$400m project faces two-year delay as dispute, complexities take over

ADB, Pakistan fail to implement upgrade meant to improve bill recovery, flow of electricity

ISLAMABAD: The Asian Development Bank has lost its love for the $400-million smart meters’ installation project after initially pushing Pakistan to take the loan, as the scheme faces a delay of around two years due to dispute over technology and complex bidding processes.

Since the Manila-based lending agency is said to be mainly responsible for the delay, it has not placed the Second Power Distribution Enhancement Programme of $400 million on the list of problematic projects.



In its recent review of Pakistan’s portfolio, the ADB has declared half of the total projects worth $3.4 billion either problematic or put on a ‘watch list’ due to implementation delays. The smart meters project is not among these problematic schemes.

The ADB had approved the loan in November 2015 and, according to the recent review of the ADB-funded portfolio, there was no physical and financial progress on the project as of June 2017, said the sources. The entire amount of $400 million remained undisbursed and not even a single contract was awarded till June 2017, they added.

Both parties, the ADB and government of Pakistan, took exactly one year to sign the loan document and another six months to make the loan effective. The loan became effective in May this year.

Pakistani authorities also wasted significant time in giving requisite approvals for the project. From the beginning, Pakistan was not ready to contract the loan due to its differences over the use of imported technology and the plan to privatise all power distribution companies under the $6.2 billion International Monetary Fund programme.

The Planning Commission of Pakistan had also opposed loan-taking, stating that the project was technically unfeasible. The Commission also wanted that the ADB should instead fund transmission expansion projects.

But in May 2015, ADB’s visiting Vice President Wencai Zhang had urged Pakistani authorities to obtain the loan for the installation of smart meters.

The imported technology will be used for the project, which may also unnerve the local manufacturers of smart meters.

The stated objective of the project is to introduce advanced metering infrastructure (AMI) in Pakistan’s different distribution companies (DISCOs). There are nine DISCOs in Pakistan and the ADB plans to introduce advanced meters in these DISCOs in phases. In the first phase, under the $400 million tranche, the ADB picked Lahore Electricity Supply Company and Islamabad Electricity Supply Company.



The concept is that pre-paid electricity meters will be installed that will control the flow of electricity and ensure 100% collection of bills. The main goal of the project was installation of 2 million smart meters and communication equipment in these two power distribution companies by 2019. About 800,000 are to be installed in the jurisdiction of IESCO and 1.2 million in LESCO.

The ADB approved the Master Bidding Document for the Project on 19 July this year, which is also subject to incorporation of minor comments.

The recovery of the bills that was 94.6% by June 2016 has again dropped to 92.2% by December 2016, according to Ministry of Water and Power’s latest report. The second important goal of the project was to set up data management system in IESCO and LESCO jurisdictions and to train the officers to operate them. No progress has been made yet on this account as well.

The third key target was to update the operation manuals and improve monitoring procedures for theft detection by 2017. The ADB is still in the process of hiring a consultant and is now expecting to complete the task by the end of September.

The fourth target was introducing new billing systems in the targeted regions by 2017. For that it is required to train 700 personnel on Billing System and CIS by 2019. However, the ADB approved the Master Bidding Document for the Project on 19 July.

Published in The Express Tribune, August 29^th, 2017.

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