ADB offers help in setting up the agency to accelerate work on power projects. STOCK IMAGE
“The Economic Affairs Division (EAD) has proposed the setting up of the central procurement agency in the wake of slow utilisation of funds to tackle the energy crisis that has crippled the country’s economy,” said a senior government official while talking to The Express Tribune.
“The Asian Development Bank has offered Pakistan its assistance in establishing the procurement agency,” he said.
A lot of procurement is done for energy projects and, therefore, the EAD has called for setting up a specialised procurement agency to undertake related activities and ensure effective spending of foreign funds on development projects.
The proposal comes following revelations made in a meeting of the Cabinet Committee on Energy that billions of dollars of foreign funds, which were available for power projects, were spent unenthusiastically as the ministries dealing with energy matters performed their tasks poorly.
This not only hindered critical work on power projects being developed to minimise outages, but also put a burden of millions of dollars in commitment charges on the national exchequer.
EAD told the energy committee that total development assistance to the tune of $27.86 billion was available for 185 projects at May-end this year. Of this, only $9.143 billion (32.78%) was utilised whereas $18.722 billion (67.2%) could not be disbursed.
Foreign funds for power projects stood at $15.157 billion at the end of May and against this, only $3.591 billion (23.7%) was utilised. According to the EAD, the responsibility lay on the ministries and executing agencies concerned to spend the funds strictly in accordance with project milestones.
The major reasons cited for the expenditure staying below par were delay in approval of a project’s PC-I, delay in completion of bidding process, award of contract, issuance of letters of credit and opening of bank accounts by project authorities.
EAD recommended that the project management unit should be fully functional by the time loans came into effect and the bidding process should be completed within the stipulated time. Moreover, there should be effective monitoring of the project by the ministries concerned.
Terming the utilisation ratio unsatisfactory, Prime Minister Nawaz Sharif said the slow spending was the result of poor planning of project activities.
He was of the view that the reduced capacity of power distribution companies was one of the major hurdles in the way of uninterrupted electricity supply to the consumers. He emphasised the need of upgrading the transmission and distribution network of power distribution companies.
According to the National Transmission and Despatch Company managing director, the delay occurred in the formulation and approval of PC-I.
Published in The Express Tribune, August 18th, 2015.
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