The World Bank (WB) is still not satisfied with the progress made so far in power sector reforms initiated a few years back for full corporate autonomy and accountability of Wapda's successor companies, official sources told Business Recorder here on Friday.
They said that the Bank also plans to extend $483 million to five companies for improvement in distribution and transmission systems. But it is yet to be finalised, the reason being delay in project preparations.
Four distribution companies - Hyderabad Electric Supply Company (Hesco), Islamabad Electric Supply Company (Iesco), Lahore Electric Supply Company (Lesco), and Multan Electric Power Company (Mepco)--and National Transmission and Dispatch Company (NTDC) are preparing the projects to improve their systems with the help of World Bank.
Sources said that these companies and the government have expressed interest in World Bank loan that would cover about 80 percent of the project cost, estimated at about $483 million. They said that project preparation was in advanced stages and the companies have shared, with the Bank, their Project Description Documents (PDD) duly completed ,or are in the final stages of completion, Environmental and Social Assessment (ESA) reports; and have initiated procurement processes.
In addition, all distribution companies have had their tariffs determined by Nepra, and notified by the government, a key step in moving the companies towards greater financial autonomy and accountability, the Bank argued.
"We need your attention and support for the actions that are still outstanding, and need to be completed to prepare the project for Bank appraisal," sources quoted World Bank Acting Country Director, Said Al Habsy, as saying in a letter to Secretary Water and Power Ismail Qureshi.
The Bank is of the view that most important action is completion of ESA reports, as Iesco, Lesco, and Mepco have submitted ESA reports to the Bank, which it has found satisfactory. However, Hesco and NTDC are yet to finalise their ESA reports. "All five companies also need to submit ESA reports to relevant provincial and federal authorities, which is a necessary condition," sources added.
Such actions could be completed within the next two to three weeks, which would enable the Bank to plan project appraisal for August, sources quoted the World Bank as saying. The Bank further said that a key element of the power sector reform has been to ensure full corporate autonomy and accountability of Wapda's successor companies, especially in distribution.
Sources said that determination and notification of new tariffs in February were to be followed by a series of steps that would put distribution companies in charge of managing their revenues and payment obligations directly, rather than through Wapda.
These steps include (i) opening of escrow accounts at commercial banks, (ii) finalising the mechanism for disbursement of subsidies; and (iii) finalising the operating procedures for invoicing and payments between Central Power Purchase Agency (CPPA) of NTDC and distribution companies. Regarding procurement, they said that Iesco, Lesco and Mepco have already initiated procurement actions, and Hesco and NTDC are also preparing procurement documents for the first year of project implementation.
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