ISLAMABAD, Aug 7: The World Bank has raised serious questions about Pakistan’s power sector reforms and may not extend new loan for power sector during the current fiscal, a senior official said.

He said in a recently concluded visit of Pakistan, a high-level team of the WB informed Pakistani authorities that in the WB’s view things had not moved an inch during the last one year.

Although the bank did not take a strong position on these reforms it made it very clear that it would not be funding anything in the power sector during the current fiscal year. If the reforms move forward, WB funding may start from next fiscal year, the source said.

In view of this development, the plans pertaining to improvement of distribution companies (DCs) of Wapda, which were based on the assumption of WB financing, hang in balance. These DCs had estimated Rs4-6 billion each for their improvement during the current financial year.

The source said the WB team informed the government side that there was no clear cut strategy or movement towards completion of the power sector reforms and corporatisation of Wapda.

One of the most important conditions for $350 million structural adjustment credit from the WB was separate tariff for each company. This step has so far not been taken and two different tariff determinations towards this end have not been implemented by the government.

Besides the National Transmission and Dispatch Company (NTDC) has not yet established a central power purchase agency (CPPA) which was to purchase power from all generation companies and independent power producers and sell it to the distribution companies.

Moreover separate power purchase tariff for generation companies of Wapda, which were determined by the National Electric Power Regulatory Authority (Nepra) and notified by the federal government about a year ago have not been implemented and the generation companies and NTDC continue to charge higher price from distribution companies on the directives of Wapda.

Nepra had allowed a fuel adjustment formula for automatic transfer of fuel price impact to the consumers but the government did not notify this formula. As a result, Wapda companies are not able to recover impact of fuel price increase from their consumers and this is being paid by the government through subsidies.

For all practical purposes, the WB team observed, Wapda continued to be a single entity dealing with all power related business, particularly in terms of financial operations. The source said the WB team also expressed worry about privatisation of power sector entities.