The government on Thursday reviewed the possibility of cancelling about $700 million foreign loans due to the problematic status of two power sector projects. In its maiden meeting, the National Coordination Committee on Foreign-Funded Projects (NCC-FFP) discussed in detail at least six power sector schemes worth $2.8 billion that have been declared problematic by the government and Its foreign lenders.
Headed by Economic Affairs Minister Khusro Bakhtyar, the committee explored the possibility of cancelling $400 million ADB-funded smart electricity meters project and winding up the second unit of 660 megawatts worth $304 million of troubled Jamshoro Power Project, sources in the Power Division told The Express Tribune.
However, no final decision was taken, as cancellation of unit-II of the Jamshoro project could make its Unit-I economically unviable due to the high cost of electricity generation, the sources added.
The total cost of the Unit-I is $750 million. Loan for the Jamshoro Power project was signed in 2014 and the scheme was planned to be completed by 2019. It remained problematic due to faulty decisions from both the Asian Development Bank and the Power Division.
During the past six years, the Power Division could not be able to resolve even land-related issues. Despite the troubled status of the Unit-I, the government went ahead with plans to arrange over $300 loans from various lenders for Unit-II that may now be cancelled if the government decides against installing another plant on imported coal said the sources.
The Power Division would apprise the coordination committee about the fate of Unit-II in the next meeting. Last month, Prime Minister Imran Khan had set up the National Coordination Committee on foreign-funded projects aimed at fast-tracking disbursement of external loans. The committee is also tasked to undertake a review of all foreign-funded projects and suggest measures to remove bottlenecks, delaying implementation of the schemes.
The coordination committee has a representation of the provinces, Prime Minister's Office and relevant federal ministries. The committee had been set up after the existing government bodies and approving authorities failed to undertake measures that are needed for swift disbursements of foreign loans. During the maiden meeting, timelines to complete various tasks were given.
At present, 14 foreign-funded projects – including power generation, transmission and distribution amounting to $3.4 billion are under implementation, according to a handout issued by the Ministry of Economic Affairs.
Bakhtyar said the purpose of the high-level meeting was to track physical and financial progress and identify issues and bottlenecks hampering smooth implementation of foreign-funded projects in the power sector. He said the government was focusing on energy sector reforms and energy efficiency through the development of renewable and dean energy at affordable prices, reliable transmission system and improved distribution network.
Minister Omar Ayub Khan directed line departments of the Power Division to fast track implementation of the projects and prompt redressal of issues for expeditious execution of projects in the energy sector.
He especially emphasised the major problematic projects including Jamshoro Power Generation Project, Advance Metering Infrastructure and CASA 1000 & other transmission Lines and set the timelines to resolve the bottlenecks. Both Ministers agreed to hold a follow-up meeting of the National Coordination Committee on the Energy sector next month.
The committee also reviewed the status of the $400million advanced power metering project, which the sources said, the Power Division declared as 'unviable' for execution. It was decided that the Power Division would review scope, project design and implementation arrangement.
There were also delays in contract award by IESCO due to slow bidding process, qualification of the single bidder and court case. Similar delays were also faced by LESCO in the bidding process. The sources said that the ADB was pushing Pakistan to award a contract on a single-bid basis.
The committee also reviewed the implementation status of the $280million power transmission enhancement investment programme. Tranche-Ill and found that there was a delay in contract awards due to the slow pace of land acquisition. Same was the use with $345 million tranche-II of the transmission line project. The coordination committee also discussed the World Bank-funded National Transmission Modernization Project, which also faced delays due to land acquisition issues.
Another WB funded the CASA-1000 was also falling behind the schedule and the lender recently expressed serious concerns over the implementation status. There was a delay of over two years in contract award and land acquisition process was also incomplete, said the sources.
Published in The Express Tribune, November 6th, 2020.
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cancelling $400 million ADB-funded smart electricity meters project --- how is this problematic i like this project i want this to go on