ISLAMABAD: The World Bank has approved a package of $825 million to modernise the national power transmission system and improve health and education service delivery in Pakistan by strengthening financial management and procurement systems.

The $425m first phase of the national transmission modernisation project would enable new power generation to reach consumers by upgrading, expanding and rehabilitating selected 500kV and 220kV substations and transmission lines, the World Bank resident mission announced here on Wednesday.

The objective of the project is to increase the capacity and reliability of selected segments of the national transmission system and modernise key business processes of the National Transmission and Dispatch Company (NTDC). The main component of the project is to expand, augment and upgrade selected existing 500kV and 220kV substations and associated lines and construct new 765kV, 500kV, and 220kV substations and transmission lines.

“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 unserved demand from consumers and reduce the number and duration of power outages”.

The project will improve supply reliability and reduce losses in the transmission network. It will also modernise the information and communication technology infrastructure and strengthen financial and accounting systems of the NTDC using information technology. This will result in more efficient operation and business decision-making processes, higher productivity and upgraded staff skills.

The government has planned to increase power generation capacity by 30,000MW by 2022. There has been progress in securing $36 billion required for this expansion, including funds for power system investments planned under the China-Pakistan Economic Corridor.

New private investment and increased investments by the existing independent power produces will fund an estimated two-thirds of the investment requirements. The least-cost generation plan focuses on the development of hydropower projects in the north and efficient thermal plants in the centre and south of the country.

Public financial management inefficiencies contribute to Pakistan’s weak performance in health and education sectors, and despite a substantial increase, financial resources fail to reach clinics and schools on time.

The $400m public financial management (PFM) reform programme will address these challenges through the enactment of a robust public finance management law, which will lead to decentralisation of payment and empower front-line service delivery managers.

The programme will also focus on strong cash management, timely and comprehensive reporting, improvement in federal-provincial coordination, timely release of funds, streamlining payroll and pension systems, efficient and transparent procurement and user-friendly reports for citizen engagement.

The government programme, as indicated in the PFM reform strategy, consists of six pillars — revenue mobilisation, fiscal management, service delivery and results-based management, public investment management and public private partnership, oversight, transparency and accountability and vertical integration.

“The public financial management challenges undermine the delivery of health and education services to the population,” said Mr Illango. “The new programme 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 transmission modernisation project is financed by the International Bank for Reconstruction and Development — a 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 six years.

The PFM reform programme is financed by the International Development Association — the World Bank’s fund for the poor — with a maturity of 25 years.

Published in Dawn, December 21st, 2017