TERMS OF REFERENCEFOR

THE SERVICES OF AN OWNER’S ENGINEER

1. BACKGROUND INFORMATION1.1. About SSGC1.2. Current status

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2. CONTRACT OBJECTIVES AND EXPECTED RESULTS2.1. Overall objectives2.2. Specific objectives2.3. Results to be achieved by the Firm

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3. ASSUMPTION AND RISKS3.1. Assumptions underlying the project3.2. Risks

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4. SCOPE OF THE WORKS TO BE CARRIED OUT4.1. General

4.1.1. Project Description4.1.2. Geographical area to be covered

4.2 Specific activities

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5. LOGISTICS AND TIMING5.1. Location5.2. Commencement date and period of execution

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6. REQUIREMENTS6.1. Personnel

6.1.1. Key Experts6.2. Technical Capacity of the Firm6.3. Economical and financial status6.4. Certification of legal status of signatory of proposal6.5. Office accommodation6.6. Facilities to be provided by the Firm6.7. Equipment6.8. Incidental expenditure

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7. REPORTS7.1. Reporting requirements7.2. Submission and approval of reports

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8. PAYMENT SCHEDULE 34

[1.] BACKGROUND INFORMATION[1.1.] Background information[1.2.] Current status

[2.] CONTRACT OBJECTIVES AND EXPECTED RESULTS[2.1.] Overall objectives[2.2.] Specific objectives[2.3.] Results to be achieved by the Firm

[3.] ASSUMPTION AND RISKS[3.1.] Assumptions underlying the project[3.2.] Risks

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[4.] SCOPE OF THE WORKS TO BE CARRIED OUT[4.1.] General

[4.1.1.] Project Description[4.1.2.] Geographical area to be covered

[4.2] Specific activities[5.] LOGISTICS AND TIMING

[5.1.] Location[5.2.] Commencement date and period of execution

[6.] REQUIREMENTS[6.1.] Personnel

[6.1.1.] Key Experts[6.1.2.] Other Experts

[6.2.] Technical Capacity of the Firm[6.3.] Economical and financial status[6.4.] Certification of legal status of signatory of proposal[6.5.] Office accommodation[6.6.] Facilities to be provided by the Firm[6.7.] Equipment[6.8.] Incidental expenditure

[7.] REPORTS[7.1.] Reporting requirements[7.2.] Submission and approval of reports

[8.] PAYMENT SCHEDULE

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1. BACKGROUND INFORMATION

Pakistan is a vibrant multicultural country with an enormous potential for development. It is ideally located at junction of Central Asia, China and South Asia and Middle East. A significant portion of the country’s population is working-age aided by arable land, rivers, mountains and abundant natural resources. The country has one of the most widespread irrigation networks in the world, which areis the backbone of its agricultural economy andsector, athe major source of income/employment.

Besides facing imperious governance and political challenges, economic growth has been slower, with double-digit inflation rate rising constantly. One of the crucial barriers to the growth of economy has been scarcity of electricity; only 70% households are served by grid-based electricity. Power sector has to cope up with widening energy demand-supply gap resulting in the prevalence of load shedding. The major contributor is the lack of domestically produced natural gas to fuel country’s thermal power plants.

The high economic growth during 2002-06 created an expansion in energy demand beyond the anticipation of planners. Frayed government structures, poor governance and ineffective decision making have hampered on-time development of indigenous energy resources like coal, hydropower and other renewable. This is supplemented by inadequate financial incentives for domestic production of natural gas hence, lowering gas production and leaving resources untapped. In addition, to this the gas network has been expanded to serve transportation sector and households in rural and far-flung areas. This has resulted in reduced allocation of gas to power sector, which is constrained to import oil products to fuel power plants.

The sub-optimal power investment choices and insufficient cost control have been deemed as major reasons for high electricity costs. Electricity tariffs have been continuously revised since 2008-10 period, after several years of no variation in the past. The recent tariff structures have yet to catch up with the full costs owing to dependence on oil for power generation. For compensation of this deficit, a governmental “tariff differential subsidy” has been established; the timeliness and completeness of subsidy payments is also a major challenge for the Government of Pakistan. This coupled up with the non-payment /partial payment for consumers to the energy providers, results in circular debt, impeding flow of money to transmission companies, energy producers and fuel suppliers. Moreover, large subsidies in the natural gas tariff to fertilizer and households have also not been too favourable towards energy efficiency and conservation measures. On top of it, the cost of indigenous natural gas in Pakistan, is a bit inexpensive as compared to oil products. Unless the energy sector is enhances its efficiency, by optimal use of resources and reduction of wastages, it is unlikely for the country to halt the degeneration of economy and revert to economic growth.

The share of natural gas in the country's energy mix is about 50%, all of which is produced domestically. Many large gas fields are in decline and the forecasting at current production levels represents a near peak production scenario. Presently, Pakistan is not into the import of natural gas, however, it is an option which has been under consideration

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at all quarters. The importation of LNG and pipeline gas from Iran or Turkmenistan, are most likely alternatives to be expedited.

Natural gas is supplied by two companies namely: Sui Southern Gas Company Limited (SSGCL) and Sui Northern Gas Pipelines Limited (SNGPL). Both companies have their own transmission and distribution networks and are listed on the domestic stock exchanges. SSGCL, which is the employer of the Owner's Engineer, has network coverage in the provinces of Sindh and Balochistan, with around 70% network in Karachi, the hub of all commerce in Pakistan. SNGPL serves Punjab and Khyber-Pakhtunkhwa provinces. SSGCL has 60% direct state ownership, while government-controlled financial institutions hold about 10% share.

Presently, the gas sector in Pakistan is facing the following challenges:

i) Higher levels of lost and unaccounted-for-gas (UFG)ii) Inefficiencies at end-use of natural gasiii) Shortage of gasiv) Inadequate allocation of gas

1. The difference between metered gas volume received by a gas utility during a time period and the metered volume of gas delivered to its consumers during that period, excluding the utility's internal consumption. The UFG of SSGC during FY 2009-10 was around 7.95% and that of SNGPL was around 9.63%. The UFG consists of physical (gas losses due to leakages) and commercial (theft of gas, inaccuracy of metering equipment due to improper maintenance, billing cycle) components. A significant amount of gas losses comes from deteriorating pipelines, followed by leaking joints in service connections, gas theft in the form of tampered-with meters, illegal connections, old/malfunctioning metering equipment and gas leakages due to higher than required pressure.

Focusing on SSGC, the UFG figure has almost remained on the same percentage level over the last decade, with an upsurge of 1% in FY 2009-10. This can be linked to the following reasons: i) Government of Pakistan directed both gas companies to expand gas networks to new towns and villages and industrial areas, which over the period resulted in diversion of resources from operation and maintenance to network expansion; ii) the compensation model of financial returns used for both gas companies, wherein the return on investment is calculated to provide a specific return on net fixed assets, (this also favours the system expansion rather than system upkeep); iii) absence of financial penalization of the gas companies for high losses, until recently i.e. 2004; iv) lack of quality control and decreasing craftsmanship/skills obsolescence; v) gas theft based on collusion between users and utility staff; vi) lack of legislative support to both gas utilities for uprooting gas theft.

2. In Pakistan, the field of energy utilization is grossly inefficient as the power plants have old generation technologies which are also improperly maintained, industrial sector uses obsolete equipment beyond its rated life and manufacture of

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appliances is not standardized. The gas utility companies need capacity building measures in the field of energy conservation and energy audit, manned with teams of Certified Energy Managers to conduct energy audit of industries. In the households, inefficient gas appliances are used which waste a substantial amount of gas. The gas appliance industry generally produces low efficiency appliances that do not meet the minimum efficiency requirements of Pakistan Standard of 2008. Improvements are necessary in appliance standards, labeling and testing for adequate certification, energy efficiency labeling and other enforcement measures. Moreover, owing to lower gas prices as compared to International standards, domestic consumers have little incentive to shift to more efficient appliances

3. The gas sector in Pakistan is facing a supply gap of 500 bcf forecasted for 2015 that is set to increase to 2000 bcf by 2025. Pakistan has probable but unproven reserves of unconventional gas mostly in the form of tight reservoirs, which are more costly to extract. If extracted, these may cause a doubling of domestic gas reserves, extending the plateau production level and cause a slower production decline.

