ISLAMABAD: Driven by a major push from a foreign lender, the government has decided to clear two projects of installing advanced electricity meters and implementing a new billing system valuing over $470 million, endeavours it had so far withheld due to high pricing and objections over technology.
The projects to install smart electricity meters and a new centralised billing system in Lahore and Islamabad will be taken up by the Central Development Working Party (CDWP) in its upcoming meeting for approval, according to Ministry of Planning and Development officials.
The PC-1s of both projects have been pending in the Energy Wing of the Planning Commission since January this year. The energy wing has decided to table the projects in the CDWP meeting amid growing pressures from the Asian Development Bank, said officials.
The latest push came just a month ago when the Director General of ADB for Central and West Asia Department, Sean O’Sullivan, took up the issue with Finance Minister Ishaq Dar during his visit to Islamabad. Earlier, in May, ADB’s Vice President Wencai Zhang urged Pakistani authorities to obtain the $1 billion loan for the installation of smart meters.
Dar had promised that he would look into the matter, agreeing that the energy wing’s objections should not stall projects, said officials of the Ministry of Finance.
The CDWP has a mandate to recommend projects valued at over Rs3 billion for final approval of the Executive Committee of National Economic Council, which is headed by the finance minister. Minister for Planning and Development chairs the CDWP meeting.
The ADB is eager to provide the $1 billion loan for the smart metes and billing system projects. In the first phase, the ADB has offered $400 million for installing smart meters in Lahore and Islamabad electricity distribution companies, officials added.
In current year’s Public Sector Development Programme (PSDP), the government has put the estimated cost of each project at Rs30.6 billion, bringing the total price of both projects to Rs61.2 billion or roughly $590 million. This includes Rs47.6 billion or roughly $455 million foreign loan.
However, revised estimates show the cost of Islamabad Electricity Supply Company (IESCO) project at Rs18.6 billion, including Rs8.8 billion in foreign loan. The cost of Lahore Electricity Supply Company (Lesco) project is kept at the same level of Rs30.6 billion, but its foreign loan component has been reduced to Rs13.1 billion.
The cumulative revised cost is Rs49.1 billion or $470 million but an official of the Planning Commission said that the final estimated price may vary. The cost of smart electricity meters is high, which will be roughly 80% of the total cost.
The Energy Wing of the Planning Commission has been opposing taking the loan, saying that the government should not invest in power distribution companies that have been advertised for privatisation. It has taken a position that the ADB should instead fund transmission expansion projects.
There were also differences over the use of technology for tracking purposes. The Planning Commission wanted that mobile-phone tracking application should be used while the ADB was pushing another tracking system, said Planning Commission officials.
The smart metering and billing system is the way forward for reducing lines losses and improving recovery of electricity bills, said Secretary Water and Power, Younus Dagha, while talking to The Express Tribune. He said there should be competitive bidding in a transparent manner.
The Planning Ministry officials said that the ADB has assured that besides giving loan for smart meters projects it would also fund transmission line projects aimed at addressing the concerns of the Commission.
The LESCO, IESCO and Faisalabad Electricity Supply Company are on the government’s active privatisation list.
Published in The Express Tribune, October 27th, 2015.
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