ISLAMABAD: The World Bank (WB) has warned National Transmission and Despatch Company (NTDC) that progress on National Transmission Modernisation Project-1 (NTMP-1) will be declared “Moderately Unsatisfactory” if no development is witnessed on long outstanding Islamabad West Substation (IWS) and disbursements, sources in Economic Affairs Division (EAD) told Business Recorder.
This warning has been issued by the World Bank’s Country Director, Najy Benhassine to the Secretary Economic Affairs Division, Dr Kazim Niaz.
The World Bank Mission, comprised of Muhammad Anis, (senior energy specialist), Task Team leader, Anjum Ahmad (senior energy specialist, co-Task Leader), Anthony Granvile (senior power engineer), Mbuso Gwafile (senior energy specialist), Shafiq Hussain (Procurement Specialist), Imran-ul-Haq (senior social development specialist) and Ahmad Imran Aslam (Environmental Specialist) held meeting from September 11-22, 2023, for the National Transmission Modernization Project-1. The mission met with various departments of NTDC.
World Bank rates implementation progress of NTMP-1 as ‘moderately satisfactory’
The mission had wrapped up meetings with the Ministry of Energy (Power Division) and the Ministry of Economic Affairs on September 21, 2023.
According to the Bank, overall implementation of the project has made some progress since the last mission in March 2023. After experiencing some delays, the Technical Evaluation Report (TER) for the Islamabad West Substation (IWS) package was approved by the NTDC board in March 2023 and the financial offers of the qualified bids were opened on August 3, 2021.
NTDC is in the process of finalising the combined evaluation and anticipates signing the contract by December 15, 2021. The physical progress of other works contracts ranges from 60% to 95%.
The progress in land compensation for the IWS has improved with 72% of the payments completed. The issues related to restrictions on Letter of Credits (LCs) have been largely resolved through signing of Amendments to the contracts except for one contract.
The implementation of Enterprise Resource Planning (ERP) is moving well. Total disbursement from this project has been projected by NTDC to be $120 million in FY24. Based on this progress the rating for the overall Implementation Progress (IP) has been retained as Moderately Satisfactory (MS).
The project is set for restructuring to extend the closing date by 35 months. This extension primarily accommodates the 30-month implementation period for the IWS work and the completion of other ongoing contacts. The extension will allow the project to achieve its objectives.
Consequently, the project currently retains its previous ratings towards achieving the Project Development Objective (PDO) as Moderately Satisfactory (MS).
The Bank is of the view that while there has been progress on most of the other ongoing contracts, it is concerned at the delay in completing the award of the Islamabad West Substation package, the largest package under the project.
This delay persists despite Bank’s clearance of the Technical Evaluation Report on March 13, 2021 and opening of financial offers from the qualified bidders on August 3, 2023. The delay in finalising the evaluated price of the lowest bidder is also holding up the revision of PC- 1 for IWS.
The revision of PC-1 is required as the estimated cost under the original PC-1 has increased significantly due to a change in scope. Bank’s decision to extend the closing date of the credit would depend on the award of the IWS contract by December 15, 2023.
The mission has been requested to extend the project’s closing date by 35 months, primarily due to a 30-month delivery period of the IWS. With less than 4 months remaining until the current closing date, it is crucial for the Bank to receive the request for extension as quickly as possible to process the required restructuring.
Furthermore, the slow progress in land acquisition for IWS, attributed frequent transfers of Land Acquisition Collector (LAC) and delays in releasing funds from NTDC main office to project management unit for paying Resettlement Action Plan (RAP) allowances, requires urgent attention from NTDC management to expedite land compensation payments.
World Bank has also drawn attention of top authorities for one particular contract for which Contractor’s Environment and Social Management plan (CESMP) has not yet been prepared and the timeline of October 31, 2023 by when the Environmental and Social (E&S) due diligence report by the consultant is due to assess what has been implemented related to E&S at site.
According the World Bank, the project disbursements are very low (14 per cent) despite being in the fifth year of implementation.
Signing of IWS contract is critical for improving disbursements. NTDC needs to ensure that their disbursement projection of about $ 120 million for FY 24 can be achieved. It said the failure to swiftly award the IWS contract and improve disbursements is likely to result in downgrade of the project rating again to “Moderately Unsatisfactory”.
Copyright Business Recorder, 2023
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