technical performance The high incidence of transformers failures shall be investigated and earthing resistors shall be put back in place # TRANSMISSION IMPROVEMENT ACTION PLAN Measures and activities Measures Activities Year 2018 2019 2020 2021 2022 2023 Owner Assess urgency and priority according to use of 30 kV Transmission BU cables in the supplied 30 kV network Determine state of earthing resistors Transmission BU Reconnect 30 kV earthing Procure new resistors as necessary resistors Install and connect new resistors Transmission BU All resistors connected Educate and train O&M staff on the importance Transmission BU of maintaining and connecting transformers earthing resistors Investigate Dedicate a highly competent technical team Transmission BU transformers to determine the true causes of transformers failures Systematic analysis of all future failures and to decide action required to mitigate them failures of grid components instituted Ensure that all transformer maintenance teams are Transmission BU adequately equipped with necessary oil treatment machines Improve and dissolved gas analysis (DGA) instruments to oversee transformers and follow up the number of transformers in the network preventive maintenance Set up at least two central oil analysis laboratories which can carry Transmission BU out full analyses of transformers (and other) oils Oil analysis laboratories fully operational Milestones Source: Awardbrand - Improving GECOL technical performance report, Strategy& analysis Strategy& | PwC Prepared for The World Bank 106 Recommendations and action plan | Improve system performance Task C: Deliverable IV (b) – Improving GECOL technical performance Overhead line cleaning and well maintained battery systems are very important to maintain the reliability of the system # TRANSMISSION IMPROVEMENT ACTION PLAN Measures and activities Measures Activities Year 2018 2019 2020 2021 2022 2023 Owner Schedule a comprehensive transmission lines cleaning Transmission BU program Equip overhead lines maintenance teams with necessary tools for Transmission BU Improve lines lines cleaning maintenance Execute cleaning program Transmission BU All 220 & 400 kV lines regularly inspected and maintained Continue executing yearly cleaning program Transmission BU Prepare an updated procedure for maintenance and operation of Transmission BU substation DC supply system Implement newly updated procedure for maintenance and Transmission BU Improve operation of substation DC supply system substation DC1 systems Establish regional task forces dedicated to inspecting and maintain Transmission BU maintenance DC supply systems and recommend actions Train staff on DC systems maintenance procedures Transmission BU and incentivize specialization in battery and dc maintenance All DC systems inspected and maintained Milestones 1) Direct Current (DC) Source: Awardbrand - Improving GECOL technical performance report, Strategy& analysis Strategy& | PwC Prepared for The World Bank 107 Recommendations and action plan | Improve system performance Task C: Deliverable IV (b) – Improving GECOL technical performance GECOL will need to improve its O&M staff competences, train new linesman and develop live line maintenance capabilities # TRANSMISSION IMPROVEMENT ACTION PLAN Measures and activities Measures Activities Year 2018 2019 2020 2021 2022 2023 Owner Institute a comprehensive skills development Transmission BU program for O&M personnel & HR Arrange intensive training for new equipment and Transmission BU Improve O&M technologies, especially DCS1 & HR staff knowledge and Continue with previously instituted training programs (i.e. Transmission BU competences training for DCS technologies and O&M development) & HR Set up program to maintain and refresh cable jointing Transmission BU skills through secondment of cable jointists with & HR contracting companies Train new As part of internal training and development program Transmission BU generation of to fill skills and specialization gaps, train a new generation Certified new linesmen & HR overhead of linesmen from underutilized GECOL’s staff linesman Develop Contract with suitable consultant to develop skills and Transmission BU capabilities knowledge in live-line work and procure required & HR for live line tools and equipment maintenance Milestones 1) Digital Control Systems (DCS) Source: Awardbrand - Improving GECOL technical performance report, Strategy& analysis Strategy& | PwC Prepared for The World Bank 108 Recommendations and action plan | Improve system performance Task C: Deliverable IV (b) – Improving GECOL technical performance In parallel, GECOL will also need to resolve the four key issues with its control department Detailed issues, measures and milestones # CONTROL IMPROVEMENT ACTION PLAN # Control Measures Milestones issues Failure of 1 communication • Repair damaged OPGW links • Restored damaged OPGW links • Solve bad data quality • 98% of bad data sources solved links • NCC upgrade and back up completed Delayed control • TRCC maintained and upgraded 2 • Complete control center projects • BRCC commissioned and operational projects • TDCC, ZDCC, and BDCC commissioned and operational • Utilize SCADA control functionalities • 80% / 90% of SCADA system control • Provide spinning reserve functionalities in use Operational 3 • Form permanent event analysis team(s) • Adequate spinning reserve is maintained deficiencies • Reinstate AGC1 functionality • All AGC are operating • Modernize procedures and codes • Control codes and procedures are implemented 4 Skills shortage • Pursue staff development and training • All control staff are trained and certified 1) Automatic Generation Control (AGC) Source: Awardbrand - Improving GECOL technical performance report, Strategy& analysis Strategy& | PwC Prepared for The World Bank 109 Recommendations and action plan | Improve system performance Task C: Deliverable IV (b) – Improving GECOL technical performance Interdepartmental teams shall be formed to address the low quantity and quality of data received at control centers # CONTROL IMPROVEMENT ACTION PLAN Measures and activities Measures Activities Year 2018 2019 2020 2021 2022 2023 Owner Set a priority list of the damaged OPGW and fiber optic Control BU cables that are most critical to the control centers and allocate & Transmission BU necessary budget for their repair works Repair damaged Execute/outsource the reparation of the broken and Control BU OPGW links damaged links Restored damaged OPGW links & Transmission BU Ensure in future repair of fiber optic links has same Control BU priority as repair of overhead lines & Transmission BU Form interdepartmental multidisciplinary teams to Control BU determine and fix problems in data from substations, 98% of bad data sources & Transmission BU including problems with RTUs1, DCS resolved Solve bad and telecomm equipment data quality issues Set up regional task forces to assess and repair DC systems, Control BU especially in MV and distribution substations, & Transmission BU affecting operation of DCCs Milestones 1) Remote Terminal Units (RTUs) Source: Awardbrand - Improving GECOL technical performance report, Strategy& analysis Strategy& | PwC Prepared for The World Bank 110 Recommendations and action plan | Improve system performance Task C: Deliverable IV (b) – Improving GECOL technical performance GECOL shall resume its delayed control center projects for the efficient, stable and safe operation of the power system # CONTROL IMPROVEMENT ACTION PLAN Measures and activities Measures Activities Year 2018 2019 2020 2021 2022 2023 Owner Replace 19 RTUs1 and 1 DCS2 in Eastern region Control BU Transmission substation and 20 RTUs in Western Region Upgrade NCC Control BU Upgrade TRCC Control