The gas crisis has been created because the natural gas network and gas consumption has surpassed the gas production rate. From 2003 to 2009, gas consumption increased by an annual average of 11% in industry, about 7% in residential and more than 40% in transportation (use of compressed natural gas, CNG). Gas supply to power sector declined by 3% per annum over this period. Expansion of gas networks for serving rural population and businesses has been a political priority and also allowed gas companies to deploy more capital, earning financial return on added fixed assets. In order to make the network extension sustainable, additional gas resources have to be made available by import of gas and enhancement of domestic production.

4. Gas allocation in Pakistan is subject to "Natural Gas Allocation and Management Policy" of 2005, which establishes an order of merit for gas dispatch: 1) Domestic and commercial sectors; 2) fertilizer sector and industrial process gas use; 3) independent power plants and WAPDA/KESC power plants with firm gas purchase agreements; 4) general industry and CNG sectors; 5) WAPDA/KESC power plants without firm gas purchase agreements and captive power (power generation by industries) and 6) the cement sector. For many years, major state- owned power plants have operated without binding gas purchase agreements and therefore given a low-priority in supply, causing less gas to be supplied as fuel for power generation. The gap on the fuel demand has been filled partly by imported petroleum products, the remaining by electricity load shedding.

[1.1.] Background informationAbout SSGC

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Sui Southern Gas Company (SSGC) is one of Pakistan's leading integrated natural gas utility Company, which is engaged in the business of transmission, and distribution (and supply from gas field to gas markets and from gas markets to points of end-use) of natural gas in the provinces of Sindh and Balauchistan.

SSGC’s high pressure gas transmission system extends from Sui in Balauchistan to Karachi in Sindh comprising over 3,200 km of pipeline ranging from 12 – 24 inch in diameter. The distribution network of over 39,353 km (including services) covers over 1200 towns in the Sindh and Balauchistan are organized through its regional offices. An average of about 356 billion cubic feet (BCFbcf) gas was sold in 2010-2011 to over 2.32 million industrial, commercial and domestic consumers in these regions through a distribution. The company also owns and operates the only gas meter manufacturing plant in the country, where 500,000 small capacity diaphragm meters are produced annually.

The Company has an authorized capital of Rs. 10 billion of which Rs 6.7 billion is issued and fully paid up. The Government owns the majority of the shares which is presently over 70%.

The Company is managed by an autonomous Board of Directors for policy guidelines and overall control. Presently, SSGC's Board comprises of 14 members. The Managing Director/Chief Executive has been delegated with such powers by the Board of Directors as are necessary to effective conduct the business of the company, and is supported by two Deputy Managing Directors, along with a management team.

1.1. Current status

Over the six year period from 2003 till 2010, the UFG of SSGC has been following a rising trend as shown in the table below:

YEARSCOMPANY WIDE

UFG VOL(MMCF)

%

FY2003-04 22,957 7.09

FY2004-05 26,988 7.48

FY2005-06 25,375 6.65

FY2006-07 28,712 7.53

FY2007-08 26,060 6.63

FY2008-09 33,040 7.93

FY2009-10 35,010 7.95

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As per the directives of Government of Pakistan, SSGC has developed a project termed as Natural Gas Efficiency Project (NGEP), which is a USD 272 million, five-year initiative, aimed at combating the rising UFG in the Company's gas distribution network. The project is financed by the World Bank loan component (USD 200 million), borrowing from local banks and Company's internal transfer of funds. The project objectives are as under:

a) Reduction of network losses (underground and overhead leakages) through rehabilitation of dilapidated leaking mains and services.b) Increasing measurement accuracy/mitigation of measurement errors with the use of modern meters and use of advanced technology to detect / curb gas theft at an early stage.c) Promote usage of gas appliances efficient with reference to gas consumption by end users.d) The conserved gas will be available for meeting the growing gas demand by power and industrial sectors leading to economic development.e) Reduction of methane/other hydrocarbons (a potent green house gases) to the atmosphere.f) To improve organizational performance of SSGC in its core-business.

The NGEP is composed of the following components:

Component 1: UFG reduction (US $ 192 million). This component has the following elements:

i. Segmentation and pressure managementii. Pipeline rehabilitation (comprising: Trenching and road restoration and pipeline replacement or leak rectification)iii. Overhead leak rectificationiv. Cathodic protectionv. Advanced metering systems

The physical targets are tabulated below:Items Unit 2012-13 2013-14 2014-15 2015-16 2016-17

Rehabilitation of Distribution system

Km 950 1,200 1,200 1,200 1,200

Underground leak survey and rectification

Km 3,100 3,600 4,000 4,000 4,000

Overhead leakage survey and rectification

No. of customer

connections430,300 585,000 585,000 585,000 585,000

Meters Nos. 2,644 2,643 2,643 2,566 2,566Meter testing equipment Nos. 24 - - - -Surveillance and data monitoring equipment

Nos. 500 500 500 500 500

Pipe recoating Km 65 90 115 90 90CP Equipment Nos. 750 1,194 1,531 1,236 1,191Segmentation & pressure management equipment

Nos. 100 150 150 -

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Procurement of Vehicles Nos. 70 70 49 -

Procurement of Equipment

Nos. 130 90 70 -

1. Segmentation and pressure management (USD 19 million) - is a crucial component of NGEP, as it is aimed at pin-pointing where the UFG is in the system. This will require the elaborative work of segregating the distribution network into 400 smaller segments by installing bulk meters at inlet points and monitoring gas in and gas out i.e. recorded at customer meters to gauge the UFG level of the segment followed by pressure testing, leakage surveys, malfunctioning/tampered-with meter identification and rank the segments for rehabilitation and/or theft investigations. The SSGC distribution network has already been divided into business units North and South, each looked after by a Senior General Manager (also team members of SSGC Management). Each business unit in turn has been divided into three sub-units, which are headed by their respective General Managers.

Since all of the rehabilitation cannot be accomplished at once, hence the

segments where UFG due to pipeline leakages exists will be deteriorating and their rate of UFG will keep on rising. Therefore, it is imperative that the distribution network segments are operated at optimum (lower minimum) pressures to reduce the leak rates. Hence, 400 pressure management and monitoring systems will also be installed in conjunction with segmentation.

2. Pipeline rehabilitation has two components i.e. replacement of irreparable leaking pipes and leak rectification of existing less damaged ones. It is

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estimated that around 5,750 km of pipelines would be replaced and about 18,700 km would undergo some form of rectification/repairs under NGEP. The condition of pipe can only be known after it is dug up and examined from the surface. The actual quantum of this work may shift as SSGC executes the project (The pipeline characteristics of SSGC's distribution network are described later in the synopsis of SSGC distribution network). The project finances procurement of PE and steel pipes of various diameters, SSGC will however focus on shifting its rehabilitated network from steel to PE mostly in urban areas. Operational equipment like: pipe fusion equipment, welding plants, electric generators, air compressors, de-watering pumps, specialized transport vehicles, leak survey equipment, will also be procured under this project to facilitate implementation. Works such trenching, backfilling and road restoration will be outsourced.

3. The leakage of above ground gas connections especially the threaded connections to residential consumers will also be attended, through outsourcing.

4. Cathodic protection will be carried out to arrest the rate of network deterioration through corrosion of buried steel pipes. This will be achieved through installation of recoating material for approximately 450 km of pipes, installation of power sources, battery back-up systems, magnesium anodes and remote CP monitoring systems.

5. Advanced metering systems will replace old meters that are inaccurate and prone to tampering. Surveillance equipment will also be procured to monitor gas theft at metering stations. About 270 turbine meters will be installed at large industrial customer meter stations and about 12,500 ultrasonic meters for industrial and commercial consumers will also be installed. Data acquisition and monitoring systems as well as calibration equipment (provers) will be procured.

