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ACKNOWLEDGEMENT
I owe my felt thanks to Allah Almighty who enables me to discharge such responsibility with due care and caution. My report will remain incomplete if I dont mention the sincere efforts of those gentlemen who helped and guided me in completion of my internship and this report. First of all I want to thanks to ALLAH Almighty; I also want to thanks to my worthy teachers the main source of enlightenment of our minds and the development of natural potentials. After them I want to thanks Mr. Anwer Ali Jokhio Manager HRM, Mr. Manji Khan Hingorjo Dy. Manager (TMP) and Imdad-ullah Kalwer Asst Manager Post Audit Section HESCO, which helped me in all matter. At the end I want to say thanks to whole staff and management of Lahore Electric Supply Co. for their cooperation and for providing a very friendly environment to gain practical knowledge.
corridors of this great institution into the real world, this legacy will be kept and upheld by the future generation of Israians.
TABLE OF CONTENTS
1.5 METHODOLOGY...........................................................................................................13 1.6 PURPOSE OF STUDY.....................................................................................................13 1.7 LIMITATIONS.................................................................................................................13 2 CHAPTER..................................................................................14 HESCO COMPANY........................................................................14 2.1 BRIEF ON HESCO..........................................................................................................14
2.1.1 ESTABLISHMENT.....................................................................................................................14 2.1.2 OBJECTIVES..............................................................................................................................15 2.1.3 AREA OF OPERATION.............................................................................................................16 2.1.4 PRODUCT LINE.........................................................................................................................16 2.1.5 BUSINESS VOLUME.................................................................................................................16 2.1.6 OFFICES OF THE COMPANY..................................................................................................17
3.2.2 ADMINISTRATION SECTION.................................................................................................26 3.2.3 BANKING SECTION..................................................................................................................27 3.2.4 COMPILATION SECTION........................................................................................................28 3.2.5 ASSET SECTION........................................................................................................................28 3.2.6 PRE-AUDIT SECTION...............................................................................................................29 3.2.7 POST-AUDIT SECTION............................................................................................................29 3.2.8 PENSION SECTION...................................................................................................................30
thermal power generating companies, nine distribution companies and a transmission and distribution company. In November 2005, the Government of Pakistan privatized (74.35%) the Karachi Electric supply Company (KESC). At present, KESC and WAPDA operate their own networks and are interconnected through 220 KV double circuit transmission lines and can supply power to each other. In October 2007, WAPDA has been bifurcated into two distinct entities i.e. WAPDA and Pakistan Electric Power Company (PEPCO). WAPDA is responsible for water and hydropower development whereas PEPCO is responsible for the management of all the affairs of WAPDAs fourteen public limited companies in the areas of thermal power generation, transmission, distribution and billing. On June 30 2010, the total generation capacity from WAPDAs own hydel and thermal sources plus generation from two nuclear power plants, KESC and Independent Power Procedures (IPPs) stood at 20,922 MW Installed Electricity Generation Capacity (As on June 30, 2010)1 Type Hydel, WAPDA Thermal, WAPDA Thermal, KESC Thermal (IPPs) Nuclear Total MW 6481 4900 1955 7123 462 20,922 Percentage 30.97 23.42 09.34 34.04 02.02 100.00%
1.2.1 ESTABLISHMENT
The Pakistan Water and Power Development Authority (WAPDA) was established through an act of parliament in February 1958 for integrated and rapid development and maintenance of water and power resources of the Country. This includes controlling soil salinity and water logging to rehabilitate the affected land in order to strengthen the predominantly agricultural economy of the country.
1. The corporatization and commercialization of WAPDAs assets block ingeneration, transmission and distribution. 2. Overseeing the design and implementation of the Manpower Transition Program 3. Stewardship of early business operations by the newly formed companies. 4. Privatization initiatives Pakistan Electric Power Company is a Registered Company since May, 1998 under Companies Ordinance 1984 (owned by Government of Pakistan) and started functioning since 14.04.1999. It falls under the category of Exempt Entity under Nam. It is a Management Company owned by Government of Pakistan working under the Ministry of Water & Power. The core operations of the company are: 1. 2. To act as a managing agent in respect of all business, assets, properties and right of the Power Wing. To carry on, expand, extend, privatize or restructure all businesses, assets, properties. The company is responsible for restructuring WAPDA Power Functions into 14 companies, establishing business relationship amongst them, help them become administratively and financially self-sufficient, improving their efficiency and preparing them for privatization. And reporting to Secretary, Ministry of Water and Power (Government of Pakistan). There is a manual system of recording all the transactions under double entry system according to companies ordinance 1984.