BU TRCC maintained and upgraded Complete control Install new back-up NCC Control BU center NCC upgrade and projects back up completed Complete commissioning of BRCC Control BU BRCC commissioned and operational Complete commissioning of Tripoli, Zawia and Benghazi DCCs Control BU TDCC, ZDCC and BDCC commissioned and operational Complete S/S adaptation works, installation works and commissioning Control BU of Misurata and Sebha DCCs and their telecommunication links, Control center renegotiating, revising, and making new contracts as necessary projects completed Milestones 1) Remote Terminal Units (RTUs); Digital Control System (DCS) Source: Awardbrand - Improving GECOL technical performance report, Strategy& analysis Strategy& | PwC Prepared for The World Bank 111 Recommendations and action plan | Improve system performance Task C: Deliverable IV (b) – Improving GECOL technical performance Utilization of SCADA functionalities and spinning reserve are an important factor to improve system reliability # CONTROL IMPROVEMENT ACTION PLAN Measures and activities Measures Activities Year 2018 2019 2020 2021 2022 2023 Owner Use SCADA Utilize SCADA control capabilities at existing Control BU control funct. control centers to carry system control functions 80%-90% of SCADA system control funct. In use Provide Provide sufficient spinning reserve to improve Control BU spinning network stability and security Adequate spinning reserve reserve is maintained Create permanent interdepartmental team(s) of senior and Control BU experienced engineers to immediately respond to Form and investigate network incidents, determine causes and permanent recommend corrective and preventive actions, event equipped with necessary tools and authority analysis team Install new fault or event recorders as required in Control, key points of the power network and put existing recorders Transmission & back in service at power plants and transmission substations Generation BUs Reinstate Reinstate AGC functions at NCC and power stations Control & AGC1 funct. All AGC are operating Generation BUs Modernize Resume work with external consultant on issuing a Control BU procedures GECOL grid code, operating and safety rules, and train Control codes and procedures and codes Control and other staff on these rules and standards are implemented Milestones 1) Automatic Generation Control (AGC) Source: Awardbrand - Improving GECOL technical performance report, Strategy& analysis Strategy& | PwC Prepared for The World Bank 112 Recommendations and action plan | Improve system performance Task C: Deliverable IV (b) – Improving GECOL technical performance GECOL shall also focus on instituting clear roles and procedures and training control engineers in using key tools # CONTROL IMPROVEMENT ACTION PLAN Measures and activities Measures Activities Year 2018 2019 2020 2021 2022 2023 Owner Renew contract with the French TSO RTE or find Control BU alternative service provider to develop control staff, control center procedures, codes, rules and regulations Train control engineers on use of EMS1 and Control BU & HR DMS functionalities, software engineers on substation Staff +modelling and data entry development and trainings Train MV and Distribution control engineers on the MV Control BU & HR and Distribution control facilities in the new DCCs All control staff trained and certified Continue with rolling training of new personnel Control BU & HR Milestones 1) Energy Management System (EMS); 2) Demand Management System (DMS) Source: Awardbrand - Improving GECOL technical performance report, Strategy& analysis Strategy& | PwC Prepared for The World Bank 113 Recommendations and action plan | Improve system performance Task C: Deliverable IV (b) – Improving GECOL technical performance GECOL will the need to set and launch a series of milestones and measures to address its MV & Distribution issues … Detailed issues, measures and milestones # MV&DISTRIBUTION IMPROVEMENT ACTION PLAN # MV & Distribution Measures Milestones issues • Improve cable handling and laying practices • Correct errors in cable jointing and termination works • All storekeepers trained and certified • Put AVRs1 of transformers with OLTCs2 in service • All project supervisors and network contractors • Correct bad practices in installation and O&M of trained and certified transformers • All cable jointists trained and certified • Use only treated oils in transformers • All AVRs of Transformers with OLTC in service • Establish workshops to repair damaged • All regions equipped with oil treatment machines Deficient asset transformers • Transformer repair facilities established installation and • Correct errors in erection of wood pole overhead 1 • Preventive maintenance system is fully maintenance lines implemented practices • Improve protection against ingress of dust and • All old minimum oil circuit breakers replaced pollution into substations • All LV switchboards repaired and maintained • Introduce a comprehensive preventive • All RMUs’ E/F alarm facilities in service maintenance program • Distribution standards updated and staff is • Replace old equipment (old switchgear) conversant to compliance • Restore LV switchboards to correct working • Comprehensive incident data and action plan condition developed to manage and reduce outages • Install earth fault alarm and indications on existing and future RMUs3 • Incident data collection and management 1) Automatic Voltage Regulators (AVRs) ; 2) On load tap changers (OLTCs); 3) Ring Main Units (RMUs) Source: Awardbrand - Improving GECOL technical performance report, Strategy& analysis Strategy& | PwC Prepared for The World Bank 114 Recommendations and action plan | Improve system performance Task C: Deliverable IV (b) – Improving GECOL technical performance ..tackling the delayed investments problems, and acting on the dangerous operating conditions and the skills shortages Detailed issues, measures and milestones # MV&DISTRIBUTION IMPROVEMENT ACTION PLAN # MV & Distribution Measures Milestones issues Delayed • Restart halted projects • Use available project equipment over the coming 2 investment and 2 • Change to Aluminum Bundled Cables (ABC) in years replacement both LV and HV rural distribution • 80% of halted projects completed projects Incorrect and • Safety management systems successfully • Enforce GECOL technical and other standards implemented 3 unsafe O&M • Strengthen safety standards enforcement • Rate of serious and fatal accidents reduced by practices 90% 4 Skills shortage • Develop a career training development plan • Career development system implemented Source: Awardbrand - Improving GECOL technical performance report, Strategy& analysis Strategy& | PwC Prepared for The World Bank 115 Recommendations and action plan | Improve system performance Task C: Deliverable IV (b) – Improving GECOL technical performance By improving its cable handling, laying and jointing procedures GECOL will reduce MV feeders failures # MV&DISTRIBUTION IMPROVEMENT ACTION PLAN Measures and activities Measures Activities Year 2018 2019 2020 2021 2022 2023 Owner Procure the proper tools and equipment for handling cables MV & Distribution BU Improve Train and direct GECOL storekeepers on proper handling MV & cable and storage of power cables All storekeepers trained Distribution BU handling and and certified laying Train GECOL staff on correct handling and lying of MV & practices power cables All cable jointists trained and certified Distribution BU Ensure contractors have sufficient experience and MV & knowledge of cable works and have the correct required equipment All project supervisors and network Distribution BU contractors trained and certified Procure correct tools and equipment for cable jointing works MV & Distribution BU Train cable jointists and supervisors on the correct jointing MV & Correct and termination practices Distribution BU errors in cable jointing Form regional teams to: MV & and 1. Assess and correct (where necessary) Distribution BU termination – Existing bonding status works – Existing sheath earthing status – Existing cable termination earthing 2. Clean cable trenches in substations from objects that represent a physical and fire hazard to cables Milestones Source: Awardbrand - Improving GECOL technical performance report, Strategy& analysisBS5 Strategy& | PwC Prepared for The World Bank 116 Recommendations and action plan | Improve system performance Task C: Deliverable IV (b) – Improving GECOL technical performance By correcting transformers installation practices, GECOL will address the high transformers failures in MV&D # MV&DISTRIBUTION IMPROVEMENT ACTION PLAN Measures and activities Measures Activities Year 2018 2019 2020 2021 2022 2023 Owner Train staff on correct settings of AVRs for Transmission and MV & Distribution BU MV transformers and correct maintenance of OLTCs Put AVRs1 of Adjust settings of AVRs and test operation with OLTCs MV & Distribution BU transformers All AVRs of transformers with OLTC in service with OLTCs2 Put AVRs in automatic mode MV & Distribution BU in service Review and optimize settings of off load tap changers MV & Distribution BU of distribution transformers Ensure all ground mounted transformers have temperature Distribution BU and Buchholz protection in service and connected to trip coils Ensure all indoor ground mounted transformers have proper Distribution BU Correct bad ventilation and it is kept in proper condition with clear air paths practices in installation Install barriers and warning signs around bushings Distribution BU and O&M of of indoor ground mounted transformers transformers Ensure all pole mounted transformers have correct surge Distribution BU arrestors in place and in service and that arcing horns are installed and adjusted to 7cm to GECOL standards Milestones 1) Automatic Voltage Regulators (AVRs); 2) On load tap changers (OLTCs) Source: Awardbrand - Improving GECOL technical performance report, Strategy& analysis Strategy& | PwC Prepared for The World Bank 117 Recommendations and action plan | Improve system performance Task C: Deliverable IV (b) – Improving GECOL technical performance GECOL shall also take action to repair transformers and correct errors in erection of wood pole overhead lines # MV&DISTRIBUTION IMPROVEMENT ACTION PLAN Measures and activities Measures Activities Year 2018 2019 2020 2021 2022 2023 Owner Equip maintenance departments with sufficient numbers Distribution BU of oil treatment machines All regions equipped with oil treatment machines Use only Train staff on dangers of use of untreated oils Distribution BU treated oils in transformers Train staff on use of oil treatment machines Distribution BU Carry out survey to determine current status of in-service Distribution BU transformers' oils, treat oils as necessary to protect transformers Establish Establish at least 3 transformer repair workshops distributed MV & Distribution BU workshops to geographically around Libya Transformer repair facilities established repair damaged Train GECOL staff on transformer repair, possibly in partnership MV & Distribution BU transformers with established transformer supplier Procure the proper tools and equipment for handling and pulling Distribution BU Correct of distribution line conductors errors in Train GECOL staff on correct handling, pulling, stringing, and Distribution BU erection of fixing of overhead line conductors wood pole overhead Train GECOL staff on the design and calculations of distribution lines Distribution BU lines Ensure contractors must have sufficient experience and knowledge Distribution BU of overhead lines works and have the correct required equipment Milestones Source: Awardbrand - Improving GECOL technical performance report, Strategy& analysis Strategy& | PwC Prepared for The World Bank 118 Recommendations and action plan | Improve system performance Task C: Deliverable IV (b) – Improving GECOL technical performance Preventive maintenance and protection of assets from external agents will reduce failures and faults # MV&DISTRIBUTION IMPROVEMENT ACTION PLAN Measures and activities Measures Activities Year 2018 2019 2020 2021 2022 2023 Owner Ensure proper seals of door and windows in substations MV & Distribution Improve protection Ensure proper operation and filtering of ventilation openings MV & Distribution against Train staff to keep compartment door closed MV & Distribution ingress of dust and Train staff not to leave circuit breaker trucks outside MV & Distribution pollution into their compartments substations Regularly maintain cleanliness of substations MV & Distribution Determine optimal set of preventive maintenance checks MV & Distribution for each type of asset Procure all necessary equipment for approved checks MV & Distribution Introduce a comprehensi Train GECOL staff on preventive maintenance checks MV & Distribution ve preventive maintenance Include preventive maintenance checks in annual maintenance MV & Distribution program programs Preventive maintenance system is fully implemented Conduct an initial condition assessment campaign of key assets, MV & Distribution especially transformers to identify any existing critical issues requiring urgent action Milestones Source: Awardbrand - Improving GECOL technical performance report, Strategy& analysis Strategy& | PwC Prepared for The World Bank 119 Recommendations and action plan | Improve system performance Task C: Deliverable IV (b) – Improving GECOL technical performance GECOL shall then ensure that all the alarms and protections are installed, repaired and put in service # MV&DISTRIBUTION IMPROVEMENT ACTION PLAN Measures and activities Measures Activities Year 2018 2019 2020 2021 2022 2023 Owner Determine substations and equipment that need to be replaced MV & Distribution BU Procure required replacements MV & Distribution BU Replace old Remove old equipment, install new replacements MV & Distribution BU All old minimum oil circuit breakers replaced equipment Erect new substations to the minimum extent necessary MV & Distribution BU (old switchgear) Carry out maintenance of old switchgear, including RMU's, MV & Distribution BU to contain risks until they are replaced Ensure sufficient supply of the correct fuses for old RMUs MV & Distribution BU until they are replaced Determine where LV switchboards have been modified MV & Distribution BU Restore LV or bypassed switchboards to correct Repair and restore switchboards MV & Distribution BU working All LV switchgear repaired and maintained Resolve problems of feeder overloads or change rating MV & Distribution BU condition of MCBs used, as appropriate Install earth Form special regional teams to carry out works MV & Distribution BU fault alarm Ensure CTs and other materials are available for each RMU and MV & Distribution BU and procure replacement parts where not available indications Carry out installation works MV & Distribution BU on existing All RMU’s E/F alarm facilities in service and future Train GECOL staff on utilization and importance of the MV & Distribution BU RMUs1 earth fault indications Milestones !) Ring main units (RMUs) Source: Awardbrand - Improving GECOL technical performance report, Strategy& analysis Strategy& | PwC Prepared for The World Bank 120 Recommendations and action plan | Improve system performance Task C: Deliverable IV (b) – Improving GECOL technical performance And it shall address incident data collection and management # MV&DISTRIBUTION IMPROVEMENT ACTION PLAN Measures and activities Measures