ISLAMAABAD: The Asian Development Bank (ADB) has reportedly showed willingness to enhance loan amount of Power Distribution Strengthening Project to $ 400 million from existing offer of $ 200 million meant to install AMI/AMR meters improvement transmission infrastructure of four DISCOs.
The ADB conducted a consultation mission from August 19 to 30, 2024, to discuss the scope of the Power Distribution Strengthening Project and the next steps with the Government, the Power Planning and Monitoring Company (PPMC), the Hyderabad Electric Supply Company (HESCO), the Sukkur Electric Power Company (SEPCO}, the Multan Electric Power Company (MEPCO), and the Lahore Electric Supply Company (LESCO).
The mission held extensive discussions with senior officials from the Ministry of Energy (Power Division). Wrap-up meetings were held with the Power Division and EAD to confirm the government’s commitment to the agreed actions.
Power sector: Govt anticipates $2bn financing by IFIs in 3 years
The Aide Memoire summarized the key agreements, which are subject to approval of the Government and the ADB. The ADB has requested the Government’s confirmation of the mission’s findings and the Aide Memoire, latest by September 16, 2024.
In consultation with Power Division and DISCOs, the mission agreed on the final scope of work for the Power Distribution Strengthening Project. The ADB has completed its due diligence on the proposed scope of work and is ready to proceed with the Board approval process upon the confirmation of the MOE. The estimated loan amount will be up to $ 200 million. The mission has requested the Power Division to confirm the proposed scope and commencement of the procurement.
According to scope of project, output-1 will be related to secondary transmission system modernized and augmented which will include conversion of four grid stations (SEPCO) and supply or critical equipment for 25 grid stations (LESCO). The ADB finances the imported equipment critically required for the grid stations under construction by LESCO. Associated transmission lines will be constructed by SEPCO using its own resources.
Output 2, low voltage distribution system modernized and augmented of 100 LV feeder line re-conducting (ABC cables in combination of ARMS in LESCO) and 40 feeder lines bifurcation (SEPCO). Output 3, revenue collection measures implemented, APMS (LESCO 1600) (MEPCO 13,000), SEPCO (1,200), AMI/AMR, 131,900 LESCO, 150,000 MEPCO and 50,000 SEPCO. and output 4, institutional assessment on Discos and gender. Institutional assessment is currently ongoing which will further recommend key reform actions.
The project is designed to address both technical and commercial loss reduction. Reform measures and capacity building components in the project will strengthen Discos, institutional capacity.
Four target DISCOS were selected earlier by the MOE, considering their performance and the extent of losses. The project complements the World Bank’s similar initiative, the Electricity Distribution Efficiency Improvement Project (2021), which targets PESCO, HESCO, and MEPCO.
ln case ofMEPCO, World Bank finances 9,000 APMS out of total 24,000 transformer points. The mission is closely coordinating with the World Bank team to share lessons and harmonize approaches.
In a separate high-level meeting with the EAD, the ADB was requested to increase the loan amount to $400 million. The mission appreciated EAD’S request and suggested that the finalized project scope be processed first, with subsequent phases covering the additional scope of work and including more DISCOs.
This programmatic approach will ensure long-term engagement of ADB with DISCOs and the timely implementation of the project, considering the capacity of DISCOs and the market. It will also provide flexibility to incorporate lessons learned and adapt to changing circumstances.
The proposed scope of work by HESCO includes converting grid stations and associated feeding transmission lines, new 132 kV transmission lines, as well as implementing APMS.
The HESCO is also implementing an AMI/ARM program (30,000 units) under the World Bank project. The mission expressed interest in funding the proposed scope and informed HESCO that ADB requires a high level of project readiness before Board approval to prevent delays in project implementation, particularly regarding the preparation and clearance of the land acquisition and resettlement plan.
HESCO requested that the associated feeding lines be funded by ADB and noted that the line route has not yet been fully surveyed.
The mission proposed continuing the land survey for the transmission lines with the assistance of a consultancy firm. Considering that other DISCOs are ready to proceed, HESCO’s portion can be processed in the next phase of the distribution investment projects, separately from the other Discos, depending on the progress.
The ADB requires a high level of project readiness before management consideration (such as the commencement of procurement for 30% of the loan amount).
Copyright Business Recorder, 2024
Comments
Comments are closed.