World Bank cancels $100 million loan for Pakistan

The World Bank has cancelled a USD 100 million loan to Pakistan for a natural gas efficiency project due to no progress in achieving the development objectives and a lack of interest on the part of the gas distribution company.

The project, which was to be carried out by Sui Southern Gas Company (SSGC) in its distribution areas in Karachi, interior Sindh and Balochistan, was aimed at enhancing the supply of natural gas by reducing physical and commercial losses of gas in the pipeline system.

A World Bank report said the failure of the project led to its closure and, as a result, the levels of unaccounted-for gas (UFG) remained high while continuing to drain the precious natural resource, Dawn reported. Illegal connections, one of the drivers of UFG, were increasing at a rate faster than the countervailing reduction of technical losses.

Justifying its rating of “unsatisfactory”, the World Bank report said it should have exercised caution and not proceeded with a project that did not receive sustained interest from the board and management of SSGC, which had insufficient ownership in the project.

Against the original commitment of USD 200m, the bank had disbursed only USD 0.25m.

The ministry of petroleum and natural gas was keen on the reduction of UFG, which was on the rise at the time of the project preparation and increased further during the project implementation phase.