During program preparation, Pakistan’s power system had insufficient capacity to meet growing demand, and electricity was routinely rationed during peak demand. These capacity constraints were evident in generation shortage, the inability of the transmission system to fully utilize available generation during peak demand, and localized constraints in the delivery of power to distribution companies. Furthermore, the sector suffered from a chronic shortage of funds. Distribution companies had higher losses and lower collections than the levels set by the regulator, resulting in a lack of financial resources with which to fulfill payment requirements to generation companies.
To help address the situation, the Asian Development Bank (ADB) approved in 2006 a 4-tranche, 10-year $800 million multitranche financing facility (MFF) to support a range of energy subprojects in Pakistan, each designed to assist in overcoming a specific transmission constraint. Tranche 2 of the MFF financed a total of 9 high-priority subprojects, selected based on the results of the load flow simulations which identified the location of system bottlenecks. The subproject locations were spread nationwide along the transmission grid.
Except for one static VAR compensator (SVC) deferred due to a lack of bidder interest, the tranche 2 project achieved all its planned outputs, including 5 new grid stations, additional transformer capacity in 2 existing grid stations, and 5 new transmission lines. Operation of the new transmission lines and grid stations relieved overloads that would otherwise have prevented consumers from receiving reliable electricity supply. For example, the net transmission capacity installed by the project was about 8% of the total capacity in 2013 and about 45% of the added capacity between 2007 and 2013. Grid constraints, according to the National Transmission and Despatch Company (NTDC), had been addressed by 2017 to the point that forced load shedding was rarely needed.
Additional project outputs included the installation of an SVC that was moved from tranche 1 to tranche 2 to provide more construction time and purchase of tools and construction equipment for use in the installation and maintenance of the transmission system assets. Notwithstanding the delivery of practically all outputs, the project completion report (PCR) mission found it hard to establish project success in achieving the intended outcome and impact specified in the design and monitoring framework (DMF). This was because, as with tranche 1 and the MFF itself, planned outputs from this project were weakly aligned to the higher-level results in the DMF. Moreover, outcome indicators provided in the tranche 2 DMF consisted of reused intangible outputs from the tranche 1 DMF that had no visible links to the project outputs.
Delays in loan effectiveness, procurement, and contract effectiveness led to a 3-time, 32-month extension of the 6-year project implementation period set at appraisal. Project actual total cost was $177.89 million, to which tranche 2 contributed $156.54 million of the total $220 million approved for tranche 2. The undisbursed loan amount was cancelled at different times during project implementation.
The NTDC, a state-owned corporation, was both the project executing agency (EA) and implementing agency (IA).
