Islamabad: A local newspaper reported that $900m Asian Development Bank (ADB) funding approved for Pakistan has been affected by bureaucratic hurdles and complex procedural issues.
ADB has only released a paltry $10m (1.1pc) out of $900m loan which was approved in December 2013. This funding had been approved for the setting up of 660MW coal-fired power plant at Jamshoro. Another 660MW unit was also to be converted into coal.
The project seems to be in doldrums according to source in power division which believes the operational date of April 2019 won’t be achievable in light of the financial and physical delays.
This funding was primarily provided by ADB to reduce reliance on furnace oil for power generation purposes, which seems likely to be missed now.
Total cost of this 1320MW coal-fired power project was estimated around $1.5b and besides this $900m loan from ADB, Pakistan had also obtained funding of $220m from Islamic Development Bank (IDB).
$870m of this $900m loan had been obtained at high interest rates and $30m on concessional rate from the ADB. Since the end of 2014, the country has been paying commitment charges for this loan despite non-disbursement.
A source in ADB said that funds will only be disbursed if the project contracts get assigned for the Jamshoro power project.
The incompetence of ADB and the power division in finalizing the bid documents has been attributed as the main reason for major delays in regard to this project.
Zero progress in regard to civil and financial work will result in the government missing its project deadline completion of April 2019.
When ADB had approved this $900m loan, it had claimed that conversion to coal-fired power plants would result in $535m annual savings on fuel imports in comparison to oil-fired power plants.
