ISLAMABAD: The Asian Development Bank (ADB) has reported slow implementation and utilisation of its funds provided for programmes and projects in Pakistan over the last five years.
“The past five-years trend in active loan portfolio shows that more than half of the loan amount remained uncommitted and two-thirds undisbursed,” said a Country Portfolio Review (CPR) submitted to the government last month.
It said the government and the ADB had agreed in last year’s CPR that project implementation required fast tracking and extension or cancellation of surplus loan amount, especially at mid-term. As a result, the ADB approved $193.6 million cancellations from loan proceeds in 2016.
Giving a break down, the ADB said the net loan amount for year 2001 amounted to $3.355 billion, of which $7.9m amount was disbursed that year. Uncommitted balance stood at $1.9bn or 57 per cent while undisbursed balance stood at $2.53bn or 75pc.
The trend generally remained unchanged in the following years. In 2016, net loan amount stood at $6.4bn, of which cumulative disbursements amounted to $1.75bn, leaving behind an uncommitted balance of $3.6bn or 56pc and undisbursed balance at $4.63bn or 73pc.
The remaining undisbursed and uncommitted amount was attributed largely to approval of 10 new investment projects worth $1.31bn in 2016 and weak procurement, contract and construction management – an issue in larger infrastructure projects and contracts mainly in energy and urban sectors.
Executing and implementation agencies’ “delays in decision-making, inherent problems of administering the contracts and performance of supervisory and management consultants undermine economy and efficiency in delivery”, it said.
The volume of ADB project portfolio remained stable at an annual average of $3.5bn during 2008-2012, increased significantly to $4.5bn in 2013 and to $6.4bn in 2016. Programme lending reduced from about $3bn (20 loans) in 2006 to zero by the end of 2011 as the standby agreement negotiated with the IMF in 2008, governing policy-based lending, lapsed in September 2011.
In 2014, policy-based lending resumed and ADB approved $400m of programme lending for the energy sector reform programme.
In the following years, ADB approved $399m and $299m for the energy programme and public sector reform programme in 2015 and 2016, respectively. As of Dec 31, 2016 the total active portfolio increased to $6.68bn including $5.94bn project lending, $298.6m in programme lending, $342.6m in grants and $100m in co-financing.
At the end of 2016, more than 55pc of all ongoing projects were implemented by four Executing and implementing agencies including National Transmission and Dispatch Company, National Highway Authority, Energy Distribution Companies, and the Punjab Irrigation Department.
Over the period 2006-2016, the multi-tranche financing facility (MFF) has been the predominant modality of loans in the Pakistan portfolio. The volume of energy sector investments grew many-fold from 2006 to 2016, to about $2.9bn under six multi-tranche financing facilities (MFF). At the end of 2016 more than 56pc of active energy projects were comprised of MFF projects.
The performance of the MFF portfolio remained mixed. Except for the MFF in the ANR sector, more than half of the MFF amount remained uncommitted. A substantial under-utilisation was in the transport and energy sectors, however, contract award and disbursement (CAD) performance for approved tranches in the transport sector was relatively better as compared to the energy sector.
In 2016, ADB approved another $800m MFF for the Second Power Transmission Enhancement Investment Programme.
Published in Dawn, April 22nd, 2017
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