Activities Year 2018 2019 2020 2021 2022 2023 Owner Unify coding system for network assets, apply unified MV & Distribution BU codes to network diagrams Enforce use of updated network diagrams as an MV & Distribution BU essential tool by O&M staff Incident data Develop unified asset and customer database for use MV & Distribution BU collection By relevant IT systems (SADA, GIS, CSS, NEPLAN/ and PSS/E, IRMS/OMS) management Ensure adherence with O&M standards and procedures, MV & Distribution BU review and update standards and procedures Distribution standards Updated and staff conversant to compliance Select and apply suitable incident recording and MV & Distribution BU Management tool, enforce company-wide implementation Comprehensive incident data and action plan developed to manage and reduce outages Milestones Source: Awardbrand - Improving GECOL technical performance report, Strategy& analysis Strategy& | PwC Prepared for The World Bank 121 Recommendations and action plan | Improve system performance Task C: Deliverable IV (b) – Improving GECOL technical performance Resuming halted projects and completing the change to aluminum bundled cables are key to solve voltage problems # MV&DISTRIBUTION IMPROVEMENT ACTION PLAN Measures and activities Measures Activities Year 2018 2019 2020 2021 2022 2023 Owner Form a task force to assess position of projects materials Medium Voltage BU in stores, improve storage conditions and security Find alternative solutions to resolve project obstacles Medium Voltage BU Restart (e.g. prefab substation buildings where standard buildings Use available project equipment halted were not constructed) over the coming 2 years projects Work with contractors to resume project execution Medium Voltage BU 80% of halted projects completed Train local engineers with suppliers on supervision works Medium Voltage BU Change to Continue with procurement of ABC conductors for new Distribution BU Aluminum rural connections 80% of rural lines Bundled replaced by ABC Cables (ABC) Launch a multi-year program to replace existing copper conductors Distribution BU in both LV and HV rural distribution Salvage value of removed copper conductors Distribution BU Milestones Source: Awardbrand - Improving GECOL technical performance report, Strategy& analysis Strategy& | PwC Prepared for The World Bank 122 Recommendations and action plan | Improve system performance Task C: Deliverable IV (b) – Improving GECOL technical performance GECOL shall urgently enforce safety rules to avoid fatal accidents and equipment failures # MV&DISTRIBUTION IMPROVEMENT ACTION PLAN Measures and activities Measures Activities Year 2018 2019 2020 2021 2022 2023 Owner Establish a company-wide training program to ensure MV & Distribution BU staff understand the GECOL standards and their application Enforce Reissue the standards in a more easy to comprehend MV & Distribution BU GECOL graphic-centered format technical and other Review and update the standards regularly as technologies MV & Distribution BU standards develop and GECOL's requirements and conditions change Engage with suppliers and contractors to properly understand MV & Distribution BU and comply with relevant standards Review and update all GECOL safety policies and procedures MV & Distribution BU (SPP) and make them available in clear and simple Arabic Launch comprehensive SPP safety awareness and training All BUs Strengthen campaigns throughout GECOL that involve all departments Safety management system successfully implemented safety standards Enforce and motivate compliance with safety rules at all levels All BUs enforcement Procure and provide all require personal protective equipment MV & Distribution BU Build a safety conscious culture in GECOL All BUs Rate of serious and fatal accidents reduced by 90% Milestones Source: Awardbrand - Improving GECOL technical performance report, Strategy& analysis Strategy& | PwC Prepared for The World Bank 123 Recommendations and action plan | Improve system performance Task C: Deliverable IV (b) – Improving GECOL technical performance Development and career programs shall be established to motivate personnel # MV&DISTRIBUTION IMPROVEMENT ACTION PLAN Measures and activities Measures Activities Year 2018 2019 2020 2021 2022 2023 Owner Update GECOL jobs requirements MV & Distribution BU & HR Specify core capabilities requirements MV & Distribution BU & HR Develop a career Develop a career development plan procedures MV & Distribution training Career development system implemented BU & HR development plan Create a platform to enhance the application of the career MV & Distribution development plan system BU & HR Continue with MV & Distribution staff development and MV & Distribution career building BU & HR Milestones Source: Awardbrand - Improving GECOL technical performance report, Strategy& analysis Strategy& | PwC Prepared for The World Bank 124 Recommendations and action plan | Improve system performance To upgrade its service quality GECOL shall establish a clear complaint valuation, resolution and monitoring process Complaint valuation, resolution and monitoring framework Receiving and Recording Resolving Closing • Prioritize calls received from Respond • Identify quickly customer type Ensure customers based on value of invoiced • Inform customers of ticket Automated based on responses • Monitor automatically the energy for the previous period closure using their channel of prioritization status of pending tickets and value of • Offer priority treatment to sent to choice (phone, email, SMS) sort based on priority customer privileged customers customer Timely Focus in next slide • Collect customer feedback • Classify problems and Obtain • Set KPIs for the resolutions of and re-open tickets if the Simple automate tickets forwarding to resolution complaints customer customer is not satisfied with classification the right experts/dept. and • Escalate issues automatically feedback on result and routing • Establish clear and timely automated if they are not resolved on time • Escalate customer satisfaction routing procedures closure escalation as needed Inform • Re-open ticket when the • Send information about customer is unsatisfied customer tickets created to customers Ensure • Keep customers regularly Re-open • Link previous ticket history about • Inform customers about the updates with updated on the status of their tickets as target resolution times for their with re-opened tickets and activities and customer open and/or delayed tickets needed complaints increase the priority of SLAs reopened tickets Monitoring & Preventing • Strengthen governance structure by empowering quality assurance team and increase accountability for ticket Monitoring and resolution quality assurance • Ensure appropriate follow up with customers on closed tickets and provide authority to revisit closed tickets if needed • Produce adequate reports to measure performance • Perform root cause analysis of complaints received Preventing • Develop and incorporate tools to identify problems prior to receiving actual complaints and proactively reach out to customers to inform them Sources: Strategy& analysis Strategy& | PwC Prepared for The World Bank 125 Recommendations and action plan | Improve system performance And in order to track its service quality performance GECOL might track progress against the following KPIs Complaints resolutions KPIs KPIs Description By customer By complaint First time resolution rate Proportion of calls that are resolved in the first instance To be computed as an average Average customer satisfaction Proportion of customers that have satisfactory had their complaint resolved P P Call handling quality Quality of conversations between agent and customer P Service level