Introduction

This Factsheet outlines the current progress in advancing Sustainable Public Procurement (SusPP) in Pakistan based on a desk review. It applies an analytical framework of six Pillars (or "building blocks") of SusPP systems.

The Framework is designed to make clear that countries do not need to follow a linear step-by-step path to build effective SusPP systems. Rather it is important to examine local contexts and prioritize the Pillars with the most potential in the country. No matter where a country starts, a balanced approach to implementation calls for progress on all Pillars to some degree.

This Factsheet is organized as follows:

• "Country overview" section with an maturity rating and graphic, key achievements and remaining gaps, and timeline of key events.
• "State of Play & Forward Looking Analysis" section that summarizes the research findings from the desk review for each Pillar theme.
• "Key Stakeholders Driving the Agenda" explores opportunities for ADB teams to open discussions with country counterparts and add value to the work of partners.

The Factsheet is intended to be a living document that will be revised and improved as new information is uncovered and advances are made. It is designed to support the ADB training programs on SusPP.

Pakistan has faced serial crises of Covid-19, climate change and geopolitical tensions, pushing over a hundred million people into extreme poverty. 225 million full time jobs have been lost, reversing two decades of development. The heatwaves and devastating floods of 2022 have caused more than 1,700 deaths and displaced over 8 million people. The damage to infrastructure, assets, crops, and livestock has also been massive, with more than $30 billion in damages and economic losses. Air pollution causes about 2,500 premature deaths annually and about 6.4 million hospital admissions and sicknesses - costing between $US 249-358 million in economic losses. The World Bank predicts that the combined risks of extreme climate-related events, environmental degradation, and air pollution are projected to reduce Pakistan’s GDP by at least 18 to 20% by 2050.

The World Bank recommends priority transitions including moving to resilient and livable cities focused on energy efficiency and clean transportation, and a just transition to sustainable energy and low-carbon transport. Pakistan’s renewable energy sector only participates in 0.3% of overall energy needs, despite the country’s strong solar and wind potential. Pakistan is one of the Asian countries with the highest energy intensity. In Pakistan, public procurement accounts for 20% of GDP. However, sustainable public procurement practices remain in their infancy. As the country emerges from the COVID-pandemic, a new vision of economic development based on sustainable infrastructure, buildings and industry is emerging. Green assessments and criteria are being piloted in bilateral and donor funding projects, including the China Pakistan Economic Corridor and Five Million Housing Programme.

>> Snapshot of Sustainable Procurement Maturity Level

Maturity Level:

Early Stage

Key Achievements

• High-level policy commitment from ministries of climate change and environment to adopt SPP with a focus on energy efficiency
  
• Green infrastructure principles piloted in China Pakistan Economic Corridor project
  
• Significant advances in development of a Green Building Code, with adoption by 2030
  
• Commitment to promoting women-owned businesses and entrepreneurs
  

Remaining Gaps

• Need for procurement law reform to allow integration of social and environmental criteria
  
• Need for all-of-government approach to SusPP implementation beyond environment ministries
  
• Lack of market readiness to deliver green products, services and technologies
  

>> Timeline of Implementation of SusPP Policies and Activities

2016

2002

2004

2016

2017

2021

2022

2005

National green building rating system launched (SEED)

Pakistan’s Vision 2050 first set out a vision for “sustained, indigenous and inclusive growth” that considers environmental sustainability

Public Procurement Regulatory Authority (PPRA) Ordinance 2002 adopted

SME Policy 2021 highlights procurement as a tool to provide market access to SMEs, especially women-owned businesses

National Climate Change Policy 2021

Public Procurement Rules 2004 adopted

Model Green Building Code Provisions for the Five Million Housing Programme developed

Vehicle emissions standards adopted

National Policy on SDG 12 promotes ecolabelling, energy efficiency and solar PV

Mid-term Development Framework: 2005-2010 prioritizes better environmental quality

Pillar 1: Government Vision & Awareness of SusPP

Governments that establish a clear policy vision on SusPP can accelerate the shift from procurement as an adminstrative to strategic function, making clear how SusPP can deliver on important national social and environmental goals.

Pakistan’s Vision 2050 first set out a vision for “sustained, indigenous and inclusive growth” that considers environmental sustainability. Pakistan’s Mid-term Development Framework: 2005-2010 called for the reorganization of economic activity towards greater value added and better environmental quality. The long-term objective is attaining sustainable economic growth without environmental degradation - a vision that has been reinforced in several policy documents. The National Climate Change Policy was updated in October 2021 setting ambitions for improved water resource management, energy efficiency, green transport and industries and emission reductions.

Sustainable public procurement with a focus on energy efficiency is set out as a priority in the 2017 National Action Plan on SDG 12, which calls for a review and streamlining of Public Procurement rules and regulations. Other complementary priorities include the enactment of energy conservation legislation and guidelines for climate resilient energy infrastructure. Tools to support SPP are planned. The Ministry of Climate Change announced the development of a green building code in 2022 to “green” construction activities, at an event supported by the EU Programme, UNEP and UN-Habitat. The Ministry of Environment issued new vehicle emission standards in January 2022 to tackle dangerous levels of urban air pollution, a major upgrade from the last revision in 1994.

