Pakistan: Energy Sector Restructuring Program
sector: Energy | country: Pakistan
This Validation agrees with the Lessons to be learned that are identified by the project completion report (PCR) and paraphrased as follows:
1. The early processing of the loan and the success with respect to meeting the loan covenants demonstrate the importance of investing time in loan processing and setting tough conditions for loan approval.
2. The Program could have included a mechanism of formal review after about 18 months in order to consider revising the content and timing of loan covenants. The objective would be to make the covenants more relevant to prevailing conditions, strengthen or bring forward some conditions, and waive or defer others.
3. A well-thought-out structure for implementing the Energy Sector Restructuring Program (ESRP) monitoring was established. The loans for the ESRP were closely coordinated with those of the International Monetary Fund (IMF) and other development partners, particularly the World Bank. This close coordination was a key strength in successful implementation of the ESRP.
4. If ADB attaches great importance to similar analysis, it should consider ensuring that commitment to undertake the analysis is irrevocable, for example, by making the work a loan condition and carrying out preliminary work before loan approval.
5. Where possible, ADB should link its loan conditions to aspects of the Program where it has strongly positioned itself in the policy dialogue and should take a leadership role in the financing partnership.
6. Difficult lending conditions like the requirement to privatize Karachi Electric Supply Corporation (KESC) are achievable, but ADB (and the executing agency or EA) must be prepared to persevere over a long period and extensive support must be provided through technical assistance and policy guidance.