WB to continue fiscal support: Water and power sector reforms
By Our Staff Reporter
ISLAMABAD, Feb 16: The World Bank will continue its financial support as well as deep engagement with the federal government to complete reforms programme in Pakistan’s water and power sectors.
A senior government official told Dawn that a review mission of the World Bank that had meetings with officials of the ministries of water and power, finance and economic affairs and Wapda was of the view that Pakistan had performed well under various covenants although some of the milestones could not be achieved.
The World Bank, said the official, was very open to identify new projects in the irrigation and power sectors as it would continue its policy dialogue for strengthening of regulatory framework and privatisation of distribution and generation system.
The overall size of the water and power sector assistance and project identification would be made in the subsequent meetings, he said.
The power sector reforms would continue to be supported by the bank through policy dialogue and adjustment lending which, by strengthening macroeconomic stability and reducing exposure risk, is expected to improve the investment climate for private investment, particularly for the privatisation of distribution companies, said the official.
The bank started its engagement in Pakistan’s power sector early 1990s and since then provided over $3.5 billion loans and grants specifically for this sector. Its power sector energy development fund worth around $1.5 billion resulted in attracting over $5 billion investment in Pakistan particularly through independent power producers.
Last year, the bank slashed its funding for Pakistan’s Rs34 billion National Drainage Programme (NDP) by $100 million due to poor performance by the provincial governments in implementing the irrigation sector reforms.
In addition, the bank would support financially through pragmatic investment leading to the privatisation of the distribution companies. In particular, international finance corporation (IFC) will mobilise private investment for the power sector, particularly for the privatised distribution companies.
IFC will also continue to act as advisor to the government on the privatisation of the Faisalabad Electric Supply Company (FESCO). FESCO and Jamshoro Power Generation Company (Genco-1), the two electric supply and generation companies respectively of Wapda, are on top of government’s privatisation agenda.
The multi-billion-dollar World Bank assistance has primarily been focussed on power sector reforms and corporatisation that divided Wapda into 12 distribution, generation and transmission companies. The programme would culminate in the creation of a power sector market like stock exchanges in which the electricity would be traded as a commodity by power producers and big consumers.
Under the three-year private sector strategy, the bank has already committed that IFC will invest equity and loan financing in gas, mining, power and telecom in the infrastructure sectors besides banks and NBFIs in the financial sector.
Similarly, the Multilateral Investment Guarantee Agency (MIGA) will offer political risk insurance through its guarantee programme in the gas, mining, power and telecom sectors particularly in the privatisation programme.
This instrument of the bank has previously been used for the privatisation of electricity distribution companies in the former Soviet Republic region.
