1. The Power Distribution Enhancement Investment Program (the Investment Program) will cover all of Pakistan, except for Karachi, tribal areas, and parts of the northern territory. The Pakistan Electric Power Company (PEPCO) will be the Executing Agency of the Investment Program, with each distribution company (DISCO) being the Implementation Agency responsible for projects in its license area. PEPCO will be responsible for coordinating with each DISCO to obtain the required government approvals and submit the periodic financing requests (PFRs) to the Asian Development Bank (ADB). Each DISCO will be responsible for identification, preparation, and implementation of its own projects.
2. PEPCO is a government holding company for power assets and is not structured for project management or distribution engineering roles. It has no internal capability for implementing distribution projects.
3. The Tranche-1 subprojects have been identified by each individual DISCO and are substantively based on the Government Planning Commission applications previously made by the DISCOs. An international consultant, financed by an ADB project preparatory technical assistance (PPTA)1, has compiled the DISCOs’ subprojects to produce Tranche-1 of the multitranche financing facility (MFF). The PPTA consultant has developed technical, financial, and economic justification and ensured compliance with ADB safeguard policies for each subproject.
4 It is envisaged that Tranche-2 project preparation will be carried out by an international consultant to be recruited using funds from TA Loan 21782. For preparation of tranches 3 and 4, if applicable, a consultant will be recruited using funds from the investment program support component.
5. For implementation of Tranche-1, it is proposed that an implementation consultant will be employed by PEPCO under the investment program support component. This implementation consultant, an international consultant based in Lahore, will coordinate with each of the DISCOs through eight project management units (PMU) to be established by each DISCO at their respective DISCO headquarters. The implementation consultant will assist the PMUs in procurement, progress reporting, and project management; and assist PEPCO in preparing combined progress reports and being the communication point between the DISCOs and ADB. The implementation consultant will audit project performance in each DISCO.
6. PEPCO will initiate advance procurement activities for the implementation consultant so that the consultant will be recruited and mobilized within 3 months of the effectiveness of the first tranche. The DISCOs will establish their respective PMUs shortly after mobilization of the implementation consultant. Each PMU will be staffed to the satisfaction of ADB and led by a suitably qualified director. The PMUs will remain in operation for the duration of the Program. 7. For tranches 3 and 4, an implementation consultant will continue to be required to coordinate between the DISCOs and interface with ADB. A decision will be made based on the
1 ADB. 2006. Technical Assistance to the Islamic Republic of Pakistan for Preparing the Power Distribution
Enhancement Multitranche Financing Facility. Manila(TA 4876-PAK, approved on 27 November, for $900,000).
2ADB. 2005. Report and Recommendation of the President to the Board of Directors on a Proposed Technical
Assistance Loan and Technical Assistance Grant to the Islamic Republic of Pakistan for Infrastructure Development. Manila (Loan 2178-PAK, approved on 18 August, for $17,163,000).
experience during Tranche-1 as to whether a national or international consultant will be recruited. This consultant will be funded using the investment program support component. 8. The eight DISCOs have expertise in project management and distribution engineering, albeit to varying levels. It is considered that subproject implementation is generally within the technical capability of all DISCOs. However, capacity may be insufficient, particularly during early tranches, in areas such as project preparation, procurement, and project management of envisaged investments. The DISCOs’ capacity will be strengthened by use of a capacity building consultant and expanded by use of employment of engineering design consultants.
9. DISCO capacity will be developed by training programs in modern distribution system planning, utility management, and information communications and technology as needed. The investment program support component will be used to strengthen DISCOs’ (i) planning, (ii) design, (iii) project management, (iv) operations, and (iv) maintenance capabilities. Bilateral exchange programs will be developed with foreign power companies to develop role models among current and potential managers. An institutional capacity building support project will be developed for each DISCO based on its individual needs. An international consultant, to be employed by PEPCO, will identify each DISCO’s needs and deliver a tailored program.
10. Because of the significant volume of work, DISCO engineering capacity will be expanded during project execution by recruitment of services from external engineering companies. To this end, the procurement plan proposes recruiting an engineering services contractor for each DISCO. It is considered that sufficient domestic engineering capacity exists in Pakistan to meet this requirement.
11. Because of the urgent nature of the subprojects, the Government and the DISCOs have requested ADB’s approval to carry out advance contracting for procurement of works and goods for each tranche. ADB Management approval for advance contracting and retroactive financing of expenditures for the first and subsequent tranches will be sought. The Government and the DISCOs have been informed that approval of advanced contracting and retroactive financing does not commit ADB to finance any of the proposed subprojects. It should also be noted that the Government and the DISCOs must comply with all ADB procurement procedures in order to qualify for retroactive financing. Following Management approval, advance action on recruitment of implementation consultant can commence. It is proposed that the existing PPTA consultant be extended pending fielding of the implementation consultant.
12. Table A5 shows the implementation schedule for the Investment Program, which can be found on the next page.
Table A5: Implementation Schedule
Task Responsible
Party J F M A M J J A S O N D J F M A M J J A S O N D 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Project Management
Set-up of PMU PEPCO
Consultant Recruitment Implementation Consultant
Implementation Consultant (T1) PEPCO
Implementation Consultant (T2, T3, and T4) PEPCO
Project Preparation Consultant
Project Preparation Consultant (T2) PEPCO
Project Preparation Consultant (T3 and T4) PEPCO
Monitoring Consultant
Monitoring Consultant (T1) PEPCO
Monitoring Consultant (T2, T3, and T4) PEPCO
Capacity Building Consultant
Capacity Building Consultant (T1-T4) PEPCO
Consultant Execution Implementation Consultant
Implementation Consultant (T1) Consultant
Implementation Consultant (T2, T3, and T4) Consultant
Project Preparation Consultant
Project Preparation Consultant (T2) Consultant
Project Preparation Consultant (T3 and T4) Consultant
Monitoring Consultant
Monitoring Consultant (T1) Consultant
Monitoring Consultant (T2, T3, and T4) Consultant
Capacity Building Consultant
Capacity Building Consultant (T1-T4) Consultant
Tranche 1