Owner's Engineer TOR FINAL 17-02-2012

TERMS OF REFERENCE
FOR
THE SERVICES OF AN OWNERS ENGINEER
1. BACKGROUND INFORMATION
1.1.
About SSGC
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
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
Key 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
9.1.
Background information
9.2.
Current status
10.1.
Overall objectives
10.2.
Specific objectives
10.3.
11.1.
11.2.
Risks
1
2
4
5
12
12
12
13
14
14
14
14
14
14
17
22
30
30
30
30
30
30
33
33
33
33
33
34
34
34
34
34
34

12.1.
General
4.3 Specific activities
13.1.
Location
13.2.
14. REQUIREMENTS
14.1.
Personnel
Key Experts
Other Experts
14.2.
14.3.
14.4.
14.5.
14.6.
14.7.
Equipment
14.8.
15. REPORTS
15.1.
15.2.
16. PAYMENT SCHEDULE
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 countrys 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 countrys 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 nonpayment /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 at all quarters.
3
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)
ii)
iii)
iv)
Higher levels of lost and unaccounted-for-gas (UFG)

Inefficiencies at end-use of natural gas
Shortage of gas
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
4
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 stateowned 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
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.
SSGCs 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 20102011 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.
1.2.
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:
COMPANY WIDE
YEARS
FY2003-04
FY2004-05
FY2005-06
FY2006-07
FY2007-08
FY2008-09
FY2009-10
UFG VOL
(MMCF)
22,957
26,988
25,375
28,712
26,060
33,040
35,010
%
7.09
7.48
6.65
7.53
6.63
7.93
7.95
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)
b)
c)
d)
e)
f)
Reduction of network losses (underground and overhead leakages) through

rehabilitation of dilapidated leaking mains and services.
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.
Promote usage of gas appliances efficient with reference to gas
consumption by end users.
The conserved gas will be available for meeting the growing gas demand
by power and industrial sectors leading to economic development.
Reduction of methane/other hydrocarbons (a potent green house gases) to
the atmosphere.
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.
ii.
iii.
iv.
v.
Segmentation and pressure management

Pipeline rehabilitation (comprising: Trenching and road restoration and
pipeline replacement or leak rectification)
Overhead leak rectification
Cathodic protection
Advanced metering systems
The physical targets are tabulated below:
Items
Rehabilitation of
Distribution system
Underground leak survey
and rectification
Overhead leakage survey
and rectification
Meters
Meter testing equipment
Surveillance and data
monitoring equipment
Pipe recoating
CP Equipment
Segmentation & pressure
management equipment
Procurement of Vehicles
Procurement of
Equipment
1.
Unit
2012-13
2013-14
Km
950
1,200
1,200
1,200
1,200
Km
3,100
3,600
4,000
4,000
4,000
430,300
585,000
585,000
585,000
585,000
2,644
24
2,643
-
2,643
-
2,566
-
2,566
-
Nos.
500
500
500
500
500
Km
Nos.
65
750
90
1,194
115
1,531
90
1,236
90
1,191
Nos.
100
150
150
Nos.
70
70
49
Nos.
130
90
70
No. of
customer
connections
Nos.
Nos.
2014-15
2015-16
2016-17
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
8
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 subunits, 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
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, dewatering 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
9
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:
MAINS
Steel Pipe
12.50
3/
4
1
20
25
38
50
Interior Sindh
Balauchistan
Total
1,397
41
1,444
3,200
3,812
603
7,615
50
51
1,820
2,964
2,339
7,123
75
15
15
100
766
2,360
965
4,091
150
457
1,237
336
2,030
200
495
385
452
1,332
250
10
15
33
54
300
12
158
11
48
217
400
450
16
18
94
-
15
-
51
28
160
28
500
20
110
110
600
24
87
87
750
30
12
1,050
42
12
4,834
24,382
Total Mains
40
11,524
12
14,292 12
5,435
8,624
10,924
31,251
Polyethylene Pipe
SERVICES
1,014Steel Pipe 814
63
1,175
125
285
180
147
Total Steel Mains
Total PE Mains
Total Mains
Steel Pipe
Polyethylene Pipe
Total Services
Total Network
network
Karachi
2,938
33
1,861
661
374
2,210
189
90
564
157
2,621
1,670
501
4,792
11,245
12,594
5,335
29,174
1,225
6,692
130
919
1,355
6,690
7,611
36,785
2,793
SERVICES
1,273
2,730
2,737
7,004
423
366
Polyethylene
Pipe
3,153
469 3,103
14,398 396
15,697
133
998
Total Services
3,262
3,334
1,406
8,002
Total Network
10
14,786
17,626
6,841
39,253
The
has been
continuously increasing with a compounded annual growth

