Hagler Bailly''s technical audit study on Gencos: factors behind poor performance delineated

Limited financial and administrative autonomy, lack of performance evaluation and preventive maintenance as well as quality of Residual Oil Fuel (RFO) and poor housekeeping were pointed out as the main reasons behind overall decline in the performance of power sector in the country.
A Technical Audit Study of GENCOs, Jamshoro, Guddu, and Muzaffargarh power plants, by Hagler Bailly exposed reasons behind decline in performance and gave recommendations to improve performance, suggesting that resolution of management and operational issues in generation companies could help improve efficiency of power sector.
The resolution of management and operational issues identified in the study require a complete change in the management approach and operational environment of the GENCOs. The government could consider bringing in independent management under a performance-based operational and management contract based on a structure of incentives and penalties against the performance of the power stations. The terms and conditions of the contract could be designed in a manner so as to make the contractor responsible for injecting investment for rehabilitation of the units and bringing in highly trained and experienced senior managers. This approach will help in establishing and expanding the O&M industry, ultimately leading to improvement in the efficiency of the power sector.
The management of GENCOs plants does not have complete financial autonomy to take independent decisions and delay in payment to GENCOs results in postponement of different routine maintenance tasks leading to degradation of plant output and efficiency.
Moreover, the management is not empowered to initiate a performance-based human resource management system to promote efficiency and competition. As a result plants are suffering from overstaffing with majority of staff working without specialised industrial training to perform their duties. No attention was given to the performance evaluation of the plant staff that limits the ability of the management to take prompt decisions and initiate actions and remedial measures for efficient operation of the plants.
The study suggested that a standard measurement and testing protocol as recommended for GENCOs should be practiced for all measurements to avoid errors in financial transactions. The GENCOs were recommended to carry out a detailed exercise to devise a robust measurement mechanism for RFO receipts at the plants to reduce oil pilferages and acceptance of substandard oil.
A third party RFO testing mechanism was also recommended on regular basis to ensure the quality of fuel received from supplier. The contracts with the fuel supplier were also recommended to include penalties or correction in price for supply of substandard oil. A detailed management study is required to identify key performance indicators.