ADB disappointed over slow pace of awarding contracts for projects

Islamabad [Pakistan], Oct.25 : The Asian Development Bank (ADB) has articulated dissatisfaction over the pace of awarding contracts for foreign-funded projects in Pakistan which has led to delay in projects, cost overruns and inefficient utilisation of external loans.

This comes at a time when ADB President Takehiko Nakao and IMF Managing Director Christine Lagarde are visiting Islamabad to attend the 15th Ministerial Conference of Central Asia Regional Economic Cooperation commencing from Wednesday, reports the Dawn.

The conference will be attended by representatives from Afghanistan, Azerbaijan, China, Kazakhstan, Kyrgyzstan, Mongolia, Pakistan, Tajikistan, Turkmenistan, Uzbekistan and Georgia.

On Sunday, the finance ministry had said that about 200 participants from 10 member countries and multilateral development partners would be attending the event.

The Manila-based lending agency in its report - annual review of ADB-funded projects as of Dec 31, 2015 -noted that on an average 13 months was the time taken to award the first contract after loan approval.

"The last five-year average shows that signing of first contract after approval took more than a year," the bank said, adding that it also included projects where these contracts were signed prior to loan approval, advance contracting and retroactive financing.

The report that was not made public said that it took relatively longer time to complete their first procurement for projects in the energy sector and agriculture, natural resource and rural development (ANR).

18.1 months and 16.8 months was the average time consumed by the energy and ANR projects respectively," said the report that was not made public.

ADB regretted that more than 18 months had passed, but no contract has been signed since approval of loans for three projects on Dec 31 last year which include Jamshoro power generation project, National Highway network development project in Balochistan and Fata water resources development project.

The bank report said that some of the key reasons for delay in procurement were related to unavailability of design, weak procurement capacities of implementation agencies, litigation, delay in establishment of project management units and project administration challenges.

It added that as a result the contract awards projection provided in the procurement plan could not be achieved.

However the ADB had said that the performance under the multi-financing facility (MFF) portfolio remained mixed last year.

There was a substantial underutilisation in transport and energy sectors. The ADB said that all sovereign loans in Pakistan's portfolio were approved, signed and reached effectiveness in 6.8 months which compared well with ADB-wide average of 6.9 months.

Some of the challenges on the government side that were highlighted by the bank included lack of ownership by the project staff during processing, lack of understanding of ADB's procurement guidelines and stipulations of project or loan agreements on procurement which were challenged when found contrary to the government laws and regulations.

The absence of a fully functional internal approval mechanism leading to procurement processes inefficiency, frequent transfer-posting of key project staff and lack of understanding on use of advance contracting were also identified as key problems.

Source: ANI