1. 2. 3. 4. 5. 6. 7. 8. 9.
Faisalabad Electric Supply Co. (FESCO) Gujranwala Electric Power Co. (GEPCO) Hyderabad Electric Supply Co. (HESCO) Islamabad Electric Supply Co. (IESCO) Peshawar Electric Supply Co. (PESCO) Quetta Electric Supply Co. (QESCO) Multan Electric Power Co. (MEPCO) Lahore Electric Supply Co. (LESCO) Tribal Electric Supply Company (TESCO)
1.3.2.2
1. Southern Generation Power Company Limited (GENCO-1) head quarter at Jamshoro district Dadu near Hyderabad Sindh. 2. Central Power Generation Company Limited (GENCO-2) head quarter at Guddu district Jacobabad Sindh. 3. Northern Power Generation Company Limited (GENCO-3) head quarters at TPS Muzaf-fargarh district Muzaffargarh Punjab. 4. Lakhra Power Generation Company Limited (GENCO-4) Headquarter at WAPDA House Lahore.
1.3.2.3 A TRANSMISSION AND DISPATCH COMPANY.
1.4.2 RESPONSIBLITIES
Major responsibilities of NEPRA include: 1. Issuance of licenses to the power utilities. 2. Tariff determinations in a transparent manner. 3. Establishment of performance standards for the utilities and their monitoring.
1.5 METHODOLOGY
The internee is placed at a middle level management position in the Finance Department of HESCO. In order to have access to various other departments/components of HESCO a recommendation letter from the Chairperson Faculty of Commerce Economics and Management Science ISRA University was obtained. The said letter facilitated the internee in conducting the internship study by spending few days in each of the department viz Human Resource & Administration, Commercial (Marketing), Computer, Field Operation, Account and Internal Audit. During the course various techniques were adopted which included personal interview, collection of Primary Data. Collection of Secondary Data from various reports/-statements which have been incorporated in this report. Since HESCO is corporatized entity of WAPDA, various policies, rules instructions and procedures framed by WAPDA and published in various bulletins and reports have also been referred to.
1.7 LIMITATIONS
Every study has certain limitations; similarly various limitations were faced by the internee while conducting internship study in HESCO. If there were no such limitations the report would have been more perfect and richer. The limitations are: Lack of cooperation from different departments. Secrecy of data made it difficult to gather the information. HESCO domain is spread throughout Sindh touching the borders of Baluchistan and Punjab which made it difficult to practically reach at every strategic place.
shares. The companies is formed to takeover/acquire all the properties, assets and liabilities of Hyderabad Area Electricity Board owned by Pakistan Water and Power Development Authority (WAPDA) and such assets and liabilities as decided by the authority. The companys main object is to distribute/supply of electricity to the existing consumer residing in the province of Sindh except Karachi Division and extend/expand the business, infrastructure, facilities and activities within the geographical boundaries to provide electric supply services to prospective consumer. The authorized share capital of the company is Rs. 50,000,000 million divided into five thousand million ordinary shares of Rs. 10.00 each. It is run through a board of Directors consisting seven (7) members one being its Chief Executive. As per memorandum of association, companys other objectives include:-
2.1.2 OBJECTIVES
To carry out the village electrification within the area of supply.
To carry out the renovation and augmentation including extension of HT/LT lines. To ascertain the tariff rate with the approval of National Electric Power Regulatory Authority (NEPRA). To built, construct, maintain buildings and offices as per own requirement.
To install services & equipment, meters & other devices for the purpose of measuring power consumption. To acquire transport of any kind which are necessary for supply & distribution of electricity. To carry out business of running, managing concerning to software and computer program for use in connection with the same. To enter into agreement with firms etc. for the purpose of carrying out any business of the company. To carry on the business & provide services associated with engineers etc.
To borrow, raise funds on secured money in such a manner as the Company deems fit. To open, operate bank accounts of the Company with any bank.
