ISLAMABAD: In a rare development, Ministry of Power has conveyed to Asian Development Bank (ADB) that the government cannot implement the $5 billion Advance Metering Infrastructure project that was meant to introduce advanced infrastructure in power distribution companies.
The ADB had made hectic lobbying for this project so that is why the board of the Manila-based lender approved the two tranches of $800 million in November 2015.
The power division had conveyed to ADB authorities that the DISCOs’ boards will take the ultimate decision on this matter.
Ironically, the government has paid $5 million to ADB as commitment charges without doing anything.
Documents indicate that the minister of power, in the last meeting, had given various proposals to ADB for the continuation of this project. Awais Laghair said that priority will be given to the DISCOs to run and maintain the infrastructure. He also said that the private sector should be allowed to make investments and own this infrastructure while the DISCOs can only procure service from them.
He also asked whether there was a possibility of diverting these funds to other critical infrastructure requirements that have already been identified for local systems by the DISCOs so that ADB’s portfolio in Pakistan is linked to the improvement of the power distribution network.
On the other hand, ADB Senior Energy Specialist Adnan Tareen said that the DISCOs had no awareness about smart metering systems. Transferring of all the DISCOs on AMI requires around $5 billion and ADB, under this project, is setting the standards and attempting to put things on track only.
In addition, he stated that the DISCOs may not install the hardware by themselves due to capacity and conflict of interest issues.
Tareen further said that one-third of the DISCOs’ meters will be installed in four years. There is a project implementation consultant for the next five years as well to provide additional technical support to the DISCOs if any issue arises and will train and aid in the capacity building of DISCOs’ engineers.
It is necessary to mention here that the period of this program is 10 years as ADB will install 30% metering in each DISCO.
Documents stated that ADB warned the government authorities that if the project shuts down abruptly, the ADB board may not approve any future funding for the distribution sector in Pakistan since this is the first intervention by ADB in the distribution sector.
Minister for power said that if returns on investment are guaranteed like those on power generation sector, the private sector would definitely get attracted to invest in the distribution sector. Alternatively, the DISCOs can have access to much cheaper financing than the 17% cost charged to them by the EAD.