NTDC: World Bank says concerned at implementation of project works without valid contract

ISLAMABAD: The World Bank (WB) has expressed serious concerns to the government on National Transmission and Despatch Company’s (NTDC) implementation of project financed works without a valid contract.

In a letter to Secretary Economic Affairs Division Dr Kazim Niaz, Acting Operations Manager, Pakistan, Eva Lescrauwaer highlighted the long-standing issue regarding project financed works being implemented without a valid contract.

At least 80 percent of the contracts awarded under the project have expired, some for as long as 24 months ago, without extension despite ongoing works by the contractors.

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She argued that the situation exposes both NTDC and the contractors to unnecessary legal risks and prevents either party from enforcing its contractual rights or seeking remedies if either party fails to deliver on its obligations.

Contract management best practice dictates that contracts should be extended before their expiration to ensure a valid contract that governs the relationship between NTDC and any contractor hired under the project.

The implementation of works without a valid contract is a serious concern, as it may lead to delays and work conducted outside the required contractual and legal frameworks, invalidating necessary insurance policies. This issue has been highlighted in previous ISMs over the past year.

During the mission, NTDC has committed to completing all pending contract extensions promptly and requested close attention in ensuring that all the pending contract extensions are completed before December 15, 2024.

She further stated that some substation extension and upgrade works require shutdowns to enable access to the existing network to complete the installations and commissioning activities. The equipments needed to complete these works are already at site, and NTDC has informed the mission that the required shutdowns will be issued during the next winter months when overall system load is reduced.

She requested close attention and follow-up to ensure the required shutdowns are issued this winter while the network load is reduced.

On extension of project closing date, she said that currently, the project is set to close on April 30, 2025. However, the largest contract, the Islamabad West Substation (IWS) Contract is scheduled for completion in January 2027. Extending the project closing date to January 2027 depends on satisfactory implementation progress of the IWS contract.

NTDC has been requested to share an updated implementation schedule (prepared with the supervision consultant and contractor) to justify the required closing date extension. She requested close support and monitoring to ensure the IWS contract progresses as expected to facilitate the extension of the project closing date beyond April 2025.

Shedding light on use of technical assistance/ capacity building funds, the Bank said that the project was designed, negotiated, and approved with a component for technical assistance and capacity building support to NTDC.

The mission discussed and agreed that funds under this component may be used to finance the hiring of individual consultants to support the reorganisation of NTDC and other capacity strengthening activities.

NTDC has been requested to share draft scope descriptions and terms of reference for the activities and individual consultants they would like to hire through this component. NTDC has been requested to submit the scope and terms of reference for the proposed individual consultants to the Bank immediately.

To address some of the issues identified with procurement and contract management during the project’s implementation, the Bank, at the behest of NTDC, will organise a workshop on Procurement and Contract Management for NTDC teams implementing Bank-financed project activities.

The date and venue of the workshop will be agreed upon with NTDC by November 30, 2024. NTDC has agreed to provide the venues and other logistic support for its staff attending the workshop. The Bank will provide the trainers for the workshop.

On pipeline power transmission sector development program, she said that following up on the discussions with MoE-P about the priority transmission grid strengthening projects planned for 2025-2030, the Bank team conducted parallel meetings with the Power Division, NTDC, and development partners on the programmatic approach to support these projects.

The identified priority investments aim to address the multifaceted challenges constraining the transmission grid to meet current demand reliably; and to enable the optimal dispatch and evacuation of existing and planned power generation facilities.

The high-level scope of these priority investments was discussed during the mission, and the Bank stands ready to initiate the preparation of an operation under the transmission sector development program upon receipt of a formal request letter from the Government.

Further, it has been agreed that the Power Division and NTDC will submit: (i) the techno-economic studies for the identified first four priority projects and (ii) nomination of the program focal point at NTDC by December 15, 2024.

Copyright Business Recorder, 2024