To act & undertake the business as mentioned in the memorandum of association of HESCO. 2.1.3 AREA OF OPERATION
To ensure uninterrupted supply of electricity and most intimate customer services to about 1.3 million consumers, HESCO has administratively into Three operation Circles, 13 operation Divisions and 111 operation Subdivisions along with 5 construction divisions, and 5 M&T divisions. 404 officers & 14446 officials of the company are striving day & night for efficient and effective running of the business. Circle is headed by Superintending Engineers (SEs), Divisions are managed by Executive Engineers (XENs) and Subdivisions are run by Sub Divisional Officers (SDOs). Each division has a Customer Services Officer (CSO). HESCO has three Circles. 1. Circle Hyderabad
Circle 1 Hyderabads Circle 2 Hyderabads Divisions. Divisions. 1. Tando Alhyar 1. Kotri 2. Latifabad 2. Phuleli 3. Mirpur Khas 3. Tando Mohd Khan 4. Dighri 4. Thatta 5. Qasimabad 5. Badin (Source: - Brief on HESCO 2010)
2. Sanghar
3. Tando Adam
Capital work-in-process Long Term Loan & Advances Current Assets Store and Spares Trade Debts Advances, deposits & other receivables Cash & Bank Account Total Assets
Rs. Rs.
2,329 8
Rs Rs Rs
(Source: 2010)
HESCO
Head Office: WAPDA Offices Complex, Fatima Jinnah Road, Hussainabad, Hyderabad. Phone #: 0092 (221) 9260161 Fax #: 0092 (221) 9260361
Mr. Masood Pervez Mr. Muhammad Jamil ENGR. Tahir Bashir Cheema
CEO
MANG: INTERNAL AUDIT
M(S&I) HYD MANG (COMM) RM (M&T)
FINANCE DIRECTOR
D.DIR (O&M)
MANG: L&L
Manager Tariff, Marketing & Contract Management. Manager Surveillance & Investigation Manager Metering & Testing
There are three circles in HESCO, Deputy Manager Commercial is at circle, and Assistant Manager Commercial is at Division. Commercial Section is mostly controlled by Revenue Officer. Revenue Office has five sections. 1. Billing Section: Billing is done through Sub division office by CP21C which is for general consumers & CP34 are for MDI consumers. When CP21C & CP34 are come in commercial section, Commercial Assistant checks it & makes it error free & then gives it to billing supervisor who check it randomly. Then he/she send to R.O, then R.O checks it randomly then send it to Computer Sector or DTC(Data Transfer Center) DTC Is at each R.O Office.
After Computer Center Data for billing will be sent to MIS for final process, billing section checks it that data which was sent to commercial section is same. 2. Debtors control section: (Receivables) Payment is received that are managed by debtor control section. Debtor control section checks that amount is same as consumer account number. This section Checks & manage the receivable section. 3. Accounts Section 4. Consumer Record Section 5. Computer Section
apply for the tender and the tender is issued to the contractor with the lowest bid. After is issuance of tender, the contractor receives the letter of intention and pays 5% of tender bid as security deposits. The contractor is bound for on time delivery, If delivery is late, he has to pay liquidate damages fine. Function of Material Management Asses consolidated requirement for materials Prepare Procurement Schedules Price Monitoring of material & services Bidding & Negotiation Prepare Contracts & Purchase Order Inventory Management Practical storage of equipment material(warehouse) Monitoring and surveillance of material Disposal of dismantled & redundant material/vehicles
The Computer Center issues electricity bills, Disconnection Notice, Equipment Removal Order, Weekly/Monthly Reports as well as Payment and Adjustment Posting. Payroll and Inventory Control System are also computerized There are 154 C.P (Commercial procedures) with separate codes on the basis of which whole Computer Section goes on operation.