Percentage of calls answered on the targeted time P Average speed of answer Time taken by agent to answer an upcoming call from the customer P Call abandonment rate Proportion of total calls that are abandoned by the customer before the agent reply P Call duration Average length of calls between agent and customer P Financial complaint resolution time Proportion of financial customers complaints that are resolved in the stated time P Technical complaint resolution time Proportion of financial customer complaints that are resolved in the stated time P Reopened tickets rate Proportion of tickets that have previously been closed but now reopened due to non-resolution of complaint P Repeated calls rate Total number of calls received from the same customer during a predetermined time period P Operational KPIs Customer KPIs Sources: Strategy& analysis Strategy& | PwC Prepared for The World Bank 126 Institutional development Processes Manpower IT Technical performance Financial performance Back-up – Review of 2011-2015 GECOL 6 part strategy Strategy& | PwC Prepared for The World Bank 127 Findings Finally Task C has reviewed GECOL’s financial performance & tariff, identifying a number of issues Financial performance issues Area Issues Unbalanced tariff framework TARIFF Tariff cross-subsidization Lack of economic efficiency incentives REVENUES and CASH Increasing commercial losses BILLING Low metering coverage Rising illegal connections COLLECTION Poor collection Increasing costs mainly COSTS driven by salaries Source: PWC- Customer service financial performance; Strategy& analysis Strategy& | PwC Prepared for The World Bank 128 Findings | Unbalanced tariff framework Task C: Deliverable III – Financial performance assessment and financial models GECOL’s revenues today are negatively affected by an unbalanced tariff set far below cost-recovery levels GECOL’s cost-tariff unbalance (Dhs/ kWh, 2015) 167 Subsidized tariff scheme Tariffs do not reflect the economic cost of the supply Government 102 SUBSIDIES Tariffs are far below on fuel cost-recovery levels 65 Gov. SUBSIDIES Avg. tariff 36 in GECOL P&L Comm. loss and DEFICIT in • Equity erosion non-collection GECOL P&L • Increase in payables 6 Cost on Subsidies Cost to Average Structural GECOL on fuel serve collection unbalance BURDEN on BURDEN on the MARKET the SECTOR (consumers) (gov./GECOL) Note: Average tariff weighted by consumption by customer class Source: Strategy& analysis Strategy& | PwC Prepared for The World Bank 129 Findings | Tariff cross-subsidization Task C: Deliverable III – Financial performance assessment and financial models Tariffs are also cross-subsidized between customer classes, not reflecting the costs that each class is responsible for Libyan tariff by customer class (2011-2017) Generation Unit cost GECOL tariff Cross-subsidization (Illustrative) (Dhs/ kWh) between customer classes Lower network Residential tariff is lower High- & energy costs than industrial, despite the voltage Heavy industrial 31 higher costs incurred in the consumers supply, which are driven by: Large agriculture 32 • More facilities needed (e.g. transformers and T&D Light industrial Responsibility 42 distribution lines / network in the cost by substations) • Higher losses incurred Small agriculture customer class 30 (supply at lower voltage) Commercial, Street Low- lighting, State offices 68 voltage consumers Residential 20 Higher network & energy costs Source: Strategy& analysis Strategy& | PwC Prepared for The World Bank 130 Findings | Lack of economic efficiency incentives Task C: Deliverable III – Financial performance assessment and financial models In addition, tariffs are applied to customers with a flat rate, not incentivizing an efficient use of energy and assets Libyan rate scheme and efficiency indicators (2011-2017) 4.7 High consumption LD / month Energy consumed 2.7 (fixed/ customer charge) 1.8 1.4 1.4 pro-capita 0.9 Typology of (MWh / capita) LD / kW Libya Jordan Egypt Algeria Tunisia Morocco charge applied (demand charge) to consumers LD / kWh 80% Libya Inefficient peak- (energy charge) average ratio Rate varying with the 70% TIME of USE (e.g. time of day, day of week, season) Load factor MENA region avg. 2011 60% Typology of (average load) / 60% Progressive rate varying with (peak load) rate applied to VOLUMES CONSUMED consumers 50% 53% Flat rate, regardless of time 48% Indication of of use and volumes consumed plant / assets 40% utilization 2008 2010 2012 2014 2016 Source: Strategy& analysis Strategy& | PwC Prepared for The World Bank 131 Findings | Lack of economic efficiency incentives Task C: Deliverable III – Financial performance assessment and financial models Only residential class experienced volume-dependent tariffs, even though “lighter” than those applied by regional peers Libyan residential rate scheme Benchmark vs. regional peers Morocco Algeria Libya Egypt Libya (A) A Tariff Tariff as % Tunisia Libya (B) B Dhs / kWh of min rate 60 180% A 160% 50 B 2004-05 140% 40 120% Regional 2006-10 100% 30 peers Higher 80% rise in price 2011-17 20 60% Faster ramp-up 40% 10 20% Libya kWh / kWh / 0 0% month month 0 500 1,000 1,500 2,000 0 500 1,000 1,500 2,000 Source: Strategy& analysis Strategy& | PwC Prepared for The World Bank 132 Findings | Increasing commercial losses Task C: Deliverable II (a) – Strategy for institutional development of GECOL The analysis of customer service highlighted a dramatic impact of commercial losses on revenues Evolution of commercial losses Impact of commercial losses on P&L TWh Mn LD 25 24.1 1,500 21.1 1,000 20 16.1 500 15 12.6 0 10 -256 6.4 -500 -471 -583 5 -750 -1,000 -953 0 2010 2012 2013 2014 2015 2010 2012 2013 2014 2015 Potential revenues without commercial losses Revenues invoiced1 2010-15 cumulated impact -2.7 Impact of commercial losses (reduced rev.) Bn LD Note: 1) (Consumption invoiced by segment) x (Segment tariff) Source: GECOL data collection ID7, GECOL data collection ID21; GECOL data collection ID37, Strategy& analysis Strategy& | PwC Prepared for The World Bank 133 Findings | Poor collection Task C: Deliverable II (a) – Strategy for institutional development of GECOL Booming receivables led to a cumulated impact on revenues between 2010-2015 of 1.6 Bn LD Evolution of receivables Impact of collection effectiveness Bn LD Mn LD 2.5 1,500 2.3 1.9 2.0 1,000 2.0 500 1.5 1.3 0 1.0 -108 -171 -500 -423 -496 0.5 -1,000 2010 2012 2013 2014 2015 0.0 2010 2012 2013 2014 2015 Revenues invoiced1 Revenues collected 2010-15 cumulated impact -1.6 Impact of collection (reduced rev.) Bn LD Note: 1) (Consumption invoiced by segment) x (Segment tariff) Source: GECOL data collection ID7, GECOL data collection ID21; GECOL data collection ID37, Strategy& analysis Strategy& | PwC Prepared for The World Bank 134 Findings | Increasing costs Task C: Deliverable II (a) – Strategy for institutional development of GECOL At the same time, on the costs side a sharp increase in average salaries led to an increase in the operating costs Evolution of GECOL costs Mn LD +0.8% 2010 2015 +535 1,600 1,520 1,532 Mn LD 1,407 1,442 1,384 321.6 +535 1,400 Salaries 856.5 Mn LD 1,200 715 103.6 583 743 592 Maintenance 72.5 1,000 952 868 107.1 Materials for O&M 4.2 800 113 129 119 130 514 69.1 600 Various Service 15.3 93 466 548 400 70 482 514 688.4 -234 Fuel cost 448.5 Mn LD 312 269 200 Fuel Transp. 