WB approves five projects to bring reforms in energy sector

ISLAMABAD: In a major development, the Board of Executive Directors of the World Bank (WB) has approved five projects pertaining to Pakistan.
These include International Finance Corporation (IFC)’s Investment in Gul Ahmed Wind Power Limited, Tenaga Generasi Limited (wind power) and Gulpur Hydro Project, Sindh Public Sector Reform Project and Acceleration of Tarbela IV Extension Project.
Officials of the Ministry of Finance and Economic Affairs Division told The News that by far this is the largest number of projects approved by the Board in one month for any country.
They said the major thrust was on the reforms in the energy sector, which was in line with the Country Partnership Strategy for Pakistan approved in 2014. The World Bank Country Partnership Strategy is anchored in the government’s framework of 4Es: Energy, Economy, Extremism and Education, the four strategic pillars of Vision 2025.
Officials of the Economic Affairs Division and Water and Power Ministry said that the World Bank’s Energy portfolio in Pakistan was gradually turning into largest in the world. With CASA-1000 (Central Asia-South Asia transmission line project), Tarbela IV, IFC’s investments in subsidiary company of Three Gorges of China (CSAIL) and Tarbela V in the offing, the portfolio aims to augment the present generation capacity by more than 10,000 megawatts over a period of five to six years. A project to augment and upgrade the transmission system is also in the pipeline.
Last year, the officials said that World Bank disbursed more than US $1.6 billion to Pakistan and a Pakistan Day was observed on May 01, 2014. The Bank is aiming to disburse US $1.25 to 1.3 billion to the government by the end of the current fiscal year from its IDA concessional package.
This generous and expeditious funding by the World Bank is viewed by economic managers of the government as a sign of trust in the official economic reform agenda.However many development planners are of the view that the government will have to undertake a radical reform agenda in order to fully benefit from the World Bank assistance. Major touchstone of success of this reform in energy sector will be privatisation of power distribution and generation companies (DISCOs and GENCOs) and other governance reforms in energy sector including radical handling of intractable circular debt. It is said if the government does not speed up its reform agenda, the World Bank may slow down the assistance.
The recent visit of IFC head Jin-Yong Cai, which is private sector investment arm of World Bank, is also seen by experts as a major development vis-a-vis the World Bank’s interest in private sector development in energy sector.
During his visit, the IFC head met Prime Minister Nawaz Sharif and Finance Minister Ishaq Dar and committed to helping Pakistan tackle some of its most pressing challenges from unemployment to energy shortage by catalysing new investment outside the public sector.
He said private businesses, both large and small, are the backbone of Pakistan’s economy, but they are often held back by power outages, excessive red tape, and a shortage of credit. “By tackling these issues, we can help companies unlock their potential and create the economic opportunities that Pakistanis are eager for.”
The IFC is expected to invest about $500 million annually in Pakistan in the next few years as part of a World Bank Group Country Partnership Strategy.Economists say unless Pakistan improves its business environment and addresses serious issues highlighted by the Ease of Doing Business Report of the World Bank, which has ranked Pakistan quite low due to multiple factors discouraging private business and investment, Pakistan would not be able to benefit from such assistance speedily. Almost all these factors pertain to archaic and unhelpful practices and attitudes of bureaucracy and public sector organisations.
Experts say that with macro-economic situation stabilising and foreign exchange reserves accumulating, Pakistan may also be able to access the IBRD (International Bank for Reconstruction and Development) window in near future, assistance from which has remained suspended for the past many years now.