India’s PowerGrid endorsed for alternative procurement arrangements by the World Bank
Earlier this year, India’s PowerGrid transmission utility company became only the second implementing agency in the world, following the experience of Bhutan’s Thimphu Thromde--to have its procurement system and regulations assessed for use in World Bank-financed projects, under the World Bank’s new Procurement Framework.
The new framework, which took effect in July 2016, enables the Bank to rely on the procurement arrangements of national agencies or of other multilateral development partners as ‘alternative procurement arrangements’, or APAs. This agreement is a breakthrough for countries that work hard on strengthening their national institutions and for the World Bank, which is working to become more flexible and efficient.
PowerGrid, one of the largest transmission utility companies in the world, establishes and operates regional and national grids to ensure the distribution of power across India. The World Bank has partnered with PowerGrid since its inception in 1989. Since 2005, PowerGrid has procured about 150 contracts under Bank financing worth around $2.7 billion.
Under APA, an implementing agency is assessed to ensure they have the right laws, regulations, capacity, and performance to meet the Bank’s fiduciary requirements. PowerGrid was successful in this regard. This will be reflected in the financing agreement, where it is agreed that using PowerGrid’s procurement arrangements is the best approach to deliver developmental objectives.
Every few years, PowerGrid will undergo a review to ensure the agency continues to meet the standards for alternative procurement arrangements.
Like the case of Bhutan, this is just the beginning. A number of other agencies are being assessed for the possible use of APAs, something that will help strengthen the national procurement systems in countries.