CDWP Approves Rs59 Billion Power Projects for Discos

The Central Development Working Party (CDWP) has recently taken a significant step towards enhancing Pakistan's power distribution infrastructure by conditionally approving power projects worth Rs59 billion. These projects, funded by the Asian Development Bank (ADB), are set to benefit three major distribution companies (Discos): LESCO, MEPCO, and SEPCO. However, this approval comes with a caveat: a detailed techno-economic feasibility study must be conducted before any further progress can be made.

The primary goal of these projects is to strengthen the power distribution network across the country. This includes the installation of advanced metering systems and upgrades to the existing grid. The estimated costs for these projects are Rs27.6 billion for LESCO, Rs22.2 billion for MEPCO, and Rs9 billion for SEPCO. During a meeting held on November 15, chaired by the deputy chairman of the Planning Commission, the CDWP underscored the necessity of validating the feasibility of these projects. This validation process will involve a thorough performance review of similar initiatives that were financed in the past.

In line with the CDWP's earlier directives from June, officials from the Power Division presented revised project documents, known as PC-1s, which clearly outline the scope of work for each Disco. For instance, LESCO's revised PC-1 includes plans for constructing new grid stations, installing advanced metering infrastructure (AMI), and deploying Aerial Bundled Cables (ABC). Meanwhile, MEPCO and SEPCO are focusing on upgrading their metering systems and enhancing their grid capabilities.

Despite the promising outlook, the CDWP raised concerns regarding the financial viability of these projects, especially in light of the impending privatization of Discos. The committee emphasized the importance of rationalizing costs, particularly for indirect components such as contingencies and capacity strengthening measures. Power Division officials have assured that they will comply with these directives, highlighting the critical role these projects will play in reducing technical losses, curbing electricity theft, and improving overall distribution efficiency.

The ADB has committed a substantial $200 million in financing for these initiatives. To secure this funding, the CDWP has instructed the Power Division to finalize loan agreements while ensuring that no commitment charges are incurred before the projects are ready for implementation. The meeting concluded with several specific directives, including the need for an independent feasibility study, submission of performance reports on previously installed systems funded by the World Bank and ADB, and a thorough rationalization of project costs.

Furthermore, the CDWP has mandated the formation of a committee of experts to finalize the project scope and provide updated PC-1s for approval by the Executive Committee of the National Economic Council (ECNEC). While the projects have received conditional approval, their final implementation is contingent upon adherence to these recommendations and further validation of their technical and financial feasibility.

The conditional approval of these power projects marks a crucial step towards improving Pakistan's energy distribution framework. As the country grapples with challenges related to electricity theft and inefficiencies in distribution, the successful execution of these projects could pave the way for a more reliable and efficient power supply. It is essential for all stakeholders involved to ensure that the necessary studies and validations are conducted promptly, as the future of Pakistan's energy landscape depends on the successful realization of these initiatives.