LAHORE, Dec 9: The World Bank on Saturday acknowledged “continued momentum” generated by the Pakistan Electric Power Company for reforming Pakistan’s power sector and pointed out some areas where the company needed to focus its attention in the coming weeks.

In its aide-memoire on power sector, the Bank listed the areas where deadlines have been met, introduction of a licensing policy being one such area. The National Electric Power Regulation Authority had issued the first distribution license to the Islamabad Electricity Supply Company in November 2001. The Bank is also satisfied with the development of disaggregate financial models, transfer of Wapda staff to corporate entities through new employment contracts and transfer of manpower and 66 KV and 132 KV grid assets and to the eight distribution entities.

It may be mentioned that the World Bank extended a $230 million loan for reforming Pakistan’s power sector and creating private companies to take over transmission and distribution. The Pepco, created for the purpose, has successfully created eight distribution and three generation companies besides a transmission company, leaving the Wapda only a supervisory role. The Pepco has completed 31 out of the 35 steps assigned to it. There is a Dec 31, 2001, deadline for the remaining four.

The bank also underlined other areas where the Pepco and other power sector-related agencies needed to push harder in view of the approaching deadlines. Completing the licensing process of distribution and generation entities, and developing a format for a transmission license, to enable the National Transmission and Distribution Company to submit an application to the Nepra was one vital area, it said. Fixing financial and technical targets that would form the basis of the regulatory process over the operations of the newly-created entities was another.

The Bank also called for an early competition among the disaggregate financial models and projections for each entity and developing scenarios — for further financial restructuring, transfer price and allocation of liabilities — for maintaining financial viability of these entities and submission of the same to Economic Coordination Committee or the cabinet for approval. It also sought finalization of transfer of assets and liabilities of all newly-created entities and clarification of government policies that would provide guidance for completing the reforms and operation and regulation of the sector. The Bank, in its aide memoire, also highlighted the need for refinement of a regulatory regime to facilitate the privatization of most of the assets in the power sector. It urged extra efforts to enhance predictability and stability of the regulatory regime to inspire investors’ interest, potentially large proceeds from privatization and by improving the environment for the entities for the time they have to remain in the public sector. This, the Bank said, was crucial for Pakistan because in the current regional environment, its privatization plans were likely to face some delays.