SYNOPSIS OF GAS DISTRIBUTION NETWORK

The gas distribution network of SSGC comprises 39,253 km of PE and Steel pipes of sizes ranging from 42 (1,050 mm) to 1/2 inches (12.5mm). The network comprises 15% polyethylene and 85% steel. The details of the network in Karachi, Interior Sindh and Balauchistan are tabulated below:

MAINSKarachi Interior Sindh Balauchistan Total

Steel Pipe

12.50 - 1 - 1

20 3/4 1,397 41 6 1,444

25 1 3,200 3,812 603 7,615

38 1 50 - 51

50 2 1,820 2,964 2,339 7,123

75 3 - 15 - 15

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100 4 766 2,360 965 4,091

150 6 457 1,237 336 2,030

200 8 495 385 452 1,332

250 10 15 33 6 54

300 12 158 11 48 217

400 16 94 15 51 160

450 18 - - 28 28

500 20 110 - - 110

600 24 87 - - 87

750 30 12 - - 12

1,050 42 12 - - 12

Total Steel Mains 8,624 10,924 4,834 24,382

Polyethylene Pipe

40 1,014 814 33 1,861

63 1,175 661 374 2,210

125 285 189 90 564

180 147 6 4 157

Total PE Mains 2,621 1,670 501 4,792

Total Mains 11,245 12,594 5,335 29,174

SERVICES

Steel Pipe 2,730 2,737 1,225 6,692

Polyethylene Pipe 423 366 130 919

Total Services 3,153 3,103 1,355 7,611

Total Network 14,398 15,697 6,690 36,785

Total Mains 

11,52414,2925,435

31,251SERVICESSteel Pipe

  

2,938 

 2,7931,273

7,004Polyethylene Pipe

469396133

998Total Services

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3,2623,3341,406

8,002Total Network

14,78617,6266,841

39,253

The network has been continuously increasing with a compounded annual growth rate of 7% during the past six years. This can be supported with the help of the following data:

THE GROWTH OF SSGC NETWORK DURING THE LAST SIX YEARS

YearsKarachi Interior Sindh Balauchistan Total Distribution Network

P.E. Steel Total P.E. Steel Total P.E. Steel Total P.E. Steel Total

2011 3,280 11,50614,78

62,136 15,490 17,626 634 6,207 6,841 6,050 33,203 39,253

2010 3,044 11,35414,39

82,036 13,661 15,697 631 6,059 6,690 5,711 31,074 36,785

2009 2,677 11,14913,82

61,934 12,017 13,951 624 5,881 6,505 5,235 29,047 34,282

2008 2,478 10,75613,23

41,833 10,651 12,484 618 5,575 6,193 4,929 26,982 31,911

2007 2,225 1043412,65

91,765 9,610 11,375 609 5,189 5,798 4,599 25,233 29,832

2006 2,030 10,18512,21

51,689 8,388 10,077 602 4,648 5,250 4,321 23,221 27,542

The ageing analysis of the pipeline is as under:

Year Karachi Interior Sindh Balauchistan Total

1-5 Years 2404 5142 2396 99426-10 Years 1444 1023 793 326011-15 Years 2621 3586 1587 779416-20 Years 2423 2371 762 555621-25 Years 826 208 610 164426-30 Years 1476 412 357 224531-35 Years 1325 533 0 185836-40 Years 515 474 0 989> 40 Years 792 202 0 994

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a) 29% of the network is 0 – 5 years old.b) 10% of the network is 6 – 10 years old.c) 23% of the network is 11 – 15 years old.d) 16% of the network is 16 – 20 years old.e) 5% of the network is 21 – 25 years old.f) 7% of the network is 26 – 30 years old.g) 5% of the network is 31 – 35 years old.h) 3% of the network is 36 – 40 years old.i) 3% of the network is more than 40 years old.

Component 2: appliance efficiency pilot project: Pakistan Gas Appliance Efficiency Enhancement Project, (PGAEEP) is initially a three year programme aiming at the development and enforcement of standards and labeling regime for Pakistani Gas Appliance Industry/Market and conserving natural gas. Based on availability of grant from donor agencies, the project scope may be enhanced.

The project will be undertaken by SSGC initially focusing on the gas appliance market in the southern region of Pakistan, which is served by SSGC distribution network. It targets at the design improvements, enhancement of energy efficiency features and installation of gadgets in gas stoves, domestic water heaters (geysers), space heaters and cooking ranges. The possibility of transforming gas-fired geysers into solar-gas hybrids will also be considered.

The organizations ENERCON (Energy Conservation), PSQCA (Pakistan Standards and Quality Control Authority) and SMEDA (Small and Medium Enterprise Development Authority ) will be the implementing partners of SSGC. It is pertinent to mention that ENERCON has an expertise in energy conservation, SMEDA has been actively participating in development of gas appliance vendors, PSQCA has developed a appliance testing facility, whereas SSGC has an expertise of gas engineering. The comprehensive development and implementation of the programme requires appointment of a Consultant(s) well-versed in the field of gas appliance standards, labeling and testing (SL&T). They will also be assigned the task of market study and develop policies for triggering the market forces in favour of energy-efficiency through a applicable SL&T regime.

The Ministry of Petroleum & Natural Resources (MP&NR), Ministry of Environment (MoE), Ministry of Science & Technology (MoST), Ministry of Industries (MoI), the World Bank, local industry and domestic gas consumers will be the key stakeholders of this project component.

Besides the commitment of implementing agencies, the relevance of experience and the quality of services rendered by the Consultant are detrimental to the success of the programme. The other factors that affect the success are the availability of regulatory framework support for energy efficiency. The incorporation of condition no. 41 in the license agreement of SSGC and SNGPL has mandated gas companies to advise consumers about the efficient utilization of natural gas.

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The consultant will be appointed by SSGC, through the WB standard bidding procedure. Their scope of work is outlined as under:

Step – 1 Determination of Present State Review existing standards, testing procedures and testing facilities Review USA, European, Japanese gas appliance standards and testing

procedures Decision Upgrade facilities / develop new facilities Test appliances to establish efficiency

Step – 2 Definition of Benchmark Import gas appliances Review their designs, features and gadgetry used, labeling, standards and

testing procedures Study of Pakistani Appliance Manufacturers capabilities Refine Pakistan Standards and improve appliance product designs Develop criteria for selection of vendors for appliances/appliance

components and contractors for installation of high efficiency appliances Trigger market drivers for high efficiency appliances - develop incentives

for customers, manufacturers

Step – 3 Manufacture of High Efficiency Appliances Notify vendors Place trail orders Inspect and test product accompanied with vendor training and development Select vendors

Step – 4 Installation of High Efficiency Gas Appliances Selection of contractors for installation of HE appliances and removal of old

appliances Customer notifications Installation of appliances Disposal of old appliances

Step – 5 Analyzing and Monitoring Progress Monitoring the gas consumption of customers Comparison with previous billing history Technical analysis for identifying avenues for product improvement

Step – 6 Closing Out/Lessons Learned

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Developing a lessons learned database Making suggestions for up-scaling the project Project close out

Component 3: Technical assistance - for supplementing NGEP activities and sustainable UFG reduction efforts in future, the project will finance technical audits, training of trainers for company's Gas Training Institute (GTI) and its upgrade through enhancing its infrastructure as well as annual customer satisfaction surveys. Project implementation will be supported by various consulting services: Owner's Engineer and Lender's Engineer. These firms will comprise teams of international consultants which will develop R&D function at SSGC for project implementation, new technologies in trenchless pipe-laying, pipeline materials, coating applications, metering, cathodic protection and energy management in gas end-use.

2. CONTRACT OBJECTIVES AND EXPECTED RESULTS

Unlike any other project, NGEP is unique, i.e. it is being implemented for the first time in the history of SSGC. It is therefore imperative to develop SSGC in such a way that it comprehends the purpose and requirements of NGEP, enhances its capacity and aligns its resources for achieving projects objectives and physical targets. This requires the assembling a team of internationally-renowned professionals having an expertise in the relevant areas of NGEP components/sub-components. The team will be termed as Owner's Engineer, a firm appointed by SSGC for the above.

2.1. Overall objectives

i) Facilitation of SSGC in planning/procurement/project management processes;

ii) Suggest and implement strategies for alignment of SSGC functional departments/resources for: executing the project; tracking progress and bringing project progress back on track in case of schedule variance;

iii) Provision of support for capacity building, R&D, and technology-upgrade/transformation of core business activities of SSGC for sustainable UFG-reduction;

iv) Conducting work inspections/technical audits of project deliverables to prepare project/phase completion reports and;

v) Intimation of NGEP-progress to SSGC Management, Lender’s Engineer and the World Bank, at least on quarterly basis

2.2. Specific objectives

a. Enhancement of R&D function and top-supervision of capacity building measures undertaken by SSGC for implementing NGEP.

b. Technical support for various components of NGEP during design,

planning and execution , which includes advice on the selection of

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technologies and methods utilized in UFG reduction (e.g. trenchless pipe-laying).

c. Development/review of standard operating procedures(SOP)/processes for pipeline rehabilitation, overhead and underground leak survey and repair, cathodic protection and maintenance of measurement devices.

c. Project supply chain management activities and procurement support for:

• Preparation / review of bidding documents for goods and works• Review and update specifications of materials and equipment• Responding to questions from bidders and participating in pre-bid

meetings if required• Reviewing bids preparing bid evaluation reports;• Coordinating with contractors during implementation; and • Reviewing and updating the procurement plan as required.

d. Project Management and overall implementation support including a review of contractors’ procedures, monitoring time schedule and cost control, review and evaluation potential change orders, and overall quality assurance/quality control of project implementation.

e. Preparation of monthly progress reports for SSGC Management.

f. Preparation of quarterly performance review reports for SSGC Board of Directors, covering targets, achievements, slippage and recommendations to overcome slippage.

g. Conduct site visits for supervising major works.

h. Reviewing the project cash flow cash flow and review of contractors’ payment certificates and verification of works completed.

i. Development, advise and implement a standards, labeling and testing regime for gas appliances manufactured in Pakistan.

