ISLAMABAD: The Asian Development Bank (ADB) will provide technical assistance to Pakistan for establishing an autonomous Central Power Purchasing Agency (CPPA) to improve financial management of the sector, Dawn learnt on Saturday.

Presently a dedicated unit within National Transmission and Dispatch Company (NTDC) handles all electricity market settlement and payment functions.

To achieve transparency, market focus and private sector investments, it is critical to decouple such purchasing and settlement functions from the domain of transmission and dispatch services, ADB observes in its report.

The technical assistance project ($1.5 million) of the ADB supports the government’s priorities of reforming the energy sector and state-owned enterprises, as well as restoring sustainability in the power sector.

The project is required to update the recommendations completed in 2006 which were not implemented due to broader structural issues, including insufficient capacity within the National Electric Power Regulatory Authority (Nepra) to formulate market rules.

The United States Agency for International Development (USAID) is providing assistance to Nepra on preparing market rules under which the CPPA will operate.

Since 1998, the government has been implementing a strategic power sector restructuring and unbundling plan to address the country’s persistent power crisis.

The plan envisages increased investments to address longstanding technical and fiscal deficits in the sector.

The reform progress has been slow and the country’s power supply and infrastructure requirements have not kept pace with rising demand, thereby constraining growth potential and the country’s competitiveness.

The current average shortfall in the supply-demand gap is between 4,500 and 6,000 megawatts resulting in routine load shedding of up to 12 hours in urban areas and 18 to 20 hours in rural areas and estimated to constrain GDP growth by at least 2pc.

The power sector unbundling in late 1990s led to the formation of NTDC, licensed to undertake power transmission, system operation and dispatch functions, and act as a single purchaser and a seller of power.

Published in Dawn, June 29th, 2014