Power project loans worth $16b left untouched

[wiqi21]

In a startling revelation, the government of Pakistan has failed to utilise $16 billion in loans that have been approved by international donors for energy projects in the country, even as Pakistan continues to face a severe energy crisis born of a crumbling infrastructure, largely due to the Civil Service of Pakistan’s inability to initiate the projects.

The revelation was made in an analysis conducted by the Economic Affairs division of the finance ministry. The $16 billion amount represents 85% of the $18.8 billion loans approved for Pakistan’s energy sector by multilateral donors, and includes projects for power generation, as well as improving the transmission and distribution grids. Islamabad’s failure to utilise these loans has cost the taxpayers $21 million a year in commitment fees for the loans, including $15 million in fees to China alone.

In total, at least 34 projects have yet to get off the ground despite having foreign funding available. Of those, two dozen were agreed to by the Zardari Administration, three by the Musharraf Administration and seven by the Nawaz Administration.

Had they been implemented, the projects would have added 4,000 megawatts of power generation capacity as well as significantly improved the crumbling transmission and distribution grids.

The issue was raised during a briefing to Prime Minister Nawaz Sharif by the water and power ministry last week, but ministry officials who attended the briefing say he did not hold anyone responsible for this apparent dereliction of duty.

More than half of the total contracted loans are signed by the water and power ministry and $9 billion or $90% of the ministry’s portfolio remains unutilised. The ministry has more than one political heads and is said to be directly monitored by the prime minister and Punjab Chief Minister Shahbaz Sharif.

Of the 16 power generation projects to be executed by water and power ministry, $7.7 billion or 92% of the portfolio remains unutilised. Over 80% loans for the power distribution projects have not been utilised.

The Asian Development Bank-funded $1.3 billion loan for replacing manual meters with smart meters is a classic example of bureaucratic inefficiency. The ADB has committed a $990 million loan for the project. A visit by the lending agency’s Manila-based team for loan negotiations had to be downgraded to “technical negotiations” after the government approval of the project, the PC-1, could not be completed in time.

Overall, the ADB has committed $2.4 billion for the energy sector projects and 86% remains unutilised.

The World Bank has committed $5.2 billion for the sector and 98% is unutilized. China has contracted $8.5 billion loans and over 80% remains unutilized. The European Union’s commitments for the energy sector remain fully unutilised.

The PM was briefed that the main reasons behind such large unspent amounts were the slow process of government approvals, delays in loan negotiations, a lack of coordination between government agencies to finalise procurement details, lengthy bidding processes and a lack of capacity of the executing agencies in contract management and project monitoring. At the heart of each case are the incompetent bureaucrats dealing with these projects.

“This system has totally failed to deliver without comprehensive civil service reforms,” said Nadeemul Haque, former deputy chairman of the Planning Commission.
Wanton inefficiency: Power project loans worth $16b left untouched – The Express Tribune

 

[anilindia]

China is also charging for commitment fee. I think they should waive it keeping in mind friendship.

 

[Indian Patriot]

In whose pocket did the money go?

 

[Pulsar]

China is also charging for commitment fee. I think they should waive it keeping in mind friendship.

You guys are so used to feebies that you now want to ask China to even forgo the commitment fees!!!

Remember, the Chinese are businessmen first. The 'stronger than steel' stuff comes second. The sooner you realize that the better.

The issue was raised during a briefing to Prime Minister Nawaz Sharif by the water and power ministry last week, but ministry officials who attended the briefing say he did not hold anyone responsible for this apparent dereliction of duty.

That's the problem! Everyone's having a ball especially the bureaucrats as they know there's no price to pay for gross inefficiency. The ordinary Pakistani suffers while the babus are busy playing golf!

 

[Dr. Strangelove]

pakistan ha bhai wo b nooray ka
dont u know experienced(tajarba kar team ) team

 

[AZADPAKISTAN2009]

Someone must be POCKETING THE INTEREST ON LOANS

 

[Orakzai]

In a startling revelation, the government of Pakistan has failed to utilise $16 billion in loans that have been approved by international donors for energy projects in the country, even as Pakistan continues to face a severe energy crisis born of a crumbling infrastructure, largely due to the Civil Service of Pakistan’s inability to initiate the projects.

The revelation was made in an analysis conducted by the Economic Affairs division of the finance ministry. The $16 billion amount represents 85% of the $18.8 billion loans approved for Pakistan’s energy sector by multilateral donors, and includes projects for power generation, as well as improving the transmission and distribution grids. Islamabad’s failure to utilise these loans has cost the taxpayers $21 million a year in commitment fees for the loans, including $15 million in fees to China alone.

In total, at least 34 projects have yet to get off the ground despite having foreign funding available. Of those, two dozen were agreed to by the Zardari Administration, three by the Musharraf Administration and seven by the Nawaz Administration.

Had they been implemented, the projects would have added 4,000 megawatts of power generation capacity as well as significantly improved the crumbling transmission and distribution grids.

The issue was raised during a briefing to Prime Minister Nawaz Sharif by the water and power ministry last week, but ministry officials who attended the briefing say he did not hold anyone responsible for this apparent dereliction of duty.

More than half of the total contracted loans are signed by the water and power ministry and $9 billion or $90% of the ministry’s portfolio remains unutilised. The ministry has more than one political heads and is said to be directly monitored by the prime minister and Punjab Chief Minister Shahbaz Sharif.

