Slow work on power transmission projects: ADB warns of partial loan cancellation

[LRE]

MUSHTAQ GHUMMAN
ISLAMABAD (September 07 2009): The Asian Development Bank (ADB) has threatened to cancel part of the loan for power transmission, enhancement investment programme, tranche 2, if procurement process is not completed on time, official sources told Business Recorder.

The Bank said that the overall implementation progress of the project has generally been slow. As of July 31, 2009, physical progress achieved was estimated at 13 percent, compared with the elapsed loan period of 21 percent. Cumulative contract awards and disbursements achieved are $41.8 million and $11.7 million, or 30 percent and 19 percent of the 2009 projections of $140 million and $62.5 million, respectively, which were jointly prepared at the beginning of the year.

Pil-Bae Song, a Director of the ADB, in a letter to Tariq Qazi, Chief Executive, National Transmission and Dispatch Company (NTDC), observed that progress on procurement was significantly behind schedule and if the majority of the civil works contracts could not be awarded by the end of 2009 completion of all sub-projects by end-2013 would be at high risk.

"As has been extensively discussed, the current practice of procuring civil works, materials and equipment through multiple contract packages and diversified lots increases processing time and load for both NTDC and ADB and eventually slows down project implementation," he said.

There are 15 contract packages remaining, including civil works and supply of material and equipment to be procured. One option would be to club the remaining contracts into the following four packages: (i) civil works for grid stations at T T. Singh, Okara, and Ghazi Barotha, on turnkey basis; (ii) civil works for 220 kv transmission lines; (iii) SVC installation at Quetta on turnkey basis; and (iv) procurement of materials and equipment. Procurement of 4 contract packages instead of 15 would clearly save cost as well as time. "We need to take prompt action to ensure timely processing of procurement, failing which, may risk partial cancellation of the items that are not procured in time. Also, ADB's approval for further tranches would be more difficult since the delays would be seen as lack of absorptive capacity," he concluded.

Copyright Business Recorder, 2009

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