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WAPDA: rural electrification.

Rural electrification is an integral programme to uplift the socio-economic standards and productive capacity of 70 per cent of the population living in the villages. During 1991-92 the number of villages electrified, including Federally Administered Tribal Areas, was 3,649. From July 1992 to February 1993, further 2,856 villages have been supplied with electricity thus the total number comes to 43,640 as of February 1993.

But the rapid economic growth experienced by the country has resulted in sharply rising demand for electricity. The development of energy resources tended to lag behind the growth in demand. The major causes have been the vested interests of officialdom and unscrupulous bureaucracy.

The Rural Electrification Project is the glaring example of this attitude. Dollar 715 million worth project has extremely been slower than estimated at appraisal and its, presently, about 30 months behind schedule. As a result, disbursements are less than 10 per cent of the estimated target. A number of factors have accounted for this delay including delays in procurement of goods and appointment of consultants for the survey, detailed design and construction supervision; and changes introduced by the government in the arrangements under which WAPDA has provided funds for rural electrification operations. The loan agreement provided for the funds to be given to WAPDA at an interest rate of 11 per cent. From the previous fiscal year the government decided to provide funds to WAPDA for rural electrification as a grant; however, in September 1991 the finance division maintained that the funds would now be provided as cash development loan, carrying an interest rate of 15 per cent. The high cost of local funding implied by this decision could adversely affect WAPDA's abilities to fund rural electrification investments. In addition to World Bank credit of 160 million dollars, Overseas Economic Cooperation Fund (OECF) and USAID are co-financing the project with dollar 163 million and 56 million respectively.

The objectives of the project are to assist the government in:

a) improving rural productivity and quality of life of the rural population;

b) rationalising investments rural electrification;

c) establishing a framework for extending the rural network at least cost;

d) capturing the benefits of the investments already made and

e) minimising the generating capacity shortfalls through better load management.

The main project component provides for:

a) extending the supply of electricity to new villages and settlements;

b) connecting the grid settlements in close proximity of already electrified villages;

c) expanding consumer connections in already electrified villages and settlements;

d) reinforcing and rehabilitating the existing distribution network;

e) extending electricity supply to tubewells;

f) mapping all villages and settlements in the country;

g) installing load management schemes; and

h) consultancy services.

At this stage, the key issues pointed out by the donor agencies include: cumbersome procurement procedures, delays in appointment of supervisory consultants and disbursements. While the delays attributable to the frequent revisions of bidding documents have already been largely overcome, there is still the possibility for delays at the evaluation, approval and the contract award stages. WAPDA needs to develop a monitoring system to ensure that the anticipated time required for evaluations of bids, approval by the World Bank and contract awards, is not exceeded. Further, appointment of a consulting firm to coordinate the various actions under the project, and to closely monitor project implementation is yet to be done.

Delays in the appointment of consultants for the survey, detailed design and construction supervision have also adversely affected the implementation of this project. The appointment of the consultants has been further delayed as WAPDA initially conveyed to the World Bank its technical financial evaluation reports for three groups without its recommendations on the proposed award.

As far as disbursements are concerned, WAPDA has made payments amounting to about dollar 1.2 million from the special account to suppliers under various contracts; however, no request for replenishment of the account has been submitted to the bank as yet. WAPDA needs to prepare and submit to the bank immediately a replenishment application for payments made out of the special account; and submit replenishment applications at monthly intervals in future.

Donor agencies expressed concern on the overall status and slow progress in the procurement procedure, i.e. appointment of consultants, and weak management of the project. Urgent measures on the above areas are required to be implemented in order to speed up the project and avoid a restructuring of the bank loan. The agencies confirmed that a mid-term review of the project will be discussed with the government shortly.

The Bank's review of the status of the project focused mainly on the following matters:

Finalization of the appointment of consultants for the survey, engineering design and supervision of works, and initiation of preparation of related work plans; status of procurement for goods and works; loan disbursement to a project director responsible solely for the rural electrification project; and agreement on an action plan in order to improve project implementation.

Although proposals from consultants were invited in February 1992, opened in May 1992, and conveyed to the bank in December 92 and the bank's no objection to initiate negotiations with the recommended firms was communicated during January and February 1993, the bids evaluation report for one group is still awaited. Negotiated contracts for groups a and g are yet to be initiated by WAPDA. However, the bank expressed its disappointment over the cumbersome procurement process of WAPDA. These problems need to be urgently addressed. WAPDA has indicated to appoint a task force to improve the procurement process and to set up a procurement monitoring system soon.

Another concern is that the list of villages to be electrified during fiscal year 1994 was to be provided to the bank; the bank informed that the list has not been received. However as was indicated the procurement of consultants and of the contractors for works has not as far advanced. In addition, while the appointment of consultants for the survey and detailed design was expected to be completed by July 1993, the lists of villages to be electrified during fiscal year 1994, which would need to be provided to the consultants as soon as they are appointed, so that the survey and detailed design work can be initiated, have still not been finalized and communicated to the bank for approval.

According to World Bank WAPDA's overall management of the rural electrification project is weak and WAPDA's officials are required to manage the rural electrification programme in addition to their other responsibilities. Project implementation is about 30 months behind the schedule and less than 10 per cent of the bank's loan/credit has been disbursed. The bank has earlier directed WAPDA to appoint a management consultant firm to assist WAPDA to monitor overall management of the rural electrification programme. WAPDA though agreed to appoint the consultants shortly but no one knows when the decision would be implemented.
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Title Annotation:Pakistan's Water and Power Development Authoritry
Author:Ashraf Khan, Mohammad
Publication:Economic Review
Date:Sep 1, 1993
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