KARACHI: The World Bank (WB) has urged the government to exempt IFIs (International Financial Institutions) funded projects from LC restrictions as such actions are delaying projects.
This issue was raised by a representative of World Bank at a meeting convened to review projects being funded by the Bank presided over by Secretary Ministry of Economic Affairs Dr Kazim Niaz.
The World Bank team which attended the meeting comprised of County Director, Najy Benhassani; Gailius J Draugelist, Operation Manager; Dr Aliya Kashif, Tobias Akhtar Haque, Lead Country Economist and Task Team Leader (TTL) PRR, Irum Touqeer, Public Sector Specialist and co- TTL for PRR, Amjad Zafar, TTL CRISP, Namoos Zaheer, Muhammad Saqib, Energy Specialist and others.
“WB highlighted the LC issue which is delaying the project progress and disbursements. The Bank suggested that IFI-funded projects should be exempted from such requirements as foreign currency will come into the country anyway,” the sources said, adding that Secretary, Economic Affairs agreed to take up the matter with Finance Division.
The Secretary MoEA briefly noted that conducting review of World Bank-funded Federal portfolio is aimed to encourage the implementing agencies to stimulate their efforts to not only achieve early set targets of their respective projects/ programs but also to cover the overdue targets to help enhance the disbursement of foreign resources.
He informed the participants that where the sponsoring/ executing agencies consider it impossible to achieve certain targets then they need to consider restructuring by getting approval of competent fora or otherwise to formally ask for cancellation of funds allocated against risky targets so that these funds may formally be diverted/ reallocated to pipeline projects.
He further highlighted that continuous engaging borrowed financial resources for unachievable targets is neither justified nor tolerated beyond certain time limit.
The following were the project/ program wise discussions and decisions taken thereon;
1- National Transmission Modernization (phase-1) project: The meeting was informed that the project implementation faced delays owing to late hiring of project design consultant and later award of contracts, particularly due to slow decision making at the higher levels in NTDC. Absence of a permanent MD has led to delays in decision making in the past. A capacity development plan for overall NTDC is under preparation for past many years which can be funded under the project.
The Technical Evaluation Report (TER) of Islamabad West Station is now with the World Bank for final approval. Bids of projects were received in December 2021. After approval of World Bank, financial proposals will be opened followed by combined evaluation and contract award. 20 per cent advance payment to selected contractor will be ensured by end June 2023.
The representative of NTDC informed that land acquisition process is ongoing and the payment process will be completed by March 15, 2023.
The Team Task Leader (TTL) World Bank highlighted the issue of two change orders which are pending approval at the level of MD and Board. WB also highlighted the LC issue which is delaying the project progress and disbursements and that IFI funded projects should be exempted from such requirements as foreign currency will come into the country anyway. Secretary, Economic Affairs agreed to take up the matter with Finance Division.
The meeting decided that NTDC will complete land acquisition including payments to ensure its possession by mid March 2023. NTDC will also ensure on-boarding of contractor for Islamabad West Sub-Station by mid March and advance payment by June 2023 and resolve the change in order issues.
II- CASA-1000 Electricity Transmission and Trade Project: The project faced initial delays owing to the key issue of land acquisition. Now the implementation pace of Pakistan part of the project is advancing well and is at par or ahead of other partner countries. However, the implementation of Afghanistan part of the project is at a halt.
The Project Director highlighted the need of arranging additional financing which primarily emerged due to SDR-USD exchange rate. Secretary Economic Affairs agreed to facilitate NTDC in bridging the financing gap. Deputy Secretary (WB), Economic Affairs also highlighted the need of quick utilization of $ 600,000 grant funds which have been made available by WB for addressing the capacity issues.
The TLL WB stressed for speedy Resettlement Action Plan (RAP) payments to the affected people for electrode station and along with route of the HVDC and timely utilization of grant funds.
The meeting decided: (i) NTDC to ensure completion of Pakistan part of the project within extended closing date; (ii) revised PC-1 to be processed and approvals obtained from competent fora to help timely engaging the additional financing WB, and (iii) early finalization and implementation of capacity building plan, utilizing the grant funs including activities such as language and management training programs at NUML and LUMS.
III- Dasu Hydropower (transmission line) project and Dasu Hydropower (phase-1) project: The representative of NTDC informed that three contracts (Lot-1, Lot-2 and Lot-3) have been finalized and advance payment for these contracts is partially made and is partially under process. Land acquisition for Mansehra Grid Station is done and payments will be completed by end March 2023.
The project team stated that Pattan issue has been resolved and work started. Secretary Economic Affairs appreciated the efforts of WAPDA, NTDC and local administration for resolving the Pattan issue. He; however, highlighted the need of extra vigilance and close coordination with local administration to avoid untoward situation again. In response to query from DS (WB) Economic Affairs, Member Finance (WAPDA) shared that progress on full utilization of Partial Credit Guarantee (PCG), will be ensured after conclusion of agreement with IMF and progress on it will be shared accordingly.
The meeting decided that WAPDA and NTDc to ensure: (I) quick implementation of 132-KV transmission line in Pattan area including main 765-kV Dasu transmission line. WAPDA and NTDC to put in place proper monitoring mechanism and strengthen coordination with Commissioner Hazara and Local Administration to avoid any obstructions in the construction work by local.
IV- Electricity Distribution Efficiency Improvement Project: The project is facing delays owing to slow progress on preparatory work (opening of assignment account, setting up PMU’s and preparation of implementation plan). The opening of assignment accounts took too much time due to non pursuance of the case with Finance Division by the Ministry. It was agreed that Power Division and Discos to sit together with Finance Division to speed up the account opening process and for speeding up the implementation of activities to ensure possible disbursements.
The TTL WB, while highlighting the need of E&S side, asked for early filling of environment and social safeguard positions. Secretary Economic Affairs desired the Ministry to share update on procurement plans, work plan and budget plan with WB.
The meeting decided that Power Division will not only facilitate Discos in timely opening of their Assignment Accounts but also ensure opening of Assignment Account of its own part of the project. Power Division and Discos to ensure sharing of their procurement plans, annual work and budget plans with WB and share the update with Ministry of Economic Affairs immediately.
HESCO, MEPCO and PESCO to ensure the creation of environment and social safeguard positions and hiring against these positions on priority basis by March 15, 2023. The meeting also decided that WAPDA shall replace trash racks by June 30, 2023 and ensure completion of all remaining minor works including clearance of liabilities to clean financial closure of the project.
WAPDA and NTDC have been directed to speed up implementation of Tarbela 5 Extension. NTDC will ensure quick RAP payments under 500-kV transmission line component.