2.3. Results to be achieved by the Firm

The OE will be responsible for the following results:

1. Segmentation of SSGC gas distribution network/business units/sub-units into smaller/manageable segments, where bulk meters are installed at gas inlets and categorization based on UFG level is possible.

2. Operate the high UFG segments at optimal pressures to restrain UFG growth.

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3. Repair and replace pipeline of gas distribution network so that the UFG is decreased from the current level and keeps constant for a period of 5 years after completion of the project.

4. Metering stations of industrial/bulk customers are monitored remotely.

5. The consumption/gas sales of 70% industrial and commercial customers is monitored on-line and the data can be accessed remotely, using data acquisition and monitoring system.

6. The pipeline protection is improved from the current level.

7. The gas appliances standards, labeling and testing regime is introduced and efficient gas appliances are available in the market.

3. ASSUMPTION AND RISKS

3.1. Assumptions underlying the project

i. The project scope has been defined and procurement schedules have been prepared, it is assumed that the revision of scope will be minimum.

ii. The benefits in the form of UFG reductions will be realized as soon as the annual physical targets have been achieved.

iii. SSGC has effectively communicated the importance and requirement of NGEP to all levels within the organization especially the technical departments, hence there will be no internal barriers against the project execution.

iv. SSGC has established a Project Management Office (PMO) for NGEP, which will coordinate with all the relevant departments of SSGC for project activities and resource allocations.

3.2. Risks

i. The project implementation capability of SSGC for undertaking NGEP needs to be enhanced.

ii. SSGC has not been able to achieve the UFG benchmarks set by the regulator hence eroding the Company's profitability.

iii. The project is aimed at reducing UFG to make more gas available to Power sector, however, with network expansions unchecked, this will be a bit complex.

iv. The present Management team will be completing the tenure of their service with the Company, the new team taking over will give priority to the project.

4. SCOPE OF THE WORKS TO BE CARRIED OUT

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4.1. General

4.1.1. Project Description

The Project is divided into the following components: a. Component 1: UFG Reduction b. Component 2: Appliance Efficiency Pilot Project c. Component 3: Technical Assistance

Component 1: UFG Reduction. This component will finance the following sub-components: a. Segmentation and pressure management b. Pipeline rehabilitationc. Cathodic protection d. Advanced metering systems

Network segmentation. Before replacing or repairing pipes, SSGC will “segment” the distribution network by installing bulk meters at nodes in the grid, i.e. at the 537 Town Border Stations (TBS) and in several cases downstream of the TBS’. The segment’s bulk meter readings will be compared with the aggregate of the involved consumer meter readings. The difference between the two gas volume numbers is the UFG in the segment. Also, pressure testing will be undertaken as well as leak detection surveys to help further locate and categorize the UFG and guide the rectifying strategy (repairs versus pipe replacements). The segmentation strategy will allow SSGC to rehabilitate segments in close to merit order.The Project will procure Pressure Management Systems for use at the Town Border Stations. These automatic systems will ensure that the pressure in the various pipeline segments is adequate for meeting gas demand hour by hour. Leakage from corroded steel pipes is largely proportionate with the pipeline pressure. The automatic Pressure Management Systems will reduce the average pipeline pressure and thus reduce the UFG beyond what is possible with the current manual pressure management system, where SSGC’s field staff several times a day modifies the pressure in parts of the network by physically turning valves. The automatic Pressure Management Systems will also feed information about system pressure and gas flows to central computers for better monitoring.Pipeline rehabilitation. The Project will finance about 5,750 km of gas pipes (about 20 percent of SSGC’s total system), which will result in a massive conversion from steel pipes to polyethylene pipes, a decision much driven by the non-corrosive characteristics of the latter. Mostly for pipe dimensions larger than 8 inches SSGC will use steel pipes in the rehabilitation work. Steel pipes would constitute about ten percent of the length of pipes procured.For network segments where leakage is less intense, SSGC will rectify existing pipes by using leak clamps and patches rather than replacing the

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pipes. The company expects to rectify 18,700 km of pipes under the Project.Categorized under pipeline rehabilitation is also numerous ancillary equipment to be procured for executing the operation, such as pipe fusion equipment, welding plants, electric generators, air compressors, de-watering pumps, transport and specialized vehicles, leak survey equipment, pipeline locators; plungers; machines for squeezing, beveling, and bending pipes, testing laboratories, and gas chromatography analyzers. Cathodic protection. Lack of cathodic protection of steel pipes over the years is a major cause of UFG today. A cathodic protection system ensures that a low-voltage electric direct current is led through the pipe wall, causing corrosion to take place on sacrificing anodes rather than on the pipe itself. While such systems can be highly effective in reducing corrosion, SSGC’s cathodic protection systems have been poorly maintained, not fully installed, and have suffered from lack of back-up power when grid-supplied electricity was unavailable. Over decades, electricity supply in Pakistan has been plagued by frequent and long-lasting black-outs, resulting in, among other, corrosion in the gas pipeline network.The Project will procure cathodic protection components such as pipe recoating material, magnesium anodes, power sources, battery and solar power backup systems, remote monitoring systems, and installation services.Advanced metering systems: SSGC does not have a good understanding of what portion of the UFG is gas theft. It is likely to be between 10 and 20 percent of the UFG, with the bulk of it in the industrial and commercial sectors. Gas theft can take the form of meter tampering or meter bypass/illegal connections, and cases of customer collusion with utility staff cannot be excluded. The Project plans to finance 12,500 virtually “tamper-proof” ultrasonic meters for commercial customers. For larger consumers, 270 turbine meters will be procured together with video surveillance systems. These investments have the potential to significantly reduce UFG (see Economic Analysis Annex). Fighting gas theft may have more of a financial impact than a physical impact, although there are expectedly many cases where consumers will consume less gas when faced with paying for the gas in full.Component 2: Appliance Efficiency Pilot Project. The proposed pilot will support both the Government and the gas companies’ energy conservation efforts. This component will finance the deployment of high-efficiency gas appliances, or retrofits for existing appliances, such as burner tip orifices made for thermal efficiency. Focus will be on cooking stoves and possibly water heaters. Attention will be paid to consumers’ financial incentives to replace inefficient appliances. This is a concern notably because by international standards, gas prices are low in Pakistan, and, furthermore, residential tariffs are currently set to about half of the average end user tariff by means of cross subsidies from industrial and power plant tariffs. This situation favors seeking retrofit solutions rather than appliance replacements.

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A thorough plan will need to be instituted to successfully manage the proposed Consumer Appliance Pilot Project, and the Project will provide funding for consultant services to assist SSGC with developing and implementing it.The pilot project would be carried out in coordination with other concerned stakeholders such as the Pakistan Standards and Quality Control Authority (PSQCA) and the National Energy Conservation Centre (ENERCON). Component 3: Technical Assistance (TA). In support of improved customer service and quality in operations, the Project will finance training of trainers for the company’s Gas Training Institute, as well as some equipment for the Institute. SSGC plans to double its training intensity and the Project will contribute to facilitate such higher level. Annual customer surveys in areas with rehabilitated network under the Project would gauge impact on customer satisfaction. A UFG-free segment will have a better ability to deliver gas to customers at adequate pressure, and in other network segment the automatic pressure management can have similar impact.

