The World Bank (WB) has voiced grave concerns regarding the National Transmission and Despatch Company’s (NTDC) handling of project-financed works without valid contractual agreements. This issue has prompted the WB to call for immediate corrective actions to mitigate legal and operational risks while ensuring the smooth execution of critical infrastructure projects.
Expired Contracts Plague NTDC Projects
In a letter addressed to Secretary of Economic Affairs Division Dr. Kazim Niaz, Eva Lescrauwaer, Acting Operations Manager for Pakistan at the World Bank, emphasized that 80% of contracts under the NTDC project have expired—some as long as 24 months ago—with no extensions granted despite ongoing work. This situation has left both NTDC and its contractors vulnerable to legal risks while hindering the enforcement of contractual rights and obligations.
“Contract management best practices dictate that contracts must be extended before their expiration,” Lescrauwaer stated. Operating without valid contracts jeopardizes the project’s timelines and disrupts adherence to necessary legal frameworks, including insurance policies.
The issue has persisted for over a year and has been highlighted during previous Implementation Support Missions (ISMs). NTDC has now committed to resolving all pending contract extensions by December 15, 2024, marking a crucial step toward rectifying this challenge.
Shutdowns for Substation Upgrades
Substation extension and upgrade works have also faced delays due to the need for shutdowns to access the existing network. While the required equipment is already on-site, NTDC has assured the World Bank that these shutdowns will be scheduled during the upcoming winter months when system load is lower. The WB has urged strict follow-up to ensure these shutdowns occur as planned, preventing further delays.
Extending Project Deadlines
The World Bank’s concerns extend to the overall project timeline. While the current project is set to conclude on April 30, 2025, the largest contract under the initiative—the Islamabad West Substation (IWS) Contract—is scheduled for completion in January 2027. Extending the project’s closing date hinges on satisfactory progress in implementing the IWS contract.
To justify the proposed extension, NTDC has been asked to provide an updated implementation schedule developed in collaboration with the supervision consultant and contractor. This measure will help ensure alignment between project milestones and the extended timeline.
Capacity Building and Technical Assistance
The project’s design includes a component for technical assistance and capacity building aimed at strengthening NTDC’s organizational capabilities. During discussions, it was agreed that funds allocated under this component could be used to hire individual consultants to support NTDC’s reorganization and other capacity-building initiatives. NTDC has been requested to share detailed terms of reference and scope descriptions for these activities to expedite the hiring process.
To address recurring procurement and contract management issues, the World Bank has committed to organizing a workshop tailored to NTDC teams working on Bank-financed projects. Scheduled for November 30, 2024, the workshop will focus on enhancing procurement and contract management practices, with NTDC providing logistical support and the WB supplying expert trainers.
Strengthening Pakistan’s Transmission Grid
In discussions with the Ministry of Energy’s Power Division and other stakeholders, the World Bank outlined a programmatic approach to strengthening Pakistan’s transmission grid. This initiative focuses on priority investments to address current grid constraints, ensuring reliable power transmission and optimal dispatch of existing and future generation facilities.
As part of the pipeline power transmission sector development program, NTDC and the Power Division have been tasked with submitting techno-economic studies for the first four priority projects and nominating a focal point for the program by December 15, 2024. These steps will lay the groundwork for initiating operations under the transmission sector development program.
World Bank’s Commitment to Pakistan’s Energy Sector
The World Bank remains steadfast in its support for Pakistan’s energy infrastructure development. By urging NTDC to address its contract management shortcomings and adhere to established timelines, the Bank aims to ensure the effective utilization of resources and the successful execution of critical energy projects.