past six years. This can be supported with the help of the
rate of 7% during the

following data:
THE GROWTH OF SSGC NETWORK DURING THE LAST SIX YEARS

Karachi
Years
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
11,506
14,786
2,136
15,490
17,626
634
6,207
6,841
6,050
33,203
39,253
2010
3,044
11,354
14,398
2,036
13,661
15,697
631
6,059
6,690
5,711
31,074
36,785
2009
2,677
11,149
13,826
1,934
12,017
13,951
624
5,881
6,505
5,235
29,047
34,282
2008
2,478
10,75
6
13,234
1,833
10,651
12,484
618
5,575
6,193
4,929
26,982
31,911
2007
2,225
10434
12,659
1,765
9,610
11,375
609
5,189
5,798
4,599
25,233
29,832
2006
2,030
10,18
5
12,215
1,689
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
1-5 Years
6-10 Years
11-15 Years
16-20 Years
21-25 Years
26-30 Years
31-35 Years
36-40 Years
> 40 Years
a)
b)
c)
d)
e)
f)
g)
h)
i)
Karachi
2404
1444
2621
2423
826
1476
1325
515
792
Interior Sindh
5142
1023
3586
2371
208
412
533
474
202
Balauchistan
2396
793
1587
762
610
357
0
0
0
Total
9942
3260
7794
5556
1644
2245
1858
989
994
29% of the network is 0 5 years old.

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
11
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.
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
12
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
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,
13
new technologies in trenchless pipe-laying, pipeline materials, coating applications,

metering, cathodic protection and energy management in gas end-use.
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;
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;
Provision of support for capacity building, R&D, and technologyupgrade/transformation of core business activities of SSGC for sustainable
UFG-reduction;
Conducting work inspections/technical audits of project deliverables to
prepare project/phase completion reports and;
Intimation of NGEP-progress to SSGC Management, Lenders Engineer
and the World Bank, at least on quarterly basis
ii)
iii)
iv)
v)
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 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;
14
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.

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.
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.
15

3.1.

i.
ii.
iii.
iv.
3.2.
The project scope has been defined and procurement schedules have been
prepared, it is assumed that the revision of scope will be minimum.
The benefits in the form of UFG reductions will be realized as soon as the
annual physical targets have been achieved.
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.
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.
Risks
ii.
iii.
iv.
i.
The project implementation capability of SSGC for undertaking
NGEP needs to be enhanced.
SSGC has not been able to achieve the UFG benchmarks set by the regulator
hence eroding the Company's profitability.
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.
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.
4.1.
General
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 rehabilitation
c.
Cathodic protection
d.
Advanced metering systems
16
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 segments 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 SSGCs 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 SSGCs 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
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, SSGCs 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 long17
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 tamperproof 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.
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 companys 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.
18

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
GAS TRANSMISSION INFRASTRUCTURE
19
20
SSGC DISTRIBUTION NETWORK IN KARACHI
21
SSGC DISTRIBUTION NETWORK IN INTERIOR SINDH
22
SSGC DISTRIBUTION NETWORK IN BALAUCHISTAN
23
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 Clients 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:
24
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:
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;
25
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 Companys 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 inhouse 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.
26
5.2.
Advise and assist SSGC with enhancing its Gas Training Institute
which has been setup for the purpose of training the Clients staff in the
various disciplines required in the organization;
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
Clients 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.
2.
3.
4.
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.
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.
Besides the consultants will also develop a reporting structure for involving
implementing agencies and partners and communicating the project
progress to all stakeholders
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):
27
STEP 1
MARKET ANALYSIS AND METHODOLOGY FOR
STANDARDS, LABELING AND TESTING (SLT) PROGRAM
DESCRIPTION OF ACTIVITIES
i.
ii.
iii.
iv.
v.
vi.
vii.
Assessing how local cultural, institutional, and political factors are

likely to influence the adoption and effectiveness of the program
Establishing strong and clear political legitimacy for standards
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
Assessing the data needs of the program and the capability of the
government to acquire and manage the data
Screening and selecting which types of products are the highest
priorities
Assessing the capacity to develop and implement SLT program
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 products
o
Existence and levels of standards in other countries
STEP 2
DEVELOPMENT OF TESTING CAPABILITIES
1.
2.
3.
4.
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)
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,
Create a facility for testing and monitoring compliance
Incorporate testing into enforcement (establishing administrative
mechanisms for certification, data collection and appeal, establishing
procedures to certify independent and manufacturer test facilities)
28
STEP 3 FINE-TUNING OF EXISTING STANDARDS

DESCRIPTION OF ACTIVTIES
A.
DEVELOP MEASURES FOR:
B.
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
CONDUCT FOLLOWING ANALYSES

Engineering AnalysisAn 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 options impact on overall product performance.
Market AnalysisA 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 AnalysisA National Impact Analysis assesses:
o
Societal costs and benefits of any proposed standard
o
Impacts on gas and electric utilities and future gas and
electricity prices that would result from reduced energy
consumption
o
Environmental effectse.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 AnalysisConsumer Analysis determines the economic
impacts on individual consumers of a standard, including effects on
purchase and operating costs.
Manufacturing AnalysisA Manufacturing Analysis predicts the
impact of a standard on international and domestic manufacturers
and their suppliers and importers. This analysis assesses effects on
29
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
A.
LABEL DESIGN
B.
What products should be covered?

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?
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 products 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.
b.
Which agency will manage product testing?

Will private-sector laboratories be certified for
testing?
30
c.
d.
e
f.
g.
h.
i.
j.
k.
Is the proposed label design understandable by and

effective with consumers and acceptable to all
stakeholders (especially suppliers)?
Are the proposed label thresholds acceptable to
stakeholders?
Who will issue the labels?
How will the labels be displayed on the product?
How will monitoring and enforcement work?
Who will evaluate the program, and how often?
How can consumers be convinced that the label is
credible?
How can salespeople be recruited to promote the
program?
Will the labeling program pave the way for minimum
efficiency standards?
STEP 5 DESIGN AND IMPLEMENTATION OF COMMUNICATION

CAMPAIGN
A.
PUBLIC
AIMED AT:
i)
ii)
iii)
COMMUNICATIONS
CAMPAIGN
Imparting ideas for a strategic purpose; may be

singular events or long-term courses of action, but all
have a specific purpose
formal efforts or a loose collection of goal-oriented
outreach activities
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)
ii)
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).
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
31
customers 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.
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.
Understanding market barriers to energy efficiency
helps policy makers develop and implement
successful activities.
Sales training, this may be part of an overall
communications campaign.
Multi-faceted efforts, which involve several different
outreach activities that evolve over time.
ii)
iii)
iv)
v)
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.
Public Relations - the use of publicity to create
enthusiasm for an idea or product.
Special events - often used in combination with
advertising and public relations to focus attention on
the issue in question.
ii)
iii)
STEP 6 DEVELOPMENT
MECHANISMS
OF
PROGRAM
INTEGRITY
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.
32
STEP 7 EVALUATION OF SLT PROGRAM

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)
The consultants may also suggest measures for the following
support activities required for continuation of SLT program:
i.
ii.
iii.
iv.
v.
vi.
vii.
viii.
Research and development

Energy pricing and metering
Incentives and financing
Regulation, in addition to information labels and
standards
Voluntary activities, including quality marks, targets,
and promotion campaigns
Energy-efficient government purchasing
Energy auditing and retrofitting
Consumer education

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.

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.
33
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
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
34
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
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
35
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.
b.
c.
d.
e.
f.
g.
h.
i.
Planning and Scheduling Engineer (01 No.)

Quality Assurance Engineer (01 No.)
HSE (Health, Safety and Environment) Engineer (01 No.)
Procurement Engineer / Executive (01 No.)
Inventory Management Executive (01 No.)
Inspector distribution pipeline (03 Nos.)
Inspector gas metering (02 Nos.)
Inspector cathodic protection (02 Nos.)
Inspector gas appliances (01 No.)
6.1.1. Key Experts
6.1.2. Other Experts

6.2.

The firm should be capable to handle large technical due diligence contracts and
have capability to carry out the following functions:
a.
b.
c.
d.
e.
f.
g.
Project Evaluation, Feasibility and Planning

Management and Monitoring of Construction process
Design and Engineering
Schedule Analysis and Optimization
Equipment Commission and Test
Operational and Maintenance Review
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.
36
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.
b.
c.
d.
6.4.
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.
Declaration on the after-tax profit for the most recent reporting year
A certified copy of the OE's income statements for the three most recent
reporting years or depending on the number of reporting years
A certified copy of OE's balance sheet for the most recent reporting years
The OE shall provide a notarized copy of a certificate of current registration

proving the current legal status of the respective company.
6.5.
The office facilities shall be provided by the client i.e. SSGC.
6.6.

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.
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.
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
37
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.

The above reports shall be submitted to SSGC for Management Approval as per the
following schedule:
a.
b.
c.
Monthly Reports - by 5th day of every month

Quarterly Reports - by 1st week of 1st month of the preceding quarter
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.
SSGCs 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 SSGCs distribution network is attached as an Annexure C 1. 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
1 Pakistan Energy Yearbook 2010 contains energy and gas sector
statistics, and can be made available to the bidder by SSGC
38
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.
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 SSGCs 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 Owners
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
39
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 Clients institutional
capacity to manage its operations of the gas distribution network through a
collaborative approach to the work with the Clients project team. The Consultant shall
ensure adequate knowledge transfer and enhance the Clients 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:
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 SSGCs company-internal Gas Training Institute.
40
41
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
Clients 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.
42
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.
43
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 projectrelated 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
44
inspection and safety reports, material inspection, and other similar compliance
reports as necessary.
4.19.
Present to the Companys 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 Clients 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..
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-today 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 Clients existing approach to the UFG
reduction activities and suggest improvements which would lead to a more timely
and cost-effective reduction in UFG.
45
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 Owners 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
46
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 SSGCs consideration]
47
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 Clients 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.
48
The Consultant shall report to the Project Director of the PMO. Progress reports shall
be made available to the Project Director Clients 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 Consultants home
office.
I. ANNEXURES TO THE TOR

A. Aggregate-level results agreement with the World Bank
B. Sample procurement plan (portions)
C. Synopsis of SSGCs distribution network
49
Annexure A - Aggregate-level results agreement with the World Bank
50
51
Annexure B Procurement Plan Sample

Portion, 1st tranche procurements (dates inaccurate)
52
53
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:
54

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TERMS OF REFERENCE

12. SCOPE OF THE WORKS TO BE CARRIED OUT

Higher levels of lost and unaccounted-for-gas (UFG)

Gas allocation in Pakistan is subject to "Natural Gas Allocation and Management

Background informationAbout SSGC

As per the directives of Government of Pakistan, SSGC has developed a project

Reduction of network losses (underground and overhead leakages) through

The NGEP is composed of the following components:

Segmentation and pressure management

The physical targets are tabulated below:

Segmentation and pressure management (USD 19 million) - is a crucial

for rehabilitation and/or theft investigations. The SSGC distribution network

Pipeline rehabilitation has two components i.e. replacement of irreparable

The leakage of above ground gas connections especially the threaded

Cathodic protection will be carried out to arrest the rate of network

The gas distribution network of SSGC comprises 39,253 km of PE and

Total Steel Mains

continuously increasing with a compounded annual growth

rate of 7% during the

THE GROWTH OF SSGC NETWORK DURING THE LAST SIX YEARS

Total Distribution Network

The ageing analysis of the pipeline is as under:

29% of the network is 0 5 years old.

Component 2: appliance efficiency pilot project: Pakistan Gas Appliance

Import gas appliances

new technologies in trenchless pipe-laying, pipeline materials, coating applications,

Facilitation of SSGC in planning/procurement/project management

Enhancement of R&D function and top-supervision of capacity building

Development/review of standard operating procedures(SOP)/processes for

Project supply chain management activities and procurement support for:

Preparation / review of bidding documents for goods and works

Coordinating with contractors during implementation; and

Project Management and overall implementation support including a review

Preparation of monthly progress reports for SSGC Management.

Preparation of quarterly performance review reports for SSGC Board of

Conduct site visits for supervising major works.

Development, advise and implement a standards, labeling and testing regime

Results to be achieved by the Firm

Segmentation of SSGC gas distribution network/business units/sub-units

Operate the high UFG segments at optimal pressures to restrain UFG

Metering stations of industrial/bulk customers are monitored remotely.

The consumption/gas sales of 70% industrial and commercial customers is

The pipeline protection is improved from the current level.

The gas appliances standards, labeling and testing regime is introduced

3. ASSUMPTION AND RISKS

Assumptions underlying the project

4. SCOPE OF THE WORKS TO BE CARRIED OUT

Network segmentation. Before replacing or repairing pipes, SSGC will

lasting black-outs, resulting in, among other, corrosion in the gas

4.1.2. Geographical area to be covered

GAS TRANSMISSION INFRASTRUCTURE

SSGC DISTRIBUTION NETWORK IN KARACHI

SSGC DISTRIBUTION NETWORK IN INTERIOR SINDH

SSGC DISTRIBUTION NETWORK IN BALAUCHISTAN

Task 1: Network segmentation:

Assist SSGC with network segmentation to select appropriately

Assist in developing systems and procedures for establishing a

Task 2: Technical design support:

Advise on the optimal methodology adopted to reduce UFG

Advise on the methodology and approach to addressing commercial

Task 3: Procurement Support:

Prepare/Review technical specifications for goods and works

Prepare/Review bidding documents for goods and works in

Assist SSGC in responding queries from prospective bidders and

Owner's Engineer TOR FINAL 17-02-2012

Owner's Engineer TOR FINAL 17-02-2012