ADB funded: Six projects worth $1.8b face hurdles

Major challenges are poor performance of consultants, delay in procurement

ISLAMABAD:

One out of every four ongoing projects financed by the Asian Development Bank (ADB) has been declared problematic due to hitches in implementation, as the government has failed to appoint quality administrators while the bank has become bureaucratic.

Out of $4.5 billion worth of 25 schemes, six valuing $1.8 billion are declared as either actual problem or potential problem, reveals an ADB document prepared to review its portfolio in Pakistan.



The high ratio of troubled projects underscores the challenges the country faces in improving governance, which has restricted socio-economic benefits of the schemes. Three of the schemes are pertaining to energy generation and transmission, two are for road reconstruction and one, probably the most critical, is for water management.

In the energy sector, there are 18 active loans totalling $3.1 billion and three of them worth $1.4 billion are termed “potential problems”. These include Jamshoro power generation project and two schemes for power transmission, an area that is neglected resulting in high losses.

The case of $1.5 billion Jamshoro power project is the most glaring. The ADB approved a loan of $900 million over two years ago, but the project is not picking up, as bid documents for setting up main power plants have not yet been issued, according to the ADB.

The bank has declared the quality of bidding documents as “poor”. The country does not have qualified people to handle the project that sailed through the ADB board only after the US abstained from voting. Coal-handling for the project was yet another outstanding issue that has to be resolved. However, the Ministry of Water and Power blames the ADB for taking longer-than-required time to evaluate the papers.



The ADB rated these projects based on indicators like procurement, loan disbursements, financial management, social safeguards and technical problems. The quarterly portfolio performance review began on February 17 and would end on March 10.

Overall, there are 32 ADB-funded projects valuing $6.4 billion. However, five loans are not effective and their signing is awaited.

The major project implementation challenges faced during 2015 were poor performance of contractors and consultants, weak contract management by implementing agencies, delays in major procurement processes, particularly in the energy sector, weak ownerships and overall poor result monitoring by the implementing agencies, said the ADB.

However, the bank has a key role in appointing local and international consultants but remains shy of taking responsibility for the failures.

Another important project that has been declared a potential problem is the $42-million Federally Administered Tribal Areas (Fata) water resources development project. It is aimed at increasing farm incomes in Bajaur, Khyber and Mohmand agencies.



However, project activities have not started due to delays in hiring of staff and other procedural issues. The ADB had approved the project in December 2014 but it became effective in August 2015.

The lending agency has also declared the $268-million National Highway Network Development Project as problematic. The scheme is aimed at rehabilitating 79 km of the existing two-lane road from Zhob to Mughal Kot (N50) and 128 km of the two-lane road from Qila Saifullah to Waghum (N70) in Balochistan.

In the power transmission sector, the tranche-III of loan valuing $248 million faced challenges since approval in December 2011 due to delay in the bid evaluation process, issues related to quality and accuracy of bid evaluation reports, leakage of confidential information and representations from bidders.

“With the present pace of work, none of the awarded contracts are expected to be completed by the loan closing date of June 30, 2016,” said the ADB. The tranche-IV for the transmission sector was approved in December 2014 and was declared one the most challenging projects for the lender and the borrower.

Published in The Express Tribune, March 3^rd, 2016.

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