23.1 245 177 173 174 to Gen. Stations 6.2 110 100 0 70.9 -240 2010 2011 2012 2013 2014 2015 Other expenses 39.2 Mn LD Generation Transmission Distribution Supply Source: GECOL data collection ID13, Strategy& analysis Strategy& | PwC Prepared for The World Bank 135 Findings Task C: Deliverable II (a) – Strategy for institutional development of GECOL Overall decreasing revenues and poor collection, coupled with rising costs, led to a sharp widening of GECOL’s deficit Evolution of GECOL revenues and costs Evolution of GECOL revenues (Bn LD) (as % of costs) CAGR 120% 3.0 2010-15 2.5 Costs 100% 2.5 (100%) 2.1 1.9 1.9 80% 2.0 1.8 ∆ Costs +1.4% 1.5 1.4 60% 1.1 1.0 40% 0.8 0.6 0.5 20% 0.5 0.4 0.4 20% Revenues ∆ Revenues (% of costs) -18.5% 0.0 0% 2010 2011 2012 2013 2014 2015 2010 2011 2012 2013 2014 2015 Costs Revenues Note: Actual evolution of GECOL revenues (slightly differs from the bottom-up version estimated within the Rapid assessment of the sector performance) Source: GECOL collection ID13, Strategy& analysis Strategy& | PwC Prepared for The World Bank 136 Recommendations and action plan | Improve financial sustainability Task C: Deliverable II (a) – Strategy for institutional development of GECOL The recommendations focused first on GECOL upgrading its tariff framework and strengthening the metering system Measures and activities Measures Activities Year 2018 2019 2020 2021 2021 2022 2022 2023 2023 Owner Plan the tariff change communication program Public relations dept. Implement the tariff change Public relations dept. communication campaign Data collection related to year n-1 Tariff and cost studies division Launch new Data projections for year n+1 Tariff and cost studies Tariff division framework Preliminary rate design for year n+1 Tariff and cost studies division Preliminary tariff submission to Tariff and cost studies Regulatory Agency division Launch new tariff framework Customer Services dept. Tariff covering Tariff covering part of P&L costs2 part of P&L costs 1 and cost of fuel subsidies Identify strategy for metering strengthening Customer Services dept. Metering Metering substitution/installation Customer Services dept. roll-out strategy roll-out Perform monthly metering reads Customer Services dept. 1) e.g. 90% of P&L costs benefiting from subsidies fuel pricing combined with a lifeline tariff to protect the most vulnerable customer classes Milestones (i.e. gradually phase out energy price subsidies through well targeted SSN); 2) ) e.g. 100% of P&L costs include subsidized fuel pricing charge One shot on GECOL+ 20% of cost of fuel subsidies + Lifeline tariff activity Source: Strategy& analysis Strategy& | PwC Prepared for The World Bank 137 Recommendations and action plan | Improve financial sustainability GECOL shall set ambitious (but achievable) target milestones through a progressive tariff reform Tariff reform roadmap Wave I Wave II ILLUSTRATIVE 2017 2021 2023 2026 2030 1.1 100% 100% Tariff 90% GECOL P&L rationale costs on customers 65% 2.2 100% Cross sub- 90% Coverage of sidization residential- 75% driven costs 45% 3.1 Residential State offices Active Street light. Commercial charges Demand Small Agr. Light Ind. P Large Agr. charge Heavy Ind. P 3.2 Residential State offices P Rate Street light. Commercial schemes Time-varying Small Agr. Light Ind. P energy charge Large Agr. Heavy Ind. P Source: Strategy& analysis Strategy& | PwC Prepared for The World Bank 138 Recommendations and action plan | Improve financial sustainability For instance, GECOL may target to increasingly cover P&L costs and start reflecting part of the cost of fuel subsidies Tariff rationale roadmap Wave I Wave II ILLUSTRATIVE 2017 2021 2026 2030 Cost of fuel subsidies on 50% customers 20% 0% 0% 100% 100% GECOL P&L 90% costs on Gradual coverage of OPEX may be combined with a lifeline tariff for households with monthly customers 65% consumption below a certain threshold in order to protect most vulnerable customer classes ((i.e. gradually phase out energy price subsidies through well targeted SSN) Source: Strategy& analysis Strategy& | PwC Prepared for The World Bank 139 Recommendations and action plan | Improve financial sustainability Cross-subsidies between customer classes might be gradually decreased… Cross subsidization roadmap Wave I Wave II ILLUSTRATIVE Coverage of class- 2017 2021 2026 2030 driven costs(1) State offices 290% Commercial 210% 200% Heavy Industrial 150% 170% Light Industrial 145% 130% 135% 135% Street Lighting 140% 120% Large Agriculture 125% 110% 100% 100% 90% Small Agriculture 80% 90% 75% Residential 45% 1) Based on allowed costs by customer class (which benefit from subsidies); thus, values higher than 100% do not necessarily imply full coverage of overall class-related costs Source: Strategy& analysis Strategy& | PwC Prepared for The World Bank 140 Recommendations and action plan | Improve financial sustainability …and more advanced charges and rate schemes applied, enabled by metering technology deployment and upgrade Charges and rates roadmap Wave I Wave II ILLUSTRATIVE 2017 2021 2026 2030 2020 Customer [all cust. charge classes] Customer charge Heavy Ind. Large Agr. Demand charge Light Ind. Active Demand Small Agr. charge Commercial charges Street light. State offices Residential Energy [all cust. charge classes] Energy charge 2020 Customer [all cust. charge classes] Flat rate Demand [all cust. charge classes] Flat rate Heavy Ind. Rate Large Agr. Flat rate Time-varying rate schemes Energy Light Ind. Small Agr. charge Commercial Street light. State offices Residential Progressive rate Source: Strategy& analysis Strategy& | PwC Prepared for The World Bank 141 Recommendations and action plan | Improve financial sustainability Guided by a gradual and tailored improvement pathway, tariff framework would thus experience a smooth transition Average tariff evolution INDICATIVE (1) ILLUSTRATIVE Customer Demand Energy charge charge charge 2017 2021 2026 2030 LD / Dhs / Dhs / month kW kWh Customer Demand Energy Customer Demand Energy Customer Demand Energy Customer Demand Energy charge charge charge charge charge charge charge charge charge charge charge charge Heavy Industrial 31 94 5 14 80 3 32 80 3 60 Large Agriculture 32 37 4 12 32 3 33 32 3 61 Light Industrial 42 22 42 19 4 34 19 4 64 Small Agriculture 30 15 33 19 4 35 19 3 65 Commercial 68 29 60 25 6 46 19 4 64 Street Lighting 68 17 69 16 70 16 94 State offices 68 29 56 22 64 16 75 Residential 20 9 37 13 58 14 90 120 120 120 120 102 100 100 100 91 100 91 Focus on 80 80 80 74 80 72 66 57 Residential - 60 60 51 60 60 40 40 35 40 40 40 Energy charge 20 20 20 20 20 20 (Dhs / kWh) 0 0 0 0 0 200 400 600 800 0 200 400 600 800 0 200 400 600 800 0 6 12 18 24 Flat rate (kWh / month) Progressive rate (kWh / month) Progressive rate (kWh / month) Time-varying rate (kWh/ month) 1) True tariff calculation and design process is enabled by year-by-year financial and technical performance data projection; Source: Strategy& analysis Strategy& | PwC Prepared for The World Bank 142 Recommendations and action plan | Improve financial sustainability PRELIMINARY GECOL shall then urge to address electricity theft through improvements in metering and billing practices Measures and activities Measures Activities 2021 2022 Year 2018 2019 2020 2021 2022 2023 2023 Owner Clarify electricity police position as GECOL’s employees HR & Communication dept. Pursue a systematic field assessment looking for irregular Customer Services connections, tampered or damaged consumption meters, dept. unmetered customers Draw a detailed map of potential theft areas Theft areas map Customer Services dept. Perform recurrent inspection of Customer Services potential theft areas dept. Address electricity Unify billing and meter reading period for all customers Customer Services theft dept. Regularly plan for the assessment of the quality and Customer Services condition of meters to detect theft and manipulation dept. considering the use of the following measures: • Average age of meter • Meter replacement rate • Frequency of meter calibration • Frequency of meter and seal inspection Use of boxes to ensure that the consumption meters are Customer