Urdu Version In Islamabad: Shahzad Sharjeel (92-51) 2279641 ssharjeel@worldbank.org In Washington: Erik Nora (202) 458 4735 enora@worldbank.org Islamabad February 8, 2008- A new World Bank report released today suggests that Pakistan strengthen its capacity to undertake major infrastructure projects needed to boost economic growth and wipe out poverty. According to the study - Pakistan Infrastructure Implementation Capacity (PIICA) – the country suffers from a dearth of infrastructure in the water, irrigation, power, and transport sectors.
Pakistan is one of the most water stressed countries in the world, and water resources are depleting rapidly. With its water infrastructure in poor condition, the report argues that Pakistan has to invest around Rs60 billion (US$1 billion) per year in reservoirs and related infrastructure over the next five years. In the energy sector, the country will face severe power shortages of around 6,000 megawatts by 2010. Similarly, inefficiencies in the transport sector cost the economy between 4-5 percent of GDP each year.
To overcome these constraints, the Government of Pakistan is tripling its annual infrastructure investment from an average of Rs150 billion (US$2.5 billion) to Rs440 billion (US$7.3 billion). However, the report points out that mega projects in the past have experienced frequent delays and cost overruns, illustrating a lack of capacity in the industry to plan, program, and execute large projects. “Lack of adequate irrigation, power, and transport infrastructure hinders growth and is affecting all sectors of the economy,” said Yusupha Crookes, World Bank Country Director for Pakistan. “It is therefore critical to address the core challenges ─ scarcity of skilled workers and inefficient business processes ─ to enable the Government’s very ambitious infrastructure plan to move forward.” In the current environment, the report concludes that the construction industry does not have the capacity to deliver the Government’s planned infrastructure program. Its analysis found that contractors keep getting work even though they lack the capacity to perform. The business environment has delivery constraints, planned projects often take longer to complete, and even longer to achieve a financial close. Issues such as poor project planning, insufficient programming, and weak implementation are common. Shortage of adequately skilled workers is particularly affecting the ability of the construction industry to deliver mega infrastructure. Over half the workers produced each year in civil, electrical, and mechanical engineering fields find employment overseas. The report calls for a development strategy to build up the existing human resources pool and upgrading the skill sets through urgent measures to enhance training capacity and to reverse the brain-drain. “A long term industry overhaul and immediate innovative approaches for mega infrastructure delivery are needed”, said Amer Durrani, Senior Transport Specialist and lead author of the report. “A construction industry development organization should be set up to anchor the development effort and provide an institutional mechanism for reform. In addition, a national construction industry development policy should be prepared and implemented for all stakeholders with immediate actions on procurement with ensured transparency and improved cost estimation.” The report further suggests that in order to rapidly overcome the current constraints, a structural reform of the current disintegrated process for implementing large infrastructure is required. It recommends undertaking a revised integrated approach to implement large public infrastructure along with medium- to long-term reforms to address the more fundamental constraints. To read the report, and for more information on the World Bank in Pakistan please visit: http://www.worldbank.org/pk # # #
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