World Bank to finance Discos' project preparation facility

The World Bank (WB) has agreed to finance Project Preparation Facility (PPF) for power distribution companies (Discos) with the condition that they have to make procurement in accordance with the Bank's guidelines, sources in Finance Ministry told Business Recorder.
"Though the bank feels that there is deadlock in power sector reforms policy of GoP, it will extend funds for PPF from the planned investment loan with the condition that procurement under this programme will have to be done according to guidelines to be set by the bank," sources said.
They said that the government was already finalising cases to seek investment for the Discos, and NTDC to reduce energy losses and 6th Second Transmission Grid (STG).
The bank, sources said, was of the view that the government should make request for a loan including identification of project participants and project component. This should also include the strengthening of the capacity of agencies for preparing and implementing the project.
The bank has also made it mandatory for the companies to obtain necessary approval from their respective board of directors and any other agencies as appropriate to initiate preparation of the projects.
The bank is further pressing the Discos and NTDC to complete the process of enhancing in-house capacity in the areas where there are deficiencies, and initiate additional project preparatory work which should by about mid-December 2005, to enable the bank to launch a formal appraisal of the project in January next year.
"The WB has advised the Discos and NTDC to start preparation of bid documents by the end of next month for those packages that should be procured during the first year of project implementation," sources said, adding that the objective is to have draft bid document submitted to the bank for review and no-objection by the end of November, with the objective of inviting bids by the end of December.
Sources said that NTDC is completing a study of the transmission system, which should identify future transmission investment needs. NTDC would share the study with the bank when it is completed.
They said that a World Bank team is due to arrive here on July 25 to deliberate on 'World Bank Indicative Lending Programme 2006-08' of $1.5 billion with government officials. The team would discuss issues relating to power sector reforms, human development and mega projects of infrastructure development. The bank would give $100-200 million for power sector rehabilitation.