4.1.2. Geographical area to be covered

The project will be executed in the Sindh and Balauchistan provinces of Pakistan, where gas is supplied by the SSGC distribution network. The maps of the SSGC transmission and distribution networks are depicted below:

SSGC FRANCHISE AREA

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GAS TRANSMISSION INFRASTRUCTURE

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SSGC DISTRIBUTION NETWORK IN KARACHI

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SSGC DISTRIBUTION NETWORK IN INTERIOR SINDH

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SSGC DISTRIBUTION NETWORK IN BALAUCHISTAN

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4.2. Specific activities

The specific tasks of the OE are outlined below:

Task 1: Network segmentation:

1.1. Assist SSGC with network segmentation to select appropriately delineated and sized segments for maximum UFG reduction;

1.2. Assist in developing systems and procedures for establishing a baseline UFG profile for each segment, and a UFG profile as a result of project interventions for the purpose of measuring UFG reduction results;

1.3. Collect and measure UFG data for each segment and prepare periodic reports to the Client’s Board and management, the World Bank, and the Oil and Gas Regulatory Authority (OGRA).

Task 2: Technical design support:

2.1. Advise on the optimal methodology adopted to reduce UFG including selection of appropriate technologies (e.g. trenchless pipe laying, advance metering, distribution system simulation and design, etc.)

2.2. Advise on the methodology and approach to addressing commercial losses including measures to reduce gas theft.

Task 3: Procurement Support:

3.1. Prepare/Review technical specifications for goods and works packages for pipeline replacement / rehabilitation, metering equipment, pressure management systems, cathodic protection, etc.

3.2. Prepare/Review bidding documents for goods and works in accordance with World Bank procurement guidelines.

3.3. Assist SSGC in responding queries from prospective bidders and participate in pre-bid meetings and technical evaluation as required.

3.4. Review technical and financial proposals and recommendations of award.

3.5. Assist SSGC with procurement planning and monitoring including review of deliverables and milestones, cost estimates of bid packages and review and update the project procurement plan as needed.

Task 4: Overall Project Implementation Support:

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4.1. Coordinate with contractors and vendors on the implementation of all activities and conduct regular site visits to supervise works as needed;

4.2. Monitor the project time schedule to ensure timely completion of activities;

4.3. Monitoring and evaluating performance targets and recommend remedial actions if adequate results are not obtained;

4.4. Verification of payment invoice / bills from contractors and vendors, along-with works completion certificate;

4.5. Review potential variation orders to any works or goods contract and assist SSGC with the evaluation of such claims;

4.6. Support SSGC with quality assurance / quality control of all activities to ensure compliance with Environmental and Social Management Framework (ESMF) developed for the project;

4.7. Prepare and submit Monthly/Quarterly progress reports on all project-related activities, including network segmentation, UFG data, progress of works on site, planning/ scheduling of activities, status of procurement packages, project cost data, and compliance with ESMF. Reports should also summarize overall project implementation and advise on critical issues impeding progress, if any;

4.8. Suggest other types of reports to be adopted by the Client for enhanced monitoring of project implementation including specialized reports such as site inspection and safety reports, material inspection, and other similar compliance reports as necessary.

4.9. Present to the Company’s Board of Directors the periodic performance reports, and suggest measures to arrest slippages, if any;

4.10. Assist the Client in the periodic audit of NGEP activities from in-house and third party auditors;

Task 5: Institutional Capacity Building

5.1. Develop R&D function in the Company, which collaborates with renowned international research institutes and helps to bring about technology transformation in gas pipeline, pressure management, metering and cathodic protection.

5.2. Advise and assist SSGC with enhancing its Gas Training Institute which has been setup for the purpose of training the Client’s staff in the various disciplines required in the organization;

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5.3. Advise and assist SSGC on the development of technical labs, purchase of equipment, developing training programs etc.

SSGC has already setup a Project Management Office (PMO) for the purpose of managing the overall implementation of NGEP. The Consultant will support the PMO with the day-to-day management of project activities as described in Section C of these terms of reference. The Consultant shall work in close collaboration with the PMO and is expected to be fully engaged in all aspects of the project providing technical input, procurement support and overall project management.

The OE shall also introduce the Client to innovative technologies and approaches to network segmentation, pipe laying, and other tools to enhance the project outcomes and results. The Consultant shall assess the Client’s existing approach to the UFG reduction activities and suggest improvements which would lead to a more timely and cost-effective reduction in UFG.

Task 6: Pakistan Gas Appliance Efficiency Enhancement Project

1. The OE will be required to facilitate the implementing agency SSGC in the execution of the SLT program. The first step will be the development of an appliance testing laboratory.

2. The Consultants will be required to study the scope and develop a proposal chalking out a work plan for the three year project, detailing cost, time and resource requirements identifying milestones and phases of the assignment.

3. Besides the consultants will also develop a reporting structure for involving implementing agencies and partners and communicating the project progress to all stakeholders

4. The consultants will then provide guidance to SSGC in project execution, which will comprise the step-wise activities described hereunder (for further facilitation of processes for each have also been delineated as appendix – A to this document):

STEP – 1 MARKET ANALYSIS AND METHODOLOGY FOR STANDARDS, LABELING AND TESTING (SLT) PROGRAM

DESCRIPTION OF ACTIVITIES

i. Assessing how local cultural, institutional, and political factors are likely to influence the adoption and effectiveness of the program

ii. Establishing strong and clear political legitimacy for standardsiii. Deciding the extent to which to rely on existing test facilities, test

procedures, label design, and standards already established by international organizations or neighboring countries

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iv. Assessing the data needs of the program and the capability of the government to acquire and manage the data

v. Screening and selecting which types of products are the highest priorities

vi. Assessing the capacity to develop and implement SLT program vii. Assessing data needs and screening/selecting products

o Current levels and forecasted trends for efficiency of products in the marketplace

o Specific new technology that has recently or will soon become available in the marketplace

o Existence and characteristics of domestically manufactured products

o Existence and characteristics of imported productso Existence and levels of standards in other countries

STEP – 2 DEVELOPMENT OF TESTING CAPABILITIES

DESCRIPTION OF ACTIVITIES

1. Definition of energy test procedure (reflect typical usage conditions, yield repeatable/accurate results, reflect the relative performance of different design options for a given appliance, cover a wide range of models within a category, produce results easily comparable with other test procedures, be inexpensive to perform)

2. Establish a test procedure (key institutions responsible for making test procedures, existing test procedures, difficulty of modifying existing test procedures, difficulty of translating results from one test to another, selecting a test procedure considering alignment, regional harmonization, announcing test procedure, normalizing energy values for volume, capacity and performance, reconciling test values and declared energy consumption,

3. Create a facility for testing and monitoring compliance4. Incorporate testing into enforcement (establishing administrative

mechanisms for certification, data collection and appeal, establishing procedures to certify independent and manufacturer test facilities)

STEP – 3 FINE-TUNING OF EXISTING STANDARDS

DESCRIPTION OF ACTIVTIES

A. DEVELOP MEASURES FOR:

■ Eliminating inefficient models currently on the market■ Avoiding import of inefficient products■ Encouraging importers and local manufacturers to develop

more economically efficient products■ Stakeholder and consumer involvement

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B. CONDUCT FOLLOWING ANALYSES

Engineering Analysis—An Engineering Analysis assesses the energy performance of products currently being purchased in the country and establishes the technical feasibility and cost of each technology option that might improve a product's energy efficiency as well as evaluating each option’s impact on overall product performance.Market Analysis—A Market Analysis is an alternative to an engineering analysis. It looks at the existing efficiency or energy consumption choices for a product of a given size available in the regional or national market and compares the difference in cost for each choice with the difference in energy use. This method may be used when it is difficult to perform engineering analysis or when it would be helpful to corroborate the results of the engineering analysis. This method generally (but not always) produces less ambitious energy-efficiency targets than an engineering analysis will because some cost effective technologies may not yet be incorporated into existing products.National Impact Analysis—A National Impact Analysis assesses:o Societal costs and benefits of any proposed standardo Impacts on gas and electric utilities and future gas and

electricity prices that would result from reduced energy consumption

o Environmental effects—e.g., changes of emissions of pollutants such as carbon dioxide, sulfur oxides, and nitrogen oxides – that would result in residential and commercial buildings and power plants because of the reduced energy consumption

Consumer Analysis—Consumer Analysis determines the economic impacts on individual consumers of a standard, including effects on purchase and operating costs.Manufacturing Analysis—A Manufacturing Analysis predicts the impact of a standard on international and domestic manufacturers and their suppliers and importers. This analysis assesses effects on profitability, growth, and competitiveness of the industry and predicts changes in employment. Depending on the local situation, this analysis may be expanded to include distributors and retailers.

STEP – 4 DESIGN AND IMPLEMENTATION OF A LABELING PROGRAM

DESCRIPTION OF ACTIVITIES

A. LABEL DESIGN

■ What products should be covered?

