ISLAMABAD: Half of the Asian Development Bank (ADB) funded projects – worth $3.4 billion – have either become problematic or put on watch list due to implementation delays, reveals a latest portfolio review that has again highlighted governance issues in Pakistan.
Most of the troubled projects are in the areas of energy generation, transmission and distribution, which are the so-called priority sectors of the PML-N government during the past four years.
The other projects are in the water, agriculture, transport and social sectors, according to officials who attended the portfolio review meetings that continued for about one month.
As of end June 2017, the ADB-funded active public sector portfolio in Pakistan is made up of 37 projects with a total cost of $6.7 billion. Of the 37 investment projects, 32 valued at $5.83 billion are ongoing. About 18 of them worth $3.6 billion are facing problems.
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The ADB has declared six projects worth $560 million ‘actual problems’ and eight schemes costing $1.2 billion ‘potential problems’. There are four projects, which are on the watch list, having total cost of $1.7 billion and there are a total of seven projects on the watch list but three are already declared problematic.
Excluding the watch list projects, the ADB rated 60% or 21 projects on track. This ratio was 80% in December last year and the latest review indicates that the project implementation is getting from bad to worse.
The ADB underlined that the downward trend in the performance rating of the projects is due to the lag time in meeting contract award and disbursement targets for the first half [January-June] of 2017. From six months to one year is wasted in between project approval by the ADB and its effectiveness, largely because of bureaucratic inefficiencies.
The ADB monitors implementation performance of projects using projections of contract awards and disbursements and the status of implementation on them.
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The high ratio of troubled projects underscores the challenges the country faces in improving governance, which has restricted socio-economic benefits of the schemes.
Pakistan’s transmission network has outlived its life, creating problems in wheeling the electricity besides causing technical losses. Similarly, the distribution companies’ network also requires upgrading and expansion.
Still, the execution agencies could not take appropriate actions to fast track development work on these schemes despite availability of funding.
The PML-N government’s top most priority was to bring power outages to an end – a promise that it has yet to fulfill with only nine months remaining in the next general elections. It has focused on enhancing generation capacity but ignored the transmission and distribution issues.
The ADB-funded energy sector portfolio is worth $3 billion that represents 43% of the active portfolio of projects. The transport sector is the second major area representing almost 26% of the active projects. The energy and transport sectors together accounted for 69% of the active loan portfolio by end of June 2017.
The ADB has declared Public Sector Enterprise Reform Project as an actual problem. The bank had approved the project in 2014 to strengthen Pakistan’s capacity to privatise and restructure its designated public sector enterprises.
A $42 million Fata Water Resources Development Project, which six months ago was on track, has been declared as actual problem. The Karachi Bus Rapid Transit design project is also declared as actual problem.
The $200 million worth National Disaster Risk Management Fund is also actual problem project. The post flood National Highways Rehabilitation project of $197 million and Sindh Cities Improvement investment programme worth $92 million have also been declared actual problems.
The ADB has also put $900 million Jamshoro Power Project on the watch list, cautioning about delays in implementation of the scheme. Despite lapse of over two and half years, the project execution agencies are still at the stage of finalising technical things and awarding the contracts.
Among the potential problem projects are $218 million Flood Emergency Reconstruction project, $278 million National Motorway project, $167 million Power Distribution Enhancement Programme tranche-4, and three tranches valuing $470 million of power transmission enhancement investment programme are facing delays. Similarly, Jalalpur Irrigation project and energy efficiency investment programme are among the potential problematic projects.
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