Amid stiff challenges facing the economy, Asian Development Bank (ADB) President Takehiko Nakao is set to arrive in Pakistan next week to hold parleys with key government functionaries to remove difficulties in implementation of the $5-billion development portfolio.

Nakao will arrive on Monday and hold meetings with President Mamnoon Hussain, Prime Minister Nawaz Sharif and Finance Minister Ishaq Dar to discuss development and economic issues affecting the relationship between the Manila-based lending agency and Islamabad, according to officials of the Economic Affairs Division (EAD).

Nakao’s visit has coincided with strains in Pakistan and International Monetary Fund’s relations that have implications for Islamabad’s financial relations with other international lending agencies as well.

The ADB President will hold a meeting with Dar on September 16 and discuss the overall macroeconomic issues, particularly the ADB’s assistance to Pakistan, according to officials. At present, the ADB-funded active project portfolio comprises 28 projects having a total value of slightly over $5 billion.

Due to difficulties in application, the ADB has already cancelled $237.2 million loans out of the total of $5.05 billion, according to the EAD documents. Due to the same reasons coupled with project implementation cycle – out of $5.05 billion – the ADB has not yet disbursed $3.4 billion. Some of the projects like the Jamshoro Power generation project will be completed in 2024, while most of the schemes are planned to be operational in the next three years.

The officials said as many as 15 projects are in the energy sector – with total value of $2.5 billion. It is also the area where the ADB is facing problems, they added. Of the $2.5 billion, the ADB has already cancelled $124.5 million loans against three energy sector projects, they added.

Approved in May 2008, the $170 million multi-tranche Power Transmission Enhancement Investment Programme tranche-II was facing delays, according to the documents. Out of the $170 million, the ADB has already cancelled $50 million while $21.8 million still remain undisbursed. The project is set to be closed by December this year.

The problems in implementation arose at a time when Islamabad is already facing difficulties in maintaining its obsolete transmission infrastructure.

Similarly, there were also serious issues in implementation of Power Distribution Enhancement Investment Programme tranche-II, which had been signed in January 2011 and will be closed by September next year. Out of $172.3 million, the ADB has already cancelled $69.7 million, while an amount of $84.1 million still remain undisbursed, according to the documents.

Both of these loans are expensive ones. The ADB also cancelled a $4.8-million loan, approved for Renewable Energy Development Sector Investment Project Support component. The total commitment was $5.5 million.

Overall, against the $2.5 billion commitment for the power sector, the ADB has so far disbursed only $721.6 million or just 28.7% of the total lending to the energy sector.

Like its predecessor, the PML-N government has been facing difficulties in resolving the energy crisis. However, it has failed to address the bottlenecks that are hampering progress on critical energy sector projects, according to the officials.

The officials said the ADB president will not discuss minute details of the development portfolio, but he is expected to highlight governance and administrative issues that are creating problems for the lending agency.

However, the ADB’s country representative to Pakistan, Werner Liepach, will give a detailed briefing on the country’s portfolio to the ADB President before his meeting with Finance Minister Dar.

The ADB has also cancelled $58.2 million of loans out of a total $541.8-million package approved in April 2011 under the Floods Emergency Reconstruction Project. Out of $541.8 million, $182.7 million still remain undisbursed while the project has to be closed by end of this month.

The ADB has also cancelled $54.5 million out of $223.8 million, committed for the Punjab Irrigated Agriculture Investment Programme tranche-I.

Nakao will hold meetings with the prime minister and president but the scheduled time of 45 minutes for each meeting suggests that discussions will remain restricted to broader issues, said the officials.

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