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Public Private Partnerships In Pakistan Yet to Mature: ADB

Public-Private Partnership (PPP) environment in Pakistan was still evolving, and, despite government support, a stable, coherent system was still some way off where political risk was a major concern, says Asian Development Bank (ADB).

The Bank in its latest report “ADB Support for Public-Private Partnerships, 2009–2019” stated that Pakistan scored 39 percent and was categorized as emerging. Its PPP environment is still evolving, and, despite government support, a stable, coherent system was still some way off. Political risk was a major concern, it added.

The report further stated that Pakistan’s PPP law was awaiting ratification, and PPP projects continued to be subject to other general and sector-specific laws. There were also operational problems with regard to capacity.

ADB’s upstream support consisted of three policy-based loans and three technical assistance (TA) projects to help develop the enabling environment for PPP projects for infrastructure and social services in the Punjab and Sindh provinces. Specific policy actions and outputs of this policy-based loan (PBLs) and TA projects included:

  1. Submission of the PPP law to the provincial assembly
  2. Establishment of PPP cells
  3. Developing detailed operational guidelines and projects
  4. Establishment of project development facilities
  5. PPP training programs delivered to relevant government agencies.

ADB downstream support consisted of:

  • Eight nonsovereign operations (NSO) projects totaling $540 million, all in the energy sector;
  • One sovereign project to pilot concessions for toll roads operation and maintenance.

ADB upstream and downstream support in Pakistan was satisfactory. The report stated that three PBLs considered less than effective in Pakistan.

The Infrastructure Development Project in Pakistan was less than effective because some of the targeted capacity building activities and feasibility studies were not achieved.

In the Punjab Road Development Sector Project in Pakistan, although resources for road construction and development grew steadily, maintenance allocations were inadequate. A PPP unit that was established under the Punjab Government Efficiency Improvement Program in Pakistan lacked the technical capacity to drive further PPP reforms and identify, develop, and promote PPP projects.

The Punjab Road Development Sector in Pakistan failed to realize any of the institutional capacity building targets because of low ownership of the institutional and policy reforms by the Punjab provincial government.

The design of the Sindh Growth and Rural Revitalization Program in Pakistan was complex, involving many implementing agencies and reform areas. Some policy actions were noncomplementary and undermined the achievement of program outcomes.

The TA project Support to Efficient Structuring of Public-Private Partnership in Punjab and Sindh Provinces, in Pakistan, was less than successful. Changes in the Government of Sindh and a lack of counterpart support from the Government of Punjab made carrying out the TA activities difficult.

The report further stated that the total installed capacity of the 7 power generation projects was 1,121 MW (gas-fired = 584 MW, wind = 306 MW, hydropower = 231 MW) accounting for 7.8 percent of the country’s additional installed capacity from 2010 (COD of first project) to 2018 (COD of seventh project). Despite the increase in power generation capacity, the electrification rate barely improved from 70.4 percent in 2010 to 71.1 percent in 2018. One of the seven power generation companies is underperforming because of tariff issues.

The natural gas development and distribution projects in Azerbaijan, the PRC, India, Indonesia, and Pakistan were likewise successful in improving the capacities of the project companies. Upon COD of the LNG import terminal facility, re-gasified LNG reached 8.7 percent of the country’s primary energy mix, 20 percent of the overall gas supply, and almost 40 percent of the volume of gas consumed by the power sector.

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