World Bank Likely to Restructure 1,410 MW Project to Extend Closing Date for $390 Million Loan

The World Bank is likely to restructure Tarbela Fourth Extension Hydropower Project (T4HP) to extend the closing date of IBRD Loan of $390 million, which is financing Tarbela Fifth Extension Hydropower Project (T5HP), to September 30, 2027. Official documents available with ProPakistani revealed that the results framework has been revised to incorporate indicators from the World Bank Group’s (WBG) Corporate Scorecard approach and framework. The Project comprises: T5HP includes: The Project’s progress towards achievement of the Project Development Objectives (PDO), “to facilitate a sustainable expansion of Pakistan’s electricity generation capacity,” is moderately satisfactory; because the PDO cannot be achieved by the current Loan Closing Date of May 31, 2024. T5HP and T5TL are expected to be completed by the extended Loan Closing Date of September 30, 2027. The overall implementation progress is moderately satisfactory. The Project’s environmental and social performance, financial management performance, and project management are all rated satisfactory. All major procurement is completed. The procurement rating is moderately satisfactory as records in the Systematic Tracking of Exchanges in Procurement (STEP) system are not fully updated. In T5HP, the key contracts for civil works and electro-mechanical (E&M) works are under implementation. The performance of the E&M contractor has been satisfactory, and the contractor is expected to ship the key equipment and parts by the first half of 2025. However, the civil works contractor is behind schedule on all work sites. The demolition of Tunnel 5 at the point of connection with the raised intake is on a critical path. The delay in completing the connecting shaft, a complex construction challenge that must be managed carefully, will impact the commissioning dates of the generation units. However, this delay has no impact on the final construction milestone, i.e. completion of raised intake by May 2027. The contract for T5TL is under implementation, and construction progress has improved after initial delays. The National Transmission and Despatch Company (NTDC), the implementing agency for T5TL, is monitoring the progress of the contractor well. T5TL connects with IWS, which is financed by the Bank through the National Transmission Modernization I Project. The contract for T5TL also includes an interconnection between the T5HP switchyard and the switchyard of powerplants in Tunnels 1-4. Therefore, if the completion of IWS is delayed, power from T5HP can be evacuated through this interconnection in the short term. A Resettlement Action Plan (RAP) is being implemented for T5TL. NTDC is compensating landowners affected by the transmission towers and will compensate people affected by transmission line rights-of-way and related works in due time, adhering to the RAP. There is a recent disagreement on commercial aspects of the CSC contract that may slow implementation progress. WAPDA is undertaking remedial measures to ensure construction progress is not impeded while working to resolve these disagreements. The extension of the Closing Date of the IBRD Loan is necessary to complete T5HP. The path for successfully completing T5HP is clear. Reasons for implementation delays of the past (delayed selection of the CSC, need for additional geological investigations, restrictions related to the COVID-19 pandemic, resolving access to Tunnel 5 have been addressed. Key contracts in T5HP for civil works and E&M works are underway and the contract schedules support the completion of the project by the extended Closing Date. The disbursement forecast has been revised based on the expected construction progress of the project.