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■ Should a program start with endorsement or comparative labeling?

■ How, and to what degree, should endorsement and comparative labels be linked?

■ If a comparative labeling program is chosen, should it be mandatory or voluntary?

■ Should comparative labels be continuous or categorical?

B. SELECTION OF LABEL TYPE

Endorsement Indicates that product is among the most energy-efficient models available on the market. Comparative Shows the relative energy use of a product compared to other models available on the market. There are three subcategories of comparative labels: Categorical labels use a step ranking system to indicate relative energy use compared to other models on the market.Continuous labels use a bar graph or scale to show the range of models available on the market. Unlike categorical labels, continuous labels do not have discrete “categories” of efficiency levels.Information-only labels give data on a product’s technical performance but offer no simple means (e.g., a scale or categories) that allow consumers to compare energy performance among products.

C. UNDERSTANDING AND INVOLVING PROGRAM STAKEHOLDERS

a. Which agency will manage product testing?b. Will private-sector laboratories be certified for

testing?c. Is the proposed label design understandable by and

effective with consumers and acceptable to all stakeholders (especially suppliers)?

d. Are the proposed label thresholds acceptable to stakeholders?

e Who will issue the labels?f. How will the labels be displayed on the product?g. How will monitoring and enforcement work?h. Who will evaluate the program, and how often?i. How can consumers be convinced that the label is

credible?j. How can salespeople be recruited to promote the

program?

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k. Will the labeling program pave the way for minimum efficiency standards?

STEP – 5 DESIGN AND IMPLEMENTATION OF COMMUNICATION CAMPAIGN

DESCRIPTION OF ACTIVITIES

A. PUBLIC COMMUNICATIONS CAMPAIGN AIMED AT:

i) Imparting ideas for a strategic purpose; may be singular events or long-term courses of action, but all have a specific purpose

ii) formal efforts or a loose collection of goal-oriented outreach activities

iii) using the media, messaging and an organized set of communications activities to generate specific outcomes in a large number of individuals and in a specified period of time

B. SELECTION OF TYPE OF CAMPAIGN FROM THE FOLLOWING

i) Integrated marketing – (a multi-tiered informational campaign in which all elements and tactics are integrated and coordinated to deliver a consistent message to targeted consumers).

ii) Social marketing - the application of marketing technologies developed in the commercial sector to the solution of social problems where the bottom line is behavior change. Social marketers normally consider people as ‘customers’ rather than as campaign ‘targets’; to think of being able to fill a customer’s needs rather than having a great product or lifestyle to sell.

C. MARKET TRANSFORMATION EFFORTS LIKE:

i) Differentiation of efficient products/services from conventional products in the eyes of consumers.

ii) Promotion (e.g. advertising and educational materials) to raise awareness among potential purchasers as well as sellers and service providers to show the full range of benefits, not just energy savings.

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iii) Understanding market barriers to energy efficiency helps policy makers develop and implement successful activities.

iv) Sales training, this may be part of an overall communications campaign.

v) Multi-faceted efforts, which involve several different outreach activities that evolve over time.

D. SELECTION OF COMMUNICATIONS TACTICS LIKE:

i) Advertising - use of media to market an idea (social marketing) or product. Ads in papers, in magazines, on television, on the radio, and online are common advertising tactics.

ii) Public Relations - the use of publicity to create enthusiasm for an idea or product.

iii) Special events - often used in combination with advertising and public relations to focus attention on the issue in question.

STEP – 6 DEVELOPMENT OF PROGRAM INTEGRITY MECHANISMS

DESCRIPTION OF ACTIVITIES

The consultant will develop means to ensure that the appliance testing data produced by national testing facility and manufacturers’ testing facilities is credible. For that matter the mechanisms for accreditation of national testing facility to an international body and certification of manufacturers’ testing facilities will also be developed by the Consultants. On top of it, the overall verification and compliance regimes will also be developed to ensure the transparency of the SLT Program.

STEP – 7 EVALUATION OF SLT PROGRAM

DESCRIPTION OF ACTIVITIES

The Consultants will develop mechanisms for: assessing the progress of the program; ensuring that the program objectives have been achieved and reporting the progress to the implementing agency / partners.

STEP – 8 SUPPLEMENTARY ACTIVITIES TO AUGMENT SLT PROGRAM (OPTIONAL)

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The consultants may also suggest measures for the following support activities required for continuation of SLT program:

i. Research and developmentii. Energy pricing and metering iii. Incentives and financing iv. Regulation, in addition to information labels and

standards v. Voluntary activities, including quality marks, targets,

and promotion campaigns vi. Energy-efficient government purchasing vii. Energy auditing and retrofitting viii. Consumer education

5. LOGISTICS AND TIMING

5.1. Location

The assignment will be carried out in southern region of Pakistan where gas is supplied by SSGC, as per the maps in section 4.1.2. The OE office will be

established at SSGC head office, where core team members will be seated. Based on the requirements during project execution, the core/support members will be visiting various sites of their respective area of expertise. The inspectors will be available on site during the morning and develop/submit compliance reports in the evening.

5.2. Commencement date and period of execution

The total period of appointment may be for six years i.e. from 03 May 2012 – 02 May 2017. However, to monitor the progress of OE, initially an annual contract may be awarded, which will be renewed subsequently based on annual performance of the firm.

6. REQUIREMENTS

6.1. Personnel

The OE team will comprise experts in Gas Distribution, Project/Supply Chain Management, Gas Measurement and Cathodic protection and Gas Appliance Standards-Labeling-and-Testing (SLT). The job specifications are defined as under:

1. Team Leader/Gas Distribution System Expert

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Description - The individual will be a seasoned Gas Distribution Engineer, having over 20 years experience consisting of:

a. At least 15 years of experience in Management of operation and maintenance of Gas Distribution Networks.

b. Capability to develop R&D function at SSGC aimed at process improvement and technological transformation.

c. Experience with latest pipeline construction technologies like: trenchless technology, key-hole technology, etc.

d. Familiarity with best-practices in design, load management, computer simulation and modeling, cathodic protection, pressure management of gas distribution networks.

e. Hands-on experience in construction/rehabilitation of gas distribution in urban/rural areas

f. Simulation of gas distribution networks for load balancing and pressure balancing through automatic/semi-automatic pressure management

Requirements - A Mechanical/Electrical Engineer having a specialized qualification in Gas Engineering/Management. Additional qualifications such as Certified Gas Distribution Engineer from GTI Chicago/other equivalent institution will be an added advantage. This has to be supplemented by work experience in a position of high responsibility in the relevant field at a renowned gas utility company.

2. Project Management/Supply Chain Management Expert Description – The individual will be an expert in the field of Project Management with a sound knowledge of Supply Chain Management. The individual may have an exposure of at least 15 years in Planning and Scheduling, Material Procurement and Inventory Management of gas distribution construction projects. The individual should be well-versed with project management software like: MS-Project, Primavera, etc.Requirements – A Civil/Mechanical Engineer or any other professional having a higher qualification in Engineering Management/Administration/Management. Additional qualifications such as Certified Project Management Professional, Certified Supply Chain Professional will be an added advantage. This has to be supplemented by work experience in a position of high responsibility in the relevant field at a renowned gas utility/oil exploration/petrochemical processing company.

3. Gas Measurement Expert Description – The individual will be an expert in the field of Gas Measurement having at least 15 years of experience in design, installation and maintenance of gas metering stations of industrial customers and meters of commercial an domestic consumers. The prospective team member shall have a sound knowledge of latest gas measurement technologies; their installation and maintenance; and their calibration methods and techniques. The knowledge of remote-monitoring and data

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acquisition systems of customer meters and theft/tampering detection will also be considered.Requirements – An Electrical/Electronics/Mechanical Engineer having a higher qualification in Gas Engineering. Additional qualifications such as Certified Gas Measurement Engineer will be an added advantage. This has to be supplemented by work experience in a position of high responsibility in the relevant field at a renowned gas utility/gas marketing/gas distribution company.

4. Cathodic Protection Expert Description – The individual will be an expert in the field of Cathodic Protection/Corrosion Engineering. The individual may have an experience of at least 15 years in design, installation and maintenance of cathodic protection systems for gas distribution networks comprising: thermoelectric generators (TEG)/transformer rectifier stations (TR), deep well ground beds, battery backup systems, CP remote monitoring systems and CP survey equipment. The knowledge of latest developments in coating tapes and primers along with new materials for plastic pipe will also be considered. Requirements – An Electrical/Electronics/Mechanical Engineer having a higher qualification in Corrosion Engineering. Additional qualifications such as Certified Corrosion Engineer will be an added advantage. This has to be supplemented by work experience in a position of high responsibility in the relevant field at a renowned gas utility/gas marketing/gas distribution company.