Services properly sealed and cannot be tampered with dept. Milestones Task A reform will also help GECOL to accomplish electricity theft through a series of regulatory / legal measures One shot activity Source: Strategy& analysis Strategy& | PwC Prepared for The World Bank 143 Recommendations and action plan | Improve financial sustainability PRELIMINARY – To be up-dated with Task B results If GECOL were able to reduce commercial losses back to ~20%, it might decrease by 2.9bn LD the state burden Scenario simulation Input Output Commercial loss (%) Financial impact 1 (Bn LD) 80% Actual “Change” scenario 2,5 70% 69% P&L costs 1,9 60% 2,0 50% 1,5 40% 1,1 30% 1,0 2,0 2,0 20% 25% 0,6 1,5 Rev. invoiced 1,3 20% 0,5 10% Rev. collected 0,7 0,8 0% 0,0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Actual “Change” scenario Δ vs. “Do-nothing” "Do-nothing" scenario Subsidy –2.9 Bn LD Cumulated 2018-2023 5.7 Bn LD "Change" scenario Bad debt 2.8 Bn LD +1.4 Bn LD Net impact –1.5 Bn LD 1) Provided that all selected variables other than Commercial loss are fixed Source: Strategy& analysis Strategy& | PwC Prepared for The World Bank 144 Recommendations and action plan | Improve financial sustainability PRELIMINARY Insolvency shall be fought through the development of appropriate awareness programs and collection facilities Measures and activities Measures Activities 2021 2022 Year 2018 2019 2020 2021 2023 Owner 2022 2023 Introduce disconnection policy for customers non paying electricity Customer Services of 3//4 bills in a raw or ceiling of accumulated debt dept. and unify these measures across commercial offices to increase transparency and equality across all customers types Upgrade invoicing and overdue notifications processes Customer Services from manual to electronic (i.e. e-mail) dept. Build a database with customers’ information Customer Services (e.g. e-mail addresses, phone numbers) Customers database dept. & ICT Set up SMS and e-mail overdue Customer Services notification systems1 SMS/e-mail billing in operation dept. & ICT Fight insolvency Develop program to launch GECOL’s Customer Services mobile payment app GECOL’s mobile app running dept. & ICT Introduce penalties for non payment or delayed payment of electricity Customer service (e.g. payment of bill on time gives customers a 5% special discount) dept. Launch a media campaign to encourage customers to pay bills on time Public relations and raise awareness on the fact that electricity is a commercial good with dept. a price Perform bad debt analysis in line and after cash collection AFC dept. Introduce write-off and bad debt policy Financial affairs dept. Milestones One shot 1) Pilot program already launched from GECOL activity Source: Strategy& analysis Strategy& | PwC Prepared for The World Bank 145 Recommendations and action plan | Improve financial sustainability PRELIMINARY – To be up-dated with Task B results Succeeding in increase collection to 85% -- even at current low invoicing – it mean to collect an additional 0.6 Bn LD Scenario simulation Input Output Collection rate (%) Financial impact 1 (Bn LD) 120% Actual “Change” scenario 2,5 100% 85% 2,0 P&L costs 2,0 80% 1,5 60% 52% 48% 1,0 40% 0,6 0,5 Rev. invoiced 0,5 20% Rev. collected 0% 0,0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Actual “Change” scenario Δ vs. “Do-nothing” "Do-nothing" scenario Subsidy Cumulated 2018-2023 8.5 Bn LD 0.0 Bn LD "Change" scenario Bad debt 0.8 Bn LD –0.6 Bn LD Net impact –0.6 Bn LD 1) Provided that all selected variables other than Collection rate are fixed Source: Strategy& analysis Strategy& | PwC Prepared for The World Bank 146 Recommendations and action plan | Improve financial sustainability PRELIMINARY GECOL shall then also consider appropriate solutions to freeze salaries growth and re-design its benefits plans Measures and activities Measures Activities 2021 2022 Year 2018 2019 2020 2021 2023 Owner 2022 2023 Baseline current compensation and benefits Employee affairs dept. Benchmark local compensation and benefits practices for Employee affairs dept. comparable companies Control operating Develop compensation and benefits revision plan Employee affairs dept. expenses Integrate redesigned compensation and benefits within ERP system ICT dept. Implement revised compensation and benefits plan HR&O dept. Salaries & benefits revised Milestones One shot activity Source: Strategy& analysis Strategy& | PwC Prepared for The World Bank 147 Institutional development Processes Manpower IT Technical performance Financial performance Back-up – Review of 2011-2015 GECOL 6 part strategy Strategy& | PwC Prepared for The World Bank 148 One of the first steps of Task C has been to assess GECOL progress against its 2011-2015 objectives GECOL’s 2010 Six Part Strategy – Targets 1 2 3 4 5 6 Improve Reduce Build and Strengthen Influence Redeploy system commercial retain information sector resources performance losses capabilities resources policies TARGETS • 18% Reserve • 9% commercial • 1.0 output • 100% career • 100% database • 100% margin losses productivity development coverage documented implementation perspectives on • No delay of • 7000 • 100% business • 100% GIS sector policy maintenance of connection process • 100% adequacy implementation issues generation backlog implementation training assets • 100% • No financial • 100% • 100% transaction impact of • 33% thermal outsourcing performance accuracy government efficiency implementation appraisal decrees within implementation • 100% data strategic plan • 2.8% • 100% job accuracy period transmission description losses development • 5.2% distribution losses Source: GECOL Strategic Plan Update (2009) Strategy& | PwC Prepared for The World Bank 149 Improve system performance The generation expansion plans have only been partially completed … Status of strategic plan initiatives Objective New plant Target Status Zwetina Complete by 2010 2 units completed1 in 2010, 3rd exp. in 2017 3 Western Mountain expansion Complete by 2010 Completed in 2011-12 4 Benghazi North 2 Complete by mid 2011 Completed in 2013 4 Misurata CC Complete by mid 2011 Completed in 2015 4 Sarir Complete by end 2011 2 units completed in 2013, 3rd exp. in 2017 4 Khaleej Complete by 2012 1 unit completed in 2015, 3 left exp. in 2019 1 Generation Ubari Start-up by end of 2013 No units completed, all 4 units exp. in 2018 0 expansion to meet demand Zwetina ST Start-up by end of 2013 N/A Tripoli West Start-up by end of 2013 No units completed, all 4 units exp. in 2020 0 Melitah Contracted and built by 2013 No units completed, all 4 units exp. in 2021 0 Alhoms II Contracted and built by 2014 No units completed, all 2 units exp. in 2017 0 Tripoli East Contracted and built by 2014 No units completed, all 4 units exp. in 2021 0 Benghazi West Contracted and built by 2014 No units completed, all 4 units exp. in 2026 0 New power plant (CCGT) Contracted and built by 2014 N/A Data N/A Met Nearly met Partially met Negligible progress No Progress 1) One unit suspended in 2015-2016 due to transformer failure (replaced in 2017) Strategy& | PwC Prepared for The World Bank 150 Improve system performance … which resulted in a reduced reserve margin -- on the other hand, average thermal efficiency improved Status of strategic plan initiatives Initiative / activity for Value 2015 Latest Objective KPIs Status 2011-2015 2009/2010 Target available Reserve Margin1 (%) -4% 18% -26% 0 Availability of 86% 89% N/A Generation Assets2 (%) Delay of Maintenance • Conduct cost benefit of Generation Assets3 40% 0% N/A analysis for maintenance (%) Generation of generation assets Assets • Develop maintenance plan Improvement • Execute maintenance / Derating capacity 81% 87% N/A overhaul of generation factor4 (%) assets Thermal Efficiency 4 