April 15, 2024 (MLN): The Independent Evaluation Department (IED) of the Asian Development Bank (ADB) has validated the assessment of the completion report for the Technical Assistance (TA) project titled ‘Pakistan: Strengthening the Federal Public–Private Partnership Framework and Enabling Reforms for Infrastructure Financing Support.'
“IED's overall assessment of the project is successful," it said.
The IED in its validation report stated that the objective of this technical assistance (TA) project was to help strengthen the enabling environment for infrastructure financing in Pakistan through capacity development, research, and policy advice.
The TA’s expected impact was informed decision-making by the government on reforms to increase infrastructure investments in the country.
Pakistan’s insufficient investments in critical and quality public infrastructure had been hindering its economic growth.
Recognizing the importance of addressing the issue, the federal government actively promoted public–private partnerships (PPPs) as a viable approach to attract private sector investments.
To strengthen the PPP framework at the federal level, the government initiated several reforms, including the enactment of the Public–Private Partnership Authority Act in 2017, the establishment of the Public–Private Partnership Authority (P3A), and the proposal to create a viability gap fund (VGF).
The government also aimed to operationalize the Pakistan Development Fund Limited (PDFL) for financing key infrastructure and PPP projects.
However, challenges around establishing institutional, regulatory, and financial mechanisms for an effective PPP framework remained.
These challenges included (i) inadequate legal, regulatory, and institutional frameworks for PPP investments; (ii) lack of a government financial support mechanism; (iii) weak government agency to identify, structure, and finance PPP projects; (iv) limited capacity of and coordination among government agencies; and (v) underdeveloped and shallow debt capital markets.
To note, this project was signed in January 2018, with a revised approved amount of around $1.89 million (from $3.27m initially).
The project was completed in March 2023 with a total disbursed amount of around $1.53m, while funds worth $0.36 remained undisbursed.
The TA’s scope of work for Output 1 (Support to develop institutional, legal, and regulatory frameworks for PPPs) and Output 3 (Enhancement of infrastructure finance and PPP capacity of the Finance Division, the Planning Commission, P3A, and key line ministries) was modified during implementation due to FCDO’s budget reprioritization in response to coronavirus disease (COVID-19) pandemic as an unforeseeable event.
The reduction in TA grant funding by $1.37m (from $3.27m to $1.89m) did not significantly hamper the TA’s overall impact, output and outcome components, or implementation arrangements.
However, changes were made to the implementation of Output 2 (Support to operationalize the PPP Authority provided) as its progress remained very slow due to the lack of consensus among the government agencies on the PDFL’s direction.
As a result, the scope of Output 2 was amended to provide more support for operationalizing P3A instead of PDFL.
Also, additional consultancy services were approved to assist the Debt Policy Coordination Office (DPCO) and support the operationalization of P3A.
In light of the above considerations, this validation assesses the TA relevant.
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Posted on: 2024-04-15T16:24:53+05:00