Of the 16 power generation projects to be executed by water and power ministry, $7.7 billion or 92% of the portfolio remains unutilised. Over 80% loans for the power distribution projects have not been utilised.

The Asian Development Bank-funded $1.3 billion loan for replacing manual meters with smart meters is a classic example of bureaucratic inefficiency. The ADB has committed a $990 million loan for the project. A visit by the lending agency’s Manila-based team for loan negotiations had to be downgraded to “technical negotiations” after the government approval of the project, the PC-1, could not be completed in time.

Overall, the ADB has committed $2.4 billion for the energy sector projects and 86% remains unutilised.

The World Bank has committed $5.2 billion for the sector and 98% is unutilized. China has contracted $8.5 billion loans and over 80% remains unutilized. The European Union’s commitments for the energy sector remain fully unutilised.

The PM was briefed that the main reasons behind such large unspent amounts were the slow process of government approvals, delays in loan negotiations, a lack of coordination between government agencies to finalise procurement details, lengthy bidding processes and a lack of capacity of the executing agencies in contract management and project monitoring. At the heart of each case are the incompetent bureaucrats dealing with these projects.

“This system has totally failed to deliver without comprehensive civil service reforms,” said Nadeemul Haque, former deputy chairman of the Planning Commission.
Wanton inefficiency: Power project loans worth $16b left untouched – The Express Tribune

Dont worry metro buses are going to generate electricity for us.

You guys are so used to feebies that you now want to ask China to even forgo the commitment fees!!!

Remember, the Chinese are businessmen first. The 'stronger than steel' stuff comes second. The sooner you realize that the better.


That's the problem! Everyone's having a ball especially the bureaucrats as they know there's no price to pay for gross inefficiency. The ordinary Pakistani suffers while the babus are busy playing golf!

Did you bother to read his name first before making this statement? If not then let me tell you he is one sorry *** Indian trying to be sarcastic.

 

[wiqi21]

Dont worry metro buses are going to generate electricity for us.

And Kickbacks for NORA

 

[Orakzai]

And Kickbacks for NORA

Have you noticed one thing? Whenever news like this surfaces where NOORAS incompetencies are shown all NOORA suporters do is read it with having their tail between their legs and would say nothing.

 

[ice_man]

16 BILLION DOLLARS APPROVED BUT NOT UTILIZED.

what i fail to understand is that even "corrupt politicians" how will they benefit if they don't withdraw the money and pocket it????

the logic is beyond me. someone please elaborate.

 

[ziaulislam]

16 BILLION DOLLARS APPROVED BUT NOT UTILIZED.

what i fail to understand is that even "corrupt politicians" how will they benefit if they don't withdraw the money and pocket it????

the logic is beyond me. someone please elaborate.

its pretty much simple..
no kick backs no projects...

the reason why projects are slow is because of kickbacks demands at different levels.
tenders are done and canceled a dozen times..if you dont pay us nothing will move, thats the moto

foreign funded projects have a better scrutiny and thus most of times the project doesn't materializes as kick backs is relatively a little harder

 

[Viper0011.]

16 BILLION DOLLARS APPROVED BUT NOT UTILIZED.

what i fail to understand is that even "corrupt politicians" how will they benefit if they don't withdraw the money and pocket it????

the logic is beyond me. someone please elaborate.

Well, do you want to understand the real logic or what your friends on here, with political mantra will tell you? When there are international institutes involved (which, for a corrupt country like Pakistan, is a blessing in disguise), you can't just "Cash the Check". The world has seen it for decades, all the way till Musharraff and Zardari's times and that's why Pakistan was almost going bankrupt in Zardari's time. No one would loan Pakistan a DIME for any project as it was all gong to corruption in some form or another.

Your current government actually put in a great reform, they made it mandatory for all projects to have international investments and international audit regulations. They went around the globe and sold the idea to the world, from China, Turkey, UAE, the US, Europe and the UK. Because of that, Pakistan finally got a couple of trade agreements (the one with China for $ 75 billion in 5 years investment and the one with European Union for trade preferences).

So the world bought into it. Now the investment has started to flow in. BUT, the funds will sit in an account TILL proper, audit-able contractors can be found who would do DELIVERABLE based work. What that means, is no check for labor cost or anything.

The contractors will have to break down the project in phases. When each phase ends, they'll show it to the auditing company (Transparency international, KPMG, etc), and then the auditors will APPROVE the payment to be released. Upon which, the investment company will then issue a check.

This is a great way to get things done and actually get projects finished. BUT, majority of your Pakistani contractors (both owned by civilians and X-military generals), don't like it as they can't do corruption, hide money, pay bribes and all. So, there is always a delay in getting qualifies contracting companies. A few that ARE doing this work, are maxed out as due to their good reputation, they are already busy and can't take on more work (like of Habib Construction, IKAN engineering, NLC, etc).

So this kind of delay is for the better. Hopefully soon, all Pakistani contracting companies will realize that the days of corruption are numbered and if they need to make money, they'll have to show the delivery and work done. Until that maturity happens, you'll see some delays. But it should be a matter of a year or two and everyone will get to a realization of working with the process. In the next five years, corruption at the highest level will be down to 5% of what used to be about 70% in Zardari's time.