32% 33% 35%6 (%) Forced Outage Rate5 5% 2% N/A (%) Data N/A Met Nearly met Partially met Negligible progress No Progress 1) (Available capacity – Peak load) / (Available capacity); 2) (Average annual number of running hours weighted by nameplate capacity) / 8760; 3) Number of units overdue for maintenance in excess of 6 months / Total number of units; 4) (Maximum available capacity) / (Total nameplate capacity); 5) (Average number of forced outage hours weighted by nameplate capacity) / 8760; 6) See Rapid assessment of sector performance report for deep-dive Strategy& | PwC Prepared for The World Bank 151 Improve system performance Losses on the T&D network have slightly improved, but are still far from reaching the strategic plan objectives Status of strategic plan initiatives Value 2015 Latest Objective Initiative for 2011-2015 KPIs Status 2009/2010 Target available • Assess ongoing T&D projects T&D • Revise and approveT&D expansion Transmission 1 System plan 15.5% 12.2% 15.2%1 Losses (%) Strengthening • Monitor and execute transmission projects • Conduct demand side management study Collection Demand Side • Deploy demand side management 2 Effectiveness N/A 35 N/A Management pilot program3 (LD/MWh) • Execute demand side management plan Data N/A Met Nearly met Partially met Negligible progress No Progress 1) 2015; 2) (Revenues collected) / (Generation) 3) GECOL carried out a DSM study, which stopped just prior to executing the pilot projects. The 2011 events prevented execution of the pilot projects Strategy& | PwC Prepared for The World Bank 152 Reduce commercial losses Commercial losses worsened, growing to an unsustainable ~60% (vs. 9% target) Status of strategic plan initiatives Planned actions & initiatives Value 2015 Latest Objective KPIs Status for 2011-2015 2009/2010 Target available • Launch a comprehensive analysis Commercial Loss1 16.2% 9.0% 59.6% 0 program of commercial losses • Streamline the customer facing (%) processes Reduce • Launch a customer services Commercial cultural transformation program losses • Launch a commercial loss awareness campaign • Commercial loss reduction Connection The increase is (at least infrastructure gaps Backlog2 40,000 (est.) 7,000 N/A partially) due to GECOL • Enforcement of collection (#) being prevented from connecting users w/o regular building permit Data N/A Met Nearly met Partially met Negligible progress No Progress Note: Libya's urban master-plans have not been updated (last approved versions date to the late 1970's). Therefore many new buildings do not have building permit and GECOL was prevented from connecting consumers that did not have a building permit. This contributed to the increase in illegal connections, adding to the commercial losses. This precondition for a legal connection has now been removed. 1) (Energy consumed – energy invoiced) / (Net generation); 2) Number of customers waiting for connection beyond 2 months Strategy& | PwC Prepared for The World Bank 153 Redeploy resources GECOL productivity per FTE did not improve Status of strategic plan initiatives Planned actions & initiatives Value 2015 Latest Objective KPIs Status for 2011-2015 2009/2010 Target available Output Productivity1 0.7 1.0 0.7 0 (GWh/FTE) • Improve organization and Business processes Process - Business processes re- N/A 100 N/A Implementation2 engineering (%) - New organization structure Redeploy roll-out to align organization Outsourcing resources blueprint to revised business Implementation3 0 100 N/A processes (%) • Identify and execute manpower rebalancing programs • Fast-track outsourcing of non-core activities and SLAs development Job Description Development4 0 100 N/A (%) Data N/A Met Nearly met Partially met Negligible progress No Progress 1) (Generation) / (# of FTEs); 2) (# of business processes defined and implemented) / (# of business processes identified in process plan); 3) (# of outsourced functions) / (# of identified functions for outsourcing); 4) (# of positions with job description) / (Total number of positions) Strategy& | PwC Prepared for The World Bank 154 Build and retain capabilities No status have yet been reported on GECOL capabilities building, employee satisfaction or training adequacy … Status of strategic plan initiatives Planned actions & initiatives Value 2015 Latest Objective KPIs Status for 2011-2015 2009/2010 Target available Career Development Implementation1 0 100 N/A (%) Adequacy of Training2 N/A 100 N/A • Compensation and benefits re- (%) design Build & • Performance appraisal system re- Performance retain design Appraisal capabilities • Career development plan design N/A 100 N/A Implementation3 • Training program assessment and (%) re-design Employee Satisfaction4 N/A 80 N/A (%) Data N/A Met Nearly met Partially met Negligible progress No Progress 1) (# of employees with career development plants) / (Total # of employees); 2) (# of employees who have completed training assigned in their carrer development plans) / (Total # of employees); 3) (# of performance appraisals completed) / (Total # of employees); 4) (# of employees giving an overall ‘acceptable’ respon se) / (# of respondents to employee satisfaction survey) Strategy& | PwC Prepared for The World Bank 155 Strengthen information resources … Nor on the IT resources strengthening Status of strategic plan initiatives Planned actions & initiatives Value 2015 Latest Objective KPIs Status for 2011-2015 2009/2010 Target available Database Coverage1 N/A 100 N/A (%) • Improve availability of information GIS for management decisions Implementation2 0 100 N/A • Database improvement (%) • Data handling process implementation Transaction Strengthen • Acquire needed additional Accuracy3 N/A 100 N/A information systems (%) resources • GIS roll-out • e-Management • ERP system activation Data • Achieve process discipline Accuracy4 N/A 100 N/A embedded in ERP and other (%) systems User Satisfaction5 N/A 80 N/A (%) Data N/A Met Nearly met Partially met Negligible progress No Progress 1) (# of archives enetered into IT DB) / (# of archives identified for electronic archiving); 2) (# of sites connected to GIS) / (# of sites identified as suitable for GIS); 3) (# of fully accurately automated processes) / (# of processes sampled); 4) (# of accurate data samples) / (# of data samples); 5) (# of ERP users giving an overall ‘acceptable’ response) / (# of respondents to user satisfy. survey) Strategy& | PwC Prepared for The World Bank 156 Influence sector policies In terms of sector policy influence, GECOL was negatively impacted by the tariff reduction imposed by the Government Status of strategic plan initiatives Planned actions & initiatives Value 2015 Latest Objective KPIs Status for 2011-2015 2009/2010 Target available • Regulatory strategy development: - Sector structure & unbundling Documented - Tariff adequacy/subsidy perspectives on mechanism sector policy 0 100% N/A N/A - Proposal for electricity theft issues1 law and enforcement (%) mechanism - Fuel allocation and pricing Influence policy Sector Policy • Development and implementation of stakeholder outreach and communication plan • Policy Compliance plan and Financial Mitigation strategies impact of government -0.8bn • Assess impact of potential 0 decrees within - 366 0 (cumulated policy changes strategic plan 2010-2015)2 • Review compliance period2 requirements and identify (M LD) gaps Data N/A Met Nearly met Partially met Negligible progress No Progress 1) (# of documented perspectives on policy issues) / (# of policy issues determined by GECOL to have significant implications); 2) (Gain from changes) – (Loss from changes pre year) 2) See chapter “Issues and implications for GECOL resulted from sector assessment” for detail review Strategy& | PwC Prepared for The World Bank 157