Multi-million dollars AMI project: No loan if scope of project gets changed, ADB tells Power Division

ISLAMABAD: The Manila-based Asian Development Bank (ADB) has communicated to the Power Division in plain words that it will not extend $400 million loan for multi-billion dollars Advanced Metering of Infrastructure (AMI) project if its scope is changed and also communicated to the government to pay over $2.2 million penalty as commitment charges for not utilising the loan for the project under the existing scope, a senior official in the Ministry of Energy told The News.

The Advanced Metering of Infrastructure (AMI) project was conceived and approved in 2016 by the ECNEC and is meant to reduce electricity theft and improve recovery through accurate billing, keeping in view the real time data. The pilot project was the first to be installed in the LESCO and IESCO.

According to the NEPRA data, Pakistan’s power sector has been sustaining huge financial damages owing to the line losses which have jacked up to 38.69 per cent. In 2019-20, the losses in the PESCO alarmingly surged to 38.69 per cent, MEPCO 28.82 per cent, SEPCO 36.27 per cent, QESCO 26.28 per cent and TESCO 16.19 per cent. However, the line losses hover over IESCO at 8.69 per cent, GEPCO 9.51 per cent, LESCO 12.40 per cent, and FESCO 9.62 per cent.

The PTI government, when it came into power in 2018, picked up the AMI project which earlier became dormant in the PML-N government.

The Manila-based Asian Development Bank had committed the loan of $400 million. The state-owned Korean Company won the bid to install the AMI project in the jurisdiction of IESCO (Islamabad Electricity Supply Company).

The Korean company is still determined to invest in Pakistan’s power sector to improve its recovery and contain the line losses as IESCO on February 22, 2021 placed the request to the Korean company for the eighth time, seeking the next 90 days extension of the bid validity against the project, disclosed the IESCO’s letter to the Korean company. “And the Korean company has accepted the eighth request of IESCO for which it had to pay an extra $200,000 addition every time to the banks from where it had managed the loan for the AMI project.”

It is pertinent to mention here the success story of installment of AMI project in Uzbekistan. Uzbekistan started implementation of the AMI project in 2015, with the long-term ADB financial support plan for the phase 1 to phase 4.

The power consumers in Uzbekistan have started getting monetary dividends in the shape of efficiency gains by reducing losses and improving recovery through accurate billing.

However, in Pakistan, the indecision of the Power Division has put the fate of the project in jeopardy as under the new scenario Special Assistant to Prime Minister (SAPM) on Power Tabish Gauhar opposed the project, arguing that there was a need to change the scope of the project, but the ADB says if the scope for the project gets changed, then it will not extend the loan of $400 million. And more importantly, the Power Division will have to pay the penalty of $2.2 million as commitment charges for not using the committed loan of $400 million for the project. The top sources said that it is a classic case for the NAB to initiate proceedings against those responsible who have not only scuttled this project but also attracted the penalty of $2.2 million.

The high-ups of the Power Division want to materialise the project with the existing scope of the project to avert the NAB proceedings on over $2.2 million charges, but SAPM Tabish Gauhar wants the project should be implemented once its scope is changed, knowing the fact that in that case there will be no credit of $400 million available from the ADB.

This also unfolds the shortcomings of the country’s decision making system which can easily sabotage the committed foreign investment by the Korean company in the power sector. Earlier, the AMI project was approved but later on, the SAPM has sabotaged the investment by opposing the project on the pretext of changing the scope.

The SAPM wants the project to be executed under the CPEC project and for this purpose, the Power Division has sent a position paper to the Planning Commission to get a decision for the way forward from the ECNEC (Executive Committee of National Economic Council) seeking approval of change in the scope of the AMI project. The Power Division actually wants to get the ECNEC ownership about change in the scope of the project to avoid the wrath of NAB — the anti-graft body of the country.

According to Tabish Gauhar, Special Assistant to PM on Power and Petroleum, the AMI project is faulty by design saying under the earlier scope of the project, AMI was to be installed at LESCO and IESCO, where the transmission and distribution losses were the lowest which are still in the range of eight per cent as both the DISCOs have been efficient companies. “The AMI should have been installed in the loss-making companies such as HESCO, SEPCO, PESCO and MEPCO and metering only upto transformers level not to end consumers.”

A senior official said that SAPM Tabish Gauhar in December 2020 asked to change the scope of the project despite project’s approval and support by the Power Division and Energy Task Force, which was refused by the ADB. The Power Division does not want to scrap the project and wants someone else to resolve the matter as the SAPM is not agreeing.