EDITORIAL: The Asian Development Bank (ADB) has just cause to be concerned with the way some of the projects it has financed are progressing and has decided to condition future disbursement of funds with the timelines that are observed. Dragging projects along needlessly, especially when they have been financed with billions of dollars from outside institutions, really defeats the purpose of the whole exercise since the country fails to erect anything of consequence and the donor only counts a dead investment. And since it was reported recently at a meeting between Minister for Economic Affairs Makhdoom Khusro Bakhtiar, ADB Country Director Xiaohong Yan and the deputy chairman of the Planning Commission that almost all of its funded energy projects worth $1.7 billion are facing serious implementation problems and have been delayed, one can understand why the Bank's representative did not take it too well. According to sources quoted in the press four out of five projects in the energy sector, meant to improve transmission and distribution, are at risk. A delay here or there in perhaps one project would have been understandable, but surely for almost all crucial projects to be delayed at the same time takes a special type of talent. So clearly there are breakdowns in the way these things are done in these parts.
That is why it was not at all surprising to learn that some of the reasons for all the missed deadlines include long filing processes, internal administrative issues, land acquisition problems and operational challenges. But these excuses just beg the obvious question that since such projects are financed after lengthy negotiations and timelines proposed and agreed by the government no doubt take into account all procedural delays that are likely to come up, how is it that the planning and execution were so wrong? Also, it doesn't help that all the projects that are lagging are related to transmission and distribution losses and aim to improve cost recovery of electricity sold, which means that the government must have been counting on their timely completion to help contain the out-of-control circular debt. Then there are all the other problems to think of, like completely unnecessary cost escalation and likely loan cancellations unless something is done right now to put a lid on all this. The projects that are causing the biggest problems include the $668 million 660MW Jamshoro Power Generation Project, $544 million Power Transmission Enhancement Investment Programme, and $400 Power Distribution Enhancement Investment Programme for Islamabad and Lahore electric supply companies.
It just beggars belief that the government could hold detailed deliberations with the funding institution, involve all sorts of experts, fine-tune details and then find out when implementing the project that so many major things were so wrongly calculated. If there is an upside to this breakdown, it is that the government at least understands what the biggest problems are as well as just which direction the relationship with an important funding institution can take if they are not urgently and sincerely addressed. The government must immediately form a committee or working group and look into the matter of removing all inefficiencies from processes like these under a very clear timeline. It is hard enough to attract serious money towards the country's power sector, especially in its present state, so the least that can be done with what little help that does come is ensure judicious utilisation. That way the country at least looks good asking for more leverage to finance more important projects.
The government no doubt understands better than anybody else just how precarious a state the economy is in at the moment. The post-lockdown economic upturn is no mean achievement and must be protected and enhanced at all costs. That is why authorities are looking to trim losses and add to benefits wherever and whenever possible. Unfortunately, Pakistan does not have the kind of finances that are needed to address structural weaknesses across many sectors. And institutions like the World Bank, ADB, etc, play such a crucial role in our economic wellbeing because they step forward with favourable financing for some of our most pressing needs. It is now up to the government to investigate all delays and take corrective measures that will keep our most important relationships in the world of international finance intact.
Copyright Business Recorder, 2020