5. Gas Appliance SLT Expert Description - The individual will be an expert in the field of gas appliance standardization, energy labeling and appliance testing. The individual may have experience in the field of gas appliance design, quality assurance and manufacturing, supplemented by working knowledge of Collaborative Labeling & Appliance Standards (CLASP) methodology, tools and techniques.Requirements – A Mechanical Engineer having a higher qualification in Design Engineering. Additional qualifications such as Certified Quality Assurance Professional, Six Sigma Black Belt, etc. will be an added advantage. This has to be supplemented by work experience in a position of high responsibility in the field of gas appliance standardization/quality assurance at a renowned gas utility/gas marketing/gas distribution company.

6. The above team members will be supported by the following supporting team members, which will be local resources selected by the core team based on their requirements:

a. Planning and Scheduling Engineer (01 No.)b. Quality Assurance Engineer (01 No.)

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c. HSE (Health, Safety and Environment) Engineer (01 No.)d. Procurement Engineer / Executive (01 No.)e. Inventory Management Executive (01 No.)f. Inspector distribution pipeline (03 Nos.)g. Inspector gas metering (02 Nos.)h. Inspector cathodic protection (02 Nos.)i. Inspector gas appliances (01 No.)

6.1.1. Key Experts

6.1.2. Other Experts

6.2. Technical Capacity of the Firm

The firm should be capable to handle large technical due diligence contracts and have capability to carry out the following functions:

a. Project Evaluation, Feasibility and Planningb. Management and Monitoring of Construction processc. Design and Engineeringd. Schedule Analysis and Optimizatione. Equipment Commission and Testf. Operational and Maintenance Reviewg. Cost/Benefit Analysis

The OE firm shall demonstrate successfully implemented projects within the last five years, which have included above activities. A track record including project descriptions, client name and date of implementation shall also be provided along with 2 references from the previous clients.

6.3. Economical and financial status

The firm should be financially sound to handle large projects upto USD 10 million. The firm should have a working capital of at least USD 3.0 million. The OE shall provide as an evidence of its sound financial and economic standing:

a. Declaration of the average annual revenues from total activities n the three most recent reporting years or depending on the date on which the firm was incorporated or started its business activities.

b. Declaration on the after-tax profit for the most recent reporting yearc. A certified copy of the OE's income statements for the three most recent

reporting years or depending on the number of reporting yearsd. A certified copy of OE's balance sheet for the most recent reporting years

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6.4. Certification of legal status of signatory of proposal

The OE shall provide a notarized copy of a certificate of current registration proving the current legal status of the respective company.

6.5. Office accommodation

The office facilities shall be provided by the client i.e. SSGC.

6.6. Facilities to be provided by the Firm

The OE shall provide appropriate staff (in terms of experience, qualification, field(s) of specialization, input allocation) and additional (to the above) facilities and equipment to successfully and efficiently execute all the requirements of the services to be provided under the TOR.

6.7. Equipment

No equipment is to be purchased on behalf of the Client as part of the scope of assignment under this TOR. Any equipment related to the services required by this TOR, which is to be acquired/rented/used for the purpose of the services shall be purchased / rented / paid for operational expenses by SSGC.

6.8. Incidental expenditure

Any intentional incidental expenditure shall be avoided by both parties. In case of inevitability of incidental expenditure, both parties shall develop a formula to share the costs.

7. REPORTS

7.1. Reporting requirements

The OE shall be required to submit the project progress review reports to SSGC Management on monthly basis. The report shall include progress on project procurement, implementation of activities, achievement of targets, accepted/rejected deliverables, slippage and recommendations for dealing with the slippage.

A more comprehensive report shall be submitted to SSGC board of directors and Lender's Engineer on quarterly basis.

At the end of year the OE shall compile the report on achievement against physical targets, lessons learned and process improvement suggestions.

7.2. Submission and approval of reports

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The above reports shall be submitted to SSGC for Management Approval as per the following schedule:

a. Monthly Reports - by 5th day of every monthb. Quarterly Reports - by 1st week of 1st month of the preceding quarterc. Annual Reports - by first week of January

8. PAYMENT SCHEDULE

A. BACKGROUND

Sui Southern Gas Company (SSGC) ‘the Client’ is one of two integrated natural gas utility companies in Pakistan, licensed by the Oil and Gas Regulatory Authority (OGRA) for transmission, distribution and sale of natural gas in the provinces of Sindh and Balochistan.

SSGC’s high pressure gas transmission system extends from Sui in Balochistan to Karachi in Sindh. The transmission network comprises over 3,300 km of pipeline ranging from 12-24 inch in diameter. The distribution network of over 36,785 km (including services) serves over 2.2 million consumers located in 2,375 towns and villages in Sindh (1,827) and Balochistan (548). A brief synopsis of SSGC’s distribution network is attached as an Annexure C1. In FY 2009-10, the Ccompany sold 388,828 million cubic feet (MMCF) of gas to industrial users (including power sector), commercial and domestic consumers. However, based on volume of gas purchased from domestic producers during the same year, the unaccounted-for gas (UFG) amounted to 35 billion cubic feet (BCF) or roughly 8% of total gas inflow. UFG has shown an increasing trend over the last 10 years. Given the importance of natural gas as a vital source of energy supply in Pakistan, the losses have a significant economic and environmental impact as well as on the financial health stability of the Company utility and the satisfaction of its customer base.

Initial surveys carried out by the SSGC indicate that the principalmain causes of UFG are attributed to pipeline leakages, gas theft and metering errors. Current forecasts show the percentage of UFG is expected to continue to increase unless significant corrective measures are taken to resolve this major issue. Coupled with significant financial penalties imposed by OGRA on excess UFG, the Ccompany has embarked on a major rehabilitation of its gas distribution network, along with improvements in its measurement and Cathodic protection systems.

The distribution system is currently undergoing major overhaul to bring down the losses by 22to 19 BCF over a 5 year period (which will nearly half the then current volume of losses). This will mainly be achieved through a segmentation of the entire distribution networkfranchise area in order to identify and subsequently categorize the nature of losses. NGEP will finance the replacement of about 5,750 km of mostly polyethylene pipeline; the rectification of about 18,700 km of pipelines with patches and clamps; cathodicCathodic protection for about 10,000 km of pipelines; installation of 400 automatic pressure management systems; and installation of about 13,000 higher accuracy meters for industrial and commercial consumers.

1 Pakistan Energy Yearbook 2010 contains energy and gas sector statistics, and can be made available to the bidder by SSGC

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B. GOALS AND OBJECTIVES OF THE ASSIGNMENT

The Government of Pakistan (GOP) intends to support the SSGC with its UFG reduction program. As such, it has sought assistance from the World Bank to provide financing of approximately US$200 million for the Natural Gas Efficiency Project (NGEP). The objective of this project is to scale up SSGC’s UFG reduction program for the years 2011-2016, which will be carried out throughout its franchise areas (Karachi, Interior Sindh & Balochistan). The project will address both technical and commercial aspects of loss reduction.

The objective of the assignment is to support the Client with the overall implementation of NGEP. In addition, the Consultant shall also assist the Client with building institutional capacity and enhancing the operations and maintenance of the network.

NGEP also includes a pilot project for introducing more efficient consumer gas appliances, but this activity will take place without involvement of the Owner’s Engineer.

The Consultant is required to propose the methodology for carrying out the tasks described in these terms of reference including the overall approach to the effective implementation and execution of project activities to achieve the development objectives of NGEP, and of the overall UFG reduction program.

C. SCOPE OF SERVICES

The primary objective of the Consultant services is to enable the Client to execute the project in a cost-effective manner, within set time schedules (5 year project framework), and with results that meet or surpass targets as provided in the results agreement between the Client and the World Bank (see Annexure A for details). A secondary objective of these services is to further build the Client’s institutional capacity to manage its operations of the gas distribution network through a collaborative approach to the work with the Client’s project team. The Consultant shall ensure adequate knowledge transfer and enhance the Client’s technical capacity to manage, operate and maintain its network and systems.

The OE shall be compensated as per the following schedule:

1. 10% of annual contract fee as mobilization advance during the first year on the submission of Bank/Insurance guarantee of an equivalent amount. The Bank/Insurance guarantee will be released at the end of the assignment.

