$390m IBRD loan: World Bank likely to restructure T4HP to extend closing date

ISLAMABAD: The World Bank is likely to restructure Tarbela Fourth Extension Hydropower Project (T4HP) to extend the closing date of IBRD loan of $390 million, which is financing Tarbela Fifth Extension Hydropower Project (T5HP), to September 30, 2027.

Official documents revealed that the results framework has been revised to incorporate indicators from the World Bank Group’s Corporate Scorecard approach and framework.

WB VP visits Tarbela, Dasu hydropower projects

The project comprises: a. IBRD Loan-81440 (US$ 400 million, fully disbursed and closed) and IDA Credit-50790 (SDR 179 million, fully disbursed and closed) approved by the bank on March 20, 2012, that financed the 1,410 megawatt (MW) T4HP in Tunnel 4 of the Tarbela Dam and related activities.

T4HP was commissioned in 2018. b. IBRD Loan-86460 of US$390 million, approved by the bank as additional financing on September 20, 2016, and AIIB Loan LN 0005-PAK of US$300 million in co-financing from the Asian Infrastructure Investment Bank (AIIB), approved on September 27, 2016, to support T5HP.

T5HP includes: (i) expansion of the Tarbela hydropower facility with an additional 1530 MW hydropower plant in Tunnel 5 of the Tarbela Dam; (ii) a 500 kilovolt (kV) switchyard; (iii) a 500 kV Tarbela 5 Transmission Line (T5TL) from the switchyard to Islamabad West Substation (IWS); (iv) social and environmental management plans; (v) project and construction management and supervision; (vi) technical assistance; (vii) future project preparation; and (viii) a pilot floating solar plant in the Tarbela reservoir.

The project’s progress towards achievement of the Project Development Objectives (PDO), “to facilitate a sustainable expansion of Pakistan’s electricity generation capacity,” is moderately satisfactory; because the PDO cannot be achieved by the current loan closing date of May 31, 2024. T5HP and T5TL are expected to be completed by the extended loan closing date of September 30, 2027.

The overall implementation progress is moderately satisfactory. The project’s environmental and social performance, financial management performance, and project management are all rated satisfactory. All major procurement is completed. Procurement rating is moderately satisfactory as records in Systematic Tracking of Exchanges in Procurement (STEP) system are not fully updated.

In T5HP, the key contracts for civil works and electro-mechanical (E&M) works are under implementation. The performance of E&M contractor has been satisfactory, and the contractor is expected to ship the key equipment and parts by first half of 2025.

However, the civil works contractor is behind schedule on all work sites. The demolition of Tunnel 5 at the point of connection with the raised intake is on a critical path.

The delay in completing the connecting shaft, a complex construction challenge which must be managed carefully, will impact the commissioning dates of the generation units. However, this delay has no impact on final construction milestone, i.e. completion of raised intake by May 2027.

The contract for T5TL is under implementation, and construction progress has improved after initial delays. The National Transmission and Despatch Company (NTDC), the implementing agency for T5TL, is monitoring the progress of the contractor well.

T5TL connects with IWS, which is financed by the Bank through National Transmission Modernization I Project. The contract for T5TL also includes an interconnection between T5HP switchyard and switchyard of power plants in Tunnels 1-4. Therefore, if the completion of IWS is delayed, power from T5HP can be evacuated through this interconnection in the short-term. A Resettlement Action Plan (RAP) is being implemented for T5TL.

NTDC is compensating landowners affected by the transmission towers and will compensate people affected by transmission line rights-of-way and related works in due time, adhering to the RAP. 5.

Construction Supervision Consultant (CSC): There is a recent disagreement on commercial aspects of the CSC contract that may slow implementation progress. WAPDA is undertaking remedial measures to ensure construction progress is not impeded while working to resolve these disagreements.

The extension of the closing date of IBRD loan is necessary to complete T5HP. The path for successfully completing T5HP is clear. Reasons for implementation delays of the past (delayed selection of the CSC, need for additional geological investigations, restrictions related to the COVID-19 pandemic, resolving access to Tunnel 5) have been addressed.

Key contracts in T5HP for civil works and E&M works are underway and the contract schedules support the completion of the project by the extended closing date. The disbursement forecast has been revised based on the expected construction progress of the project.

Copyright Business Recorder, 2024