liaison
Control Section
Cash Section
Machine Room
1. Liaison section: In liaison section two basic functions are carried out and this section receives and sends data to numerous departments. Input: Liaison section receives meter readings file, transactions, paid bills and bank scrolls. They apply certain validation checks in the input received and then send it to concerned departments for record keeping. Usually Liaison receives input from Asst: Commercial Manager (RO).. Output: It receives bill from numerous departments to carry on the authentication and validation checks. Data Entry Side: Other MIS sections data and different stuff sends raw data to Entry Section. Entry Section scan & punch it, then Entry Section forward it to cash section as Inputs Received at Computer Section 2. Control Section: Control Section check the CP21C & then put coding on it after that CP21C sent to entry section for entry. After that Entry Section again send the CP21C to Control Section for billing. Data Side has four Sections
a) Liaison Section: Receives all inputs from Assistant Manager Operation & Process it send it in the form of Output.
b) Data Control: Liaison Section receives data from Revenue Officers & Send it to data control section. c) Co ordination Section: Deals with MDI section, receives data & Process that data and then Dispatch the output of that data.
3. Cash Section: There are 13 Divisions and 13 R.Os. Bank codes are given to Revenue Officers. All the Divisions have given the ID Number or Unicode, which are given by Cash Section. Id numbers tells from which division Cash has been come. Revenue Office send the stuff & bank scroll to Liaison office. Liaison office send that things to Entry Section. Entry Section scan & punch it, then Entry Section forward it to cash section. Cash Section Reconcile it to make it error free. After cash correction then cash section send request to machine room for cash compare list. Cash Compare list is to make update of error correction into master file. Machine room compare error corrections in master file & send back to cash section. 5 Machine room: Printings of electricity bills of consumers occur in machine room along with this other reports are also printed here. the record is kept in the form of backup on backup storage devices also keeps records of jobs processed
FUNCTIONS OF HR HESCO's HR department goes through following functions 1. Recruitment & promotion: Recruitment in HESCO is done either for direct quota seats which are done by giving advertisements, and hiring directly from external market. For promotional seats employees on the hierarchy have to give such tests and interviews to clear the promotional tests. 2. Employee benefits & maintenance:
Hr department is responsible for maintenance employees, providing the following services: Training of employees for better performance Providing higher studies opportunities Provision of TA/DA Health benefits Leaves Maintaining employee performance appraisal Authorizing residential allowances Transportation facilities Handling work related legal issues
and
development
of
ESTABLISHM EN SECTION
COMPILATIO N SECTION
BUDGET SECTION
BANKING SECTION
ADMN SECTION
Administration Section Covers Section of Leaves 1. Casual leave: 25 days in a year are casual leave.
2. Earned leave: In Earned leave traveling allowance will be deducted. 3. Pakistan leaves, 4. Study Leave: 5. Medical leave:
2. 3.
4.
All releases of demands are made through Impressed Cash books. Collection Cash Books: If HESCOs any division is calling the tenders, the tender fee is been put in Collection Cash Books, that amount will be sent to HESCO by Monthly, weekly or daily basis.
Revenue Officer Watches daily in Banks about bills.
GENCO produces the Electricity and sends to NTDC. NTDC (National Transmission Distribution Company) is Distributing the Electricity to 9 Distribution Companies.
There are four GENCO companies in Pakistan. 1. GENCO 1 JAMSHORO Power House
GUDDU Power House MUZZAFFAR GARH Power House LAKRAH Power House
There are three types of Nomination: 1. GLI: (Group Life Insurance) if any one dies during the service his/her Nominees gets the Insurance Fund. But any one Retirees he/she did not get the GLI.
2. 3.
GPF (General Provident Fund) employees own contribution amount are kept in this fund. WWF (WAPDA Welfare Fund) It will be given to Widows, Scholarships for WAPDA Employees & Marriage grant. 3.2.4 COMPILATION SECTION
Issue and Maintain the Trail Balance of all accounts. They compile all the accounts. There are two types of accounts in this Section. 1. Receivable Payable: If any person is getting the Electricity bill from HESCO and doing job at other company, they will get the money from that company money will go in Receivable account.