2. 90% of the remaining contract fee in 12 equal monthly installments upon submission and Management Approval of monthly progress reports.

3. Annual contract fee in 12 equal monthly installments upon submission and Management Approval of monthly progress reports.

The Consultant will provide technical, design, procurement, and implementation support for the following project components:

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Replacement of aged/deteriorated pipelines; Underground leakage survey and rectification; Overhead leakage survey and rectification; Cathodic protection upgrading and revamping; Installation of automatic pressure management systems; Improvement of surveillance at industrial customer connections through advance metering infrastructure / smart meters; and Technical assistance for SSGC’s company-internal Gas Training Institute.

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D. TASKS OF THE CONSULTANT

The specific tasks of the Consultant are outlined below:

Task 1: Network segmentation:

1.4. Assist the Client with network segmentation to select appropriately delineated and sized segments for maximum UFG reduction;

1.5. Assist in developing systems and procedures for establishing a baseline UFG profile for each segment, and a UFG profile as a result of project interventions for the purpose of measuring UFG reduction results;

1.6. Collect and measure UFG data for each segment and prepare periodic reports to the Client’s Board and management, the World Bank, and the Oil and Gas Regulatory Authority (OGRA).

Task 2: Technical design support:

2.3. Advise on the optimal methodology adopted to reduce UFG including selection of appropriate technologies (e.g. trenchless pipe laying, advance metering, distribution etailed system simulation and design design(?), etc.)

2.4. Advise on the methodology and approach to addressing commercial losses including measures to reduce gas theft.

Task 3: Procurement Support:

3.6. Prepare/Review technical specifications for goods and works packages for pipeline replacement / rehabilitation, metering equipment, pressure management systems, cathodiccathodic protection, etc.

3.7. Prepare/Review and assemble bidding documents for goods and works in accordance with World Bank procurement guidelines.

3.8. Assist the Client in responding queries from prospective bidders and participate in pre-bid meetings and & technical evaluation as required.

3.9. Review technical and financial proposals and recommendations of award.

3.10. Assist the Client with procurement planning and monitoring including review of deliverables and milestones, cost estimates of bid packages and review and update the project procurement plan as needed.

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Task 4: Overall Project Implementation Support:

4.11. Coordinate with contractors and vendors on the implementation of all activities and conduct regular site visits to supervise works as needed;

4.12. Monitor the project time schedule to ensure timely completion of activities;

4.13. Monitoring and evaluating performance targets and recommend remedial actions if adequate results are not obtained;

4.14. Verification of payment invoice / bills from contractors and vendors, along-with works completion certificate;

4.15. Review potential variation orders to any works or goods contract and assist the Client with the evaluation of such claims;

4.16. Support the Client with quality assurance / quality control of all activities to ensure compliance with Environmental and Social Management Framework (ESMF) developed for the project;

4.17. Prepare and submit Monthly/qQuarterly periodic progress reports on all project-related activities, including network segmentation, and UFG data, progress of works on site, planning/ and scheduling of activities, status of procurement packages, project cost data, and compliance with ESMF. Reports should also summarize overall project implementation and advise on critical issues impeding progress, if any;

4.18. Suggest other types of reports to be adopted by the Client for enhanced monitoring of project implementation including specialized reports such as site inspection and safety reports, material inspection, and other similar compliance reports as necessary.

4.19. Present to the Company’s Board of Directors the periodic performance reports, and suggest measures to arrest slippages, if any;

4.20. Assist the Client in the periodic audit of NGEP activities from in-house and third party auditors;4.21.

Task 5: Institutional Capacity Building

5.4. Advise and assist the Client with enhancing its Gas Training Institute which has been setup for the purpose of training the Client’s staff in the various disciplines required in the organization;

5.5. Advise and assist the Client on the development of technical labs, purchase of equipment, developing training programs etc..

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The Client has setup a Project Management Office (PMO) for the purpose of managing the overall implementation of NGEP. The Consultant will support the PMO with the day-to-day management of project activities as described in Section C of these terms of reference. The Consultant shall work in close collaboration with the PMO and is expected to be fully engaged in all aspects of the project providing technical input, procurement support and overall project management.

The Consultant shall also introduce the Client to innovative technologies and approaches to network segmentation, pipe laying, and other tools to enhance the project outcomes and results. The Consultant shall assess the Client’s existing approach to the UFG reduction activities and suggest improvements which would lead to a more timely and cost-effective reduction in UFG.

E. DURATION OF SERVICES

The estimated duration of these services is 60 months from the effective date of the contract. A work program, proposed staff qualifications and man-month schedule for the services should be developed for the duration of the services in line with the project implementation schedule.

The Consultant shall submit the required man- months for home office and field services including the required travel to execute the services. The Consultant may associate himself with local Cconsulting engineers/firms for the performance of its servicessupervision of works.

F. QUALIFICATIONS AND EXPERIENCE OF KEY PERSONNEL

The Owner’s Engineer shall field a team with the requisite skills and qualifications for the following key personnel:

Project Manager / Resident Engineer (01 No): Degree in engineering. Minimum 20-25 years of experience in gas distribution, gas flow management, meteringand metering, cathodic protection, project management, especially in controlling UFG and also quality/HSE . Demonstrated experience in working with utilities and contractors, and effectively managing infrastructure rehabilitation works is required. A degree in mechanical engineering is required. Diversified experience in developing countries will be preferred.

Gas distribution engineer / specialist (02 Nos): Degree in mechanical engineering. Minimum 1515-20 years experience in operations and maintenance of gas distribution networks and project management.. . Experience with pressure management systems, metering infrastructure, and cathodic protection is essential. Specific experience in UFG reduction programs will be preferred

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Gas distribution supervisors (04 Nos): 08-10 years experience in operations and maintenance of gas distribution networks, cathodic protection, gas measurement and project management.

Planning & Scheduling Engineer (01 No): Degree in engineering. Minimum 08-10 years experience in planning & scheduling of works relating to rehabilitation of utility systemsgas distribution networks and project management. Good command of Knowhow of MS project/Primavera, MS project orPrimavera or equivalent PMS software is will be required.

Procurement Specialist /Contracts Aadministrator (01 No): 08-Minimum 110 years administrative experience in procurement of goods/services and contract management of infrastructure works contracts.

Quality Control/HSE Specialist (01 No.) Minimum 10 Years experience suitably qualified and trained in quality assurance and HSE. related issues, experience preferably in gas pipeline system

[Others, for SSGC’s consideration]

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G. FACILITIES TO BE PROVIDED BY THE CLIENT

To enable the Consultant to carry out the duties and responsibilities set forth in these terms of reference, the Client will provide the following:

Office, Furniture and Equipment The Consultant shall be provided office space in the Client’s offices, with necessary furniture and internet connection. The Consultant shall provide his own computers, & otherand other equipment deemed necessary and required. The Consultant shall be responsible for telephone bills and consumables necessary for his own use.

Local Transportation To the extent the Consultant is required to conduct site visits to supervise the works, the Client will arrange road transportation (vehicle) to and from site locations as necessary.

Travel and Accommodation (TA / DA) To be borne by the Cconsultant.

H. REPORTING ARRANGEMENTS

The PMO is led by a Project Director and consists of full-time SSGC staff from various disciplines in the organization, such as procurement, finance, health, environment and safety, operations & maintenance, etc.

The Consultant shall report to the Project Director of the PMO. Progress reports shall be made available to the Project Director Client’s senior management at the start of each month, or in any such frequency determined by the Client. The Consultant shall also provide input as needed for quarterly progress reports to the ClientWorld, World Bank, and quarterly UFG reports to OGRA.

The majority of the Services will be carried out in Pakistan where the works are taking place, with some activities being provided remotely from the Consultant’s home office.

I. ANNEXURES TO THE TOR

A. Aggregate-level results agreement with the World BankB. Sample procurement plan (portions)C. Synopsis of SSGC’s distribution network

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Annexure A - Aggregate-level results agreement with the World Bank

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Annexure B – Procurement Plan SamplePortion, 1st tranche procurements (dates inaccurate)

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C : SYNOPSIS OF SSGC GAS DISTRIBUTION NETWORK

The gas distribution network of SSGC comprises 36,785 km of PE and Steel pipes of sizes ranging from 42 (1,050 mm) to 1/2 inches (12.5mm). The network comprises 16% polyethylene and 84% steel. The details of the network in Karachi, Interior Sindh and Balochistan are tabulated below:

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