Budgetary support: ADB asks Pakistan to bring house in order

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ISLAMABAD: The Asian Development Bank (ADB) has asked Pakistan to address bottlenecks hindering progress on crucial energy and communication sector projects, as Islamabad is paying millions of dollars annually on the approved loans that remain undisbursed due to slow implementation of the schemes.
The ADB desired Pakistan to bring its house in order at a time when the Manila-based lending agency is ready to augment its assistance to the dollar-starved country and is considering approving at least $3 billion worth of fresh loans, while aligning its priorities with those of the new government. The fresh loans also include $900 million for coal-fired Jamshoro Power Generation project that will have a capacity of producing 1,200 megawatts (MW).
The multilateral lending agency sought resolution of the outstanding issues during review of its current assistance to Pakistan, standing at $3.4 billion against twenty projects. The review meeting was co-chaired by the ADB Director General for Central and West Asia Department Klause Gerhaeusser and Economic Affairs Division (EAD) Secretary Nargis Sethi.

Over half a dozen projects, valued over $1 billion, are facing delays due to chronic problems in execution of contracts, land acquisition disputes and alleged kickbacks in one of such projects, according to EAD officials. The loans against some of these projects may be cancelled, as the ADB was following a policy of no-extension, they added.
As about a third of the ongoing loans remain undisbursed due to problems at the execution stage, the country is paying millions of dollars in commitment charges since the ADB has already committed the amount in favour of Pakistan, the officials said.
Against undisbursed loans, the ADB charges 0.15% as commitment charges.
The head of the ADB delegation was not happy with the pace of the progress on $60 million Energy Efficiency Investment programme, which had been approved in September 2009 to distribute energy savers for conserving energy. The loan is going to lapse on December 31 this year and the delivery of the compact fluorescent has not yet reached the target mark. The officials said there was possibility that this project may not achieve its objective in the stipulated time.
The delay has been attributed to the former prime minister Raja Pervez Ashraf when he was serving as the water and power minister and former member energy of the planning commission Shahid Sattar.
A $243 million Power Transmission Enhancement Programme-III and $245 million Power Distribution Enhancement Programme-III are also facing delays. Both these projects were aimed at improving the country’s obsolete power transmission and distribution systems to reduce line losses. The government has yet to approve the PC-I of the transmission project. The DG asked Pakistan to expedite work on both projects, the officials said.
The ADB also wants that the PC-I of the $900 million Jamshoro coal-fired project should be prepared at the earliest, as the progress on this proposed project has remained slow.
The $285 million component of Flood Emergency Project aimed at rehabilitation of damaged roads, which is to be executed by National Highway Authority, also remains a non-starter. The loan for this project may also lapse, according to the officials.
Pakistan and the ADB have differences over the land acquisition policy and director general Gerhaeusser suggested Islamabad to appoint valuators to resolve the issue, the officials said.
In a bid to address outstanding issues, the government has decided to constitute a special “Foreign Assistance Monitoring Cell” to effectively monitor the timely disbursement and utilisation of foreign assistance for development projects, according to an official handout.
It added that the Minister for Finance Ishaq Dar was also concerned about the slow disbursement and implementation of various projects and has directed to evolve a proper mechanism to expedite projects.
During the meeting, both sides also discussed the Country Operational Business Plan 2014-16, under which the ADB intends to give $3 billion including $1.1 billion as concessionary loan. The volume may go up, if the ADB decides to restore the budgetary support, the officials said.

2013-07-27

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