2. IOT (Inter Office transaction) if any transaction is found wrong in Pre Audit Section, then the permission is got from Finance Director for General Voucher. In these transaction Cash is not involved, Accounts are Settled with each other. If Material is purchased from LESCO they will not get cash of that material but the cash transfer will be done. 3.2.5 ASSET SECTION
Polls, Wires, Meters are assets of HESCO. They are maintained at asset section. All the expenses of Assets are Record in Asset section. Asset Section Informs about Asset Increase or Decrease. Account Heads in Asset section: 1. Land:
a. Freehold land b. Leasehold land c. Right of way 2. 3. 4. 5. 6. 7. Offices on fire hold land Stores houses on free hold land Other buildings on free hold land Officers on lease hold land Store houses on lease hold hand Other building on lease hold land
8. 132KV Grid Station Equipments 9. 66KV Grid Station Equipments 10. 11KV Grid Station Equipments 11. 132KV Dist. Lines 12. 66KV Dist. Lines 13. 33KV Dist. Lines 14. 11KV Dist. Lines 15. 400KV Low Tension Lines 16. 220KV Low Tension Lines 17. Underground conduct 18. Underground conductor & Lines 19. Dist. Transformers (11KV/400V) 20. Service Drops (SAP) 21. METERS (SAP) 22. 11 KV Distribution H/T --- L/T (SAP) 23. Conductor (SAP) 24. Capacitor 25. Computer office equipment 26. Furniture & Fixture 27. Vehicles 28. Store Equipment 29. Work shop Equipment 30. Medical & Hospital Equipment
After 3, 4 Months of Pre audit if sign remain or any mistake is corrected in this Section.
Formula of Pension: Basic pay x Qualifying years of Service x 7 300 Maximum service limit is 30 even he anyone has done 40 years service because 30 years limit is fixed. 65% are given on gross pension as commutation to the retired employee. 35% are given as net pension.
4.1.1 STRENGTHS
The HESCO top management is the combination of both experience and young energetic professionals which are proving to be the real strength of HESCO. HESCO website provides every information about HESCO to the customers and investors. HESCO has equipped with the latest technology. The HESCO employees are locally so, the turnover rate is low.
The HESCO has efficient internal audit department, which keep check and balance.
The HESCO has experienced of strategic apex and managerial skilled staff. Full support from Federal Government.
4.1.2 WEAKNESSES
The administrative cost of the company is very high due to which the profitability of the company decreases. There is still improvement of technology in the HESCO like in computers.
There customer service are not up to mark they have to improve the customer services to satisfy the customers There divisions are not well furnished they have the need to improve them. Telecom and Media revolution Dependency on suppliers of power generation equipment. Government intervention leads to slow development.
4.1.3 OPPORTUNITIES
Electrification of Rural Areas of Sindh can increase the demand of electricity.
There is no competitor in the local market; there is a big opportunity to get more share. Buyers of HESCO services are easily available in the local market.
The extension plan of divisions by the HESCO is very good to capture the market. The HESCO has maintained better relationship in the market which helps the HESCO to increase the customers. Research and development in power generation equipment
4.1.4 THREATS
One major threat to the HESCO is increasing number of customers day by day.
Consistent fluctuations in the supply of electricity leads to massive load shedding. Withdrawal of support from suppliers. There are small number of suppliers of equipments required in power sector, hence the suppliers enjoy monopoly to some extent, and can charge more. Delays in the supplies can increase cost and delay the operations.
4.2 CONCLUSION
After completion of internship the internee has come to the following conclusions. It appears that corporatization has not been fully implemented in HESCO. WAPDA Head office still seems to be controlling the affairs. Consequently, organization of HESCO appears to be partly commercial and partly Government controlled public sector organization. It seems that executives and workers have not been oriented to work in a commercial environment. HESCO is a public utility service organization but alike other Government department people working there appeared to be lacking in the concept of service. Employees were found dissatisfied with their remuneration, considering the services being rendered by them. The department appears to have been running in losses. This may be due to high rate of electricity which compels people to steal the electricity. The HESCO employees seem to be unable to check such tendency due to several economic, social and political constraints.
4.3 SUGGESTIONS
After careful study of the system the internee has made following suggestion to the conclusions arrived at in the preceding section. HESCO may be allowed to assume full autonomous role so as to run its affairs on commercial basis instead of being controlled by WAPDA. All employees & executives may be trained and oriented in modern management techniques including marketing, finance and organizational behavior. All HESCO employees may be oriented about the concept of service and how to act like a service provider in market environment. In stead of Government basic pay scale the employees may e allowed salaries comparable with other service utility organization. The rate of electricity may be rationalized so that a common man can easily manage to pay bill within budget.