WB okays $825mn for power transmission, health, education

ISLAMABAD – The World Bank has approved a loan of $825 million to improve the national power transmission system in Pakistan and enhance health and education service delivery by strengthening financing management and procurement systems.

The $425 million National Transmission Modernization Project-I (NTMP-I) will modernize the national transmission system to enable new power generation to reach consumers by upgrading, expanding and rehabilitating selected 500kV and 220kV substations and transmission lines.

The government had decided to modernise the national power transmission to provide an immediate relief to the overall national transmission and dispatch system, which is under stress due to inadequate transformation capacity. Pakistan had sought financing from the World Bank for the modernisation of power sector. The first phase will involve upgradation and extensions to existing substations, modification to transmissions towers and lines, and the construction of new substation sites across the country.

The estimated total financing requirement of the project is $549.32 million, whereas the World Bank will provide financing of $425m, while the remaining amount of $124.32m will be covered by National Transmission and Despatch Company (NTDC), which will implement the project.

“With a substantial volume of new generation now coming online, the strengthening of the transmission and distribution systems is critical,” says Illango Patchamuthu, World Bank Country Director for Pakistan. “The improved power supply will help meet the un-served demand from consumers and reduce the number and duration of power outages”.

NTMP-I will improve supply reliability and lower losses in the transmission network. The project will also modernize the information and communication technology infrastructure and strengthen financial and accounting systems of the National Transmission and Dispatch Company using information technology. This will result in more efficient operation and business decision-making processes, higher productivity and upgraded staff skills.

Public financial management inefficiencies contribute to Pakistan’s weak performance in health and education sector, and despite a substantial increase, financial resources fail to reach clinics and schools on time. Three sub-projects have been tentatively identified; however, their exact location is not yet finalised. These include 22kV Punjab University Grid Station along with associated 4km transmission line located in Lahore; 220kV Zero-Point Grid Station in Islamabad; and 220kV Mastung Grid Station along with 220kV Sibi-Mastung-Quetta, Loralai double circuit transmission lines.

The $400 million Public Financial Management (PFM) reform program will address these challenges through the enactment of a robust public finance management law, which will lead to decentralization of payment and empower the front-line service delivery managers. The program will also focus on strong cash management; timely and comprehensive reporting; improved federal-provincial coordination; timely release of funds; streamlined payroll and pension systems; efficient and transparent procurement, and user-friendly reports for citizen engagement.

“The public financial management challenges undermine the delivery of health and education services to the population”, said Illango. “The new program will support the government to strengthen their public financial management and make it more transparent and accountable by introducing new aspects like, social audit of public expenditures by beneficiaries.”

The NTMP is financed by the International Bank for Reconstruction and Development, part of the World Bank Group that lends to credit-worthy low and middle income countries. It is a fixed-spread loan with a maturity of 21 years, including a grace period of 6 years. The PFM reform program is financed by the International Development Association, the World Bank’s fund for the poor, with a maturity of 25 years, including a grace period of 5 years.

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