Pakistan policy goals and planned actions that sustainable public procurement can help achieve

National Climate Change Policy 2021

• Promote energy efficiency and management activities that include new and innovative energy efficiency methodologies and techniques in various sectors, especially power generation, transport, industry, biomass, and waste;
  
• Enact and enforce energy conservation legislation and audit standards;
  
• Conduct, support and incentivize energy audits for industry and businesses;
  
• Promote and gradually make it mandatory to specify the energy efficiency/fuel consumption rates of energy using equipment and devices of common use.
  
• Promote the use of energy efficient motors in the industrial sector;
  
• Encourage the industrial sector to have periodic “Energy Efficiency Audits”;
  
• Explore and introduce incentives for industries to adopt low- emission technologies;
  
• Legislate opportunities for industry to facilitate transition to circular economy model and boost the market demand for recycled products.
  

National Action Plan on SDG 12 (indicative list, not exhaustive)

• Usage of energy efficient bulbs in public and open spaces, streetlights, buildings, industries and commercial places
  
• Sensors installed to increase energy efficiency
  
• Increase in sprinkler and trickle irrigation, optimized use of fertilizers and pesticides
  
• Increase green spaces and greening pillars of bridges to enhance air quality
  
• Units installed for recycling of waste
  

Sustainable infrastructure development is also a key national priority. The Foreign Ministry has stressed the importance of massive investment in infrastructure development and climate resilience, with a special emphasis on empowering women economically. The Minister identified agriculture, infrastructure, energy - including renewable energy - and the tech sector including green technologies are priority areas. Pakistan has joined the Group of Friends of Sustainable Infrastructure Investment, an initiative co-sponsored with South Africa. The goal is to try to tackle the sustainable infrastructure challenge at both ends: mobilizing finance or access to finance, both official and private; as well generating a sufficiently large portfolio of sustainable infrastructure projects in as many developing countries as possible.

In terms of SME promotion, the Government adopted an SME Policy 2021 with the aim of facilitating enterprise growth. SMEs in Pakistan contribute 40% of national GDP and 80% of non-farm employment. The Policy also recognizes the enormous potential of women in contributing towards economic growth. According to the Female Entrepreneurship Index 2015, Pakistan is the lowest ranked country with only 3% of businesses in Pakistan are women-owned. However, willingness to change is high. Public procurement is specifically mentioned as a policy tool for providing market access to SMEs. Doing so is seen as an incentive for informal SMEs to register and formalize, entering the documented economy. The SME Policy recommends measures for SME promotion, including revising the procurement rules to facilitate greater SME participation, encouraging federal and provincial procurement bodies to set minimum quotas for SME (aiming for 30% SME participation by 2025) and establishing SME support units with local industry and trade associations.

Pillar 2: Legal & Regulatory Framework

Procurement law reform can be key to clear obstacles to implementation by establishing "value for money", not "lowest price", as a core procurement objective, and authorizing procurement approaches suited to SusPP.

Procurement of goods, works and services in Pakistan is regulated by the Public Procurement Regulatory Authority (PPRA) Ordinance 2002 (amended up to July 2020), Public Procurement Rules 2004, Public Procurement Regulations 2008 and PPRA guidelines. Bids are to be awarded on the basis of “most advantageous bid”, which can include criteria related to cost, quality or supplier qualification. The Procurement Rules recognize the principle of “value for money” meaning “best returns for each rupee spent” considering various factors from quality, timeliness, reliability, after sales service, upgrade ability, price, source and the combination of whole-life cost and quality to meet the procuring agency’s requirements.

Article 24 allows for preferences to domestic suppliers or contractors in procurements for works projects and certain goods that are manufactured and sourced in Pakistan. Article 16A allows for the use of framework agreements to purchase recurrent or common use items and services with maintenance services - a tool that can be leveraged for sustainable procurements.

The current procurement rules technically open the door for inclusion of social and environmental criteria.

Pillar 3: Institutions & Capacity

The Public Procurement Regulatory Authority is an autonomous body endowed with the responsibility of prescribing regulations and procedures for public procurements by Federal Government owned public sector organizations with a view to improve governance, management, transparency, accountability and quality of public procurement of goods, works and services.

A National Coordination Committee on SMEs Development has been created to lead the SME development agenda set out in the SME Policy 2021. The NCC is headed by the Minister for Industries and Production. The Small & Medium Enterprises Development Authority (SMEDA) is the apex SME development agency federally. SMEDA coordinates an SME Registration Portal that can help procurers find SME suppliers to engage in market research and bidding.

The Pakistan Green Building Council (PGBC) is a non-profit organization committed to advancing the green building agenda in the country. It is a member of the World Green Building Council.

Pillar 4: Market Practices & Sustainable Supply Chain

Market dialogue throughout the procurement process helps procuring entities to choose realistic sustainability criteria and ensure suppliers succeed in delivering on sustainability commitments over the contract duration.

The SME Policy 2021 sets out plans to organize regular trade fairs and exhibitions and develop National Product Standards. The E-Commerce Policy of Pakistan 2019 aims to establish an “Online Market Place/Digital Platform” to facilitate SME access in both domestic and