Wapda chief as coordinator: World Bank threatens to stop funding for power sector

Pakistan is likely to be deprived of World Bank funding for power sector as a reaction to giving key role to Chairman Water and Power Development Authority (Wapda) as the coordinator. Additional Secretary Incharge Ministry of Water and Power, Rai Sikandar informed the Senate Committee on Water and Power on Friday that the World Bank has conveyed serious concerns over this decision and threatened to stop funding.
Well-informed sources told Business Recorder, that both the Additional Secretary Incharge and Chairman Wapda, Raghib Abbas are the key architects of this controversial plan which is being strongly criticised by the International Financial Institutions (IFIs). "The World Bank team reached the Ministry of Water and Power after the issuance of notification of Chairman Wapda as co-ordinator and considered it a step against the power sector reforms," the sources added.
He informed the committee that during last one month, the ministry expedited efforts to bridge the growing shortfall in the demand and supply of power especially in the months of April, May and June which implies that load shedding during the interim set-up will be minimised so that PPP may not be criticised on this account.
According to him, financing for furnace oil import has been a major hurdle in generation and with the intervention of President of Pakistan Ministry of Finance has agreed to arrange Rs 5.4 billion for the opening of Letter of Credit (L/Cs) for oil import through PSO. The imported oil would be stored for consumption during the peak summer season to minimise load shedding.
Ministry of Finance has agreed to arrange Rs 10 billion financing through a consortium of banks such as National Bank of Pakistan and Standard Chartered Bank for provision of fuel and other resources to seven Independent Power Plants (IPPs) which at present are shut owing to non-availability of fuel, he continued.
Ministry of Water and Power stated that World Bank would be approached by next week for early start of the construction of Dasu Dam as the feasibility study for the dam has been completed with a capacity to produce 4500 MW power. World Bank has agreed to provide $800 million to Pakistan for Dasu Dam and later on a consortium would be formed by the World Bank to provide the entire financing of up to $2 billion. The committee meeting presided over by Senator Zahid Khan in the parliament house was attended by Senator Maula Bakhsh Chandio, Senator Nisar Muhammad Khan, Senator Humayun Khan Mandokhel and Senator Khalda Parveen. Raghib Abbas, Chairman Wapda informed the committee that despite the fact the Diamer-Bhasha Dam would remain the first priority of the country, yet owing to challenging situation the government would go for construction of Dasu Dam project and World Bank has already assured required financing for it. He further revealed that at present power shortfall is around 4000MW to 5000MW and completion of construction of Dasu Dam project would help bridge the power shortfall through this single project.
He added that this project would not take long to complete as major preparatory work has already been completed by the authorities. He said that a formal letter would be dispatched to ministry for approaching World Bank through Finance and EAD ministries.
He further revealed that with the help of Water and Power Ministry, Wapda has been able to secure financing for five hydro power projects which were not provided enough financing during the last four years. There is much activity on the water front for improving hydro generation in the country. Updating the committee on progress on other dams, the official stated that consultants would start their work on Kurram Tangi Dam Project next month. Third and newly constructed power house at Sadpara Dam has just started functioning. To end litigation on Golan Gol Hydro Power Project has already been agreed between lending institution of Kuwait and its tender would be floated within next two working days. United States has also agreed to provide $31 million for Kurram Tangi Dam project through USAID and plan is to inaugurate the project by President of Pakistan within this month, he further revealed.
There is much activity on the construction of Naulong Dam, Drawat Dam and Gabir Dam projects. Feasibility study for construction of Munda Dam project has also been completed and the European Union has agreed to provide financing for this vital project, however, the officials accused the Planning Commission of delaying the initial financing for this project.
On the assurance of Wapda Chairman, oil supplies on credit to seven IPPs would start early to again operationalise them and when financing from banking consortium would be available this credit would be cleared immediately. The revival of the seven IPPs would help generate around 1,450 MW power during the summer season and help reduce duration of load shedding. He also stated that Rs 93 billion GST refund of Wapda is struck up with Federal Board of Revenue as well as around Rs 200 billion power dues against private sector of the country.
Secretary Water and Power further stated that uninterrupted gas supply to captive power plants operated by textile sector is going on and what has been proposed to the government is to stop this supply to textile sector for three months so that this gas is used for generation by public sector generation companies during summer season.
It was decided in the meeting that the committee would visit different hydro power project sites for inspection of progress thereon. It was also decided that finance and petroleum ministries would be invited in the next meeting to suggest increased availability of gas for power generation during the upcoming summer season. Senator Humayun Khan Mandokhel challenged the claim of the water and power authorities of selling power at Rs 9 to Rs 10 per unit against the generation or purchasing cost of Rs 14 per unit. He said after including all taxes and levies per unit power is costing a consumer over Rs 15 per unit.