Audit of the rural electrification project in Pakistan, project no. 391-0473

Audit report covers the period 9/82-3/87 and is based on document review, site visits, and interviews with USAID/P, Government of Pakistan (GOP), and contractor officials. Despite a 4/24/87 amendment which doubled project funding (and extended the PACD to 9/24/92) and despite generally satisfactory management by USAID/P, progress has been mixed. Work on the key objective - expanding rural electrification - has not yet begun and no funds were expended for it because a specific condition precedent, which required WAPDA to prepare a master plan for this task, has not been fulfilled. WAPDA did in fact prepare a plan, but it was deemed unacceptable by USAID/P after being superceded by a plan from the Office of the Prime Minister. USAID/P should either reprogram or deobligate funding for this component if the master plan is not completed by a specific date. Work on an energy loss reduction program (ELRP) is also at a standstill, due to poor program coordination, incomplete mapping, slow preparation of construction work orders, and poor construction. This has reduced the benefits from USAID/P"s investment of $40.3 million for two gas turbine generators for the Guddu power plant. Also, $2.5 million worth of A.I.D.-financed materials and equipment remain idle because no work orders were approved for the ELRP. It is recommended that the ELRP be accelerated and its funding reviewed. Another $2.4 million in A.I.D.-financed project commodities could not be completely accounted due to the GOP"s inadequate accounting system, the contractor"s failure to maintain an inventory of purchases, and ineffective monitoring by USAID/P. The latter should require that an adequate commodity accounting system be established. Although project TA and training have strengthened the WAPDA"s capacity to provide electricity to rural areas in the future, it is doubtful that the WAPDA will be able to assume project responsibilities by the contractor"s departure in 1989 as planned. The WAPDA"s failure to assign counterparts and its inability to decide on the nature of the contractor"s work have prevented the contractor from preparing a work plan acceptable to USAID/P. The audit recommends determination of specific TA requirements, development of appropriate plans to meet these, and assignment of counterparts. USAID/P has agreed with all of the findings and recommendations.