The Asian Development Bank (ADB) has raised concerns over undue delays in the award of billions of rupees worth of contracts given by power distribution companies (discos) under the Power Distribution Enhancement Investment Program (PDEIP) tranche-1.
The expected outcome is rehabilitation, augmentation and expansion of power distribution systems through improvements of the STG, distribution of power and capacitors, reduction of energy loss, and miscellaneous investments to the distribution system.
The project, with an estimated cost of $27.7 million, has pending contracts as follows: (i) Faisalabad Electric Supply Company (Fesco)- ADB-Fesco-02 (direct contracting estimated cost 0.50 million. Approval for direct contracting given in July 2010 but contract is still awaited. (ii) ADB-Hesco-01(repeat order) $1.80 million (date of Board of Directors (BoD) was November 11, 2010. (iii) Islamabad Electric Supply Company (Iesco), ADB-Iesco-01 (repeat order) $3 million (board approval November 8, 2010), (iv) ADB-Pesco -07 (repeat order) $1.0 million (approval date October 21, 2010), ADB-Pesco-01(direct contracting) $1.10 million (approval of direct contracting given in July 2010) is still awaited. (v) ADB-Qesco-01 (repeat order) $7.30 million (approved on November 8, 2001) and (vi) ADB-Pepco-01 $13 million (BoD approval date November 9, 2010). Total projects cost is $242 million and is scheduled to be completed by June 30, 2012. However, ADB is unhappy with discos over delays in contract awards.
"The procedural delay in signing contracts by the discos has raised a lot of concerns at ADB," said, Pil-Bae Song, a Director at the Bank's head office. Song says that despite persistent monitoring and constant reminders, the issuance of Letters of Award (LoA) and contract signing for the packages, where evaluation reports have been approved by ADB in the past three or four months, is still pending.
According to the Bank, since, Pakistan Electric Power Company (Pepco) has a role of executing agency for this project, necessary follow-ups must be taken up with the relevant discos for early disposal of the pending awards. "Discos may also be informed that in case any bidder declines to award the contract due to price escalation or bid validity expiry, the disco would face problems in re-bidding. ADB will consider the lapse as serious mismanagement and will review on case to case basis", sources said.
Pepco should take all possible measures to improve the procedures being followed, and guide the discos on the issues relating to approving authority in the absence of Board of Directors (BoD). As of 30 June 2010, 94 contracts up to $90.752 million were signed (9 subprojects have already been completed). Surplus loan proceeds of $73.40 million have been identified and a request by the Government of Pakistan (GoP) for utilising of $60 million and cancellation of $13.4million has been received by ADB. A major change in scope is in process and a memo was circulated on 22 June 2010 for approval of utilisation of surplus loan proceeds of $60 million and cancellation of $13.4 million.
The support project is an integral component of the investment program. The investment program's objective was to contribute to economic growth and social development through enhancing efficiency of the overall power distribution system and provision of an adequate and reliable power supply to a greater number of industrial, commercial and residential customers in Pakistan.