Funds for power sector: Foreign assistance utilised at slow pace, only 23% used

Ministries dealing with energy issues blamed for the low disbursement

ISLAMABAD: Though funds were available for power companies to improve their performance and prevent the country from plunging into darkness, the ministries dealing with energy matters fared poorly as they utilised the money at a significantly slow pace.

This caused hurdles in the way of executing critical power projects designed to curb outages and also placed a burden of millions of rupees on national coffers in the shape of commitment charges on loans.

The disclosure was made in a meeting of the cabinet committee on energy on June 25. The responsibility of slow utilisation of foreign funds was put on the ministries concerned, late approval of project plans, delay in completion of bidding process, award of contract, issuance of letters of credit and opening of bank accounts by project authorities.

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Economic Affairs Division (EAD) Secretary Muhammad Saleem Sethi gave a presentation on foreign assistance for the power sector. According to him, the available development assistance portfolio totalled $27.86 billion for 185 projects as on May 31, 2015. Of this, only $9.143 billion (32.78%) was utilised whereas $18.722 billion (67.2%) remained undisbursed.

Foreign financing for the power sector as on May 31 stood at $15.157 billion, of which only $3.591 billion (23%) was utilised.

He said the onus lay on the ministries and executing agencies concerned to spend project funds strictly in accordance with the set targets and outlined reasons behind the delay in fund utilisation.

The EAD secretary suggested that project management units should be fully functioning by the time loans were provided and the bidding process should be completed within the stipulated time. Moreover, he called for effective monitoring of energy projects by the ministries concerned and termed such schemes procurement-intensive.

Following the presentation, the prime minister called the utilisation ratio unsatisfactory, saying the slow spending of foreign funds was the result of poor planning of project activities.

The National Transmission and Despatch Company (NTDC) managing director explained that the delay was caused at the stage of formulating and approval of PC-I of projects and further delay was noted during the bidding process that took a year. However, now work on all projects was going on smoothly.

The prime minister expressed concern over the slow progress and disbursement of funds as well as payment of commitment charges on loans. He directed the EAD to address the problem and ensure a speedy release of funds.

He also told the EAD to establish a well-coordinated mechanism and report to him if the utilisation of foreign aid and loan was delayed for any reason. He was of the view that the lower capacity of power distribution companies was one of the major hurdles in the way of uninterrupted electricity supply. He underlined the need of upgrading the transmission and distribution system to enable it to cope with the projected increase in electricity generation in future.

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The committee was told that the NTDC had prepared a five-year plan for revamping the system and the distribution companies needed capacity augmentation with the help of private sector to meet the challenges.

Published in The Express Tribune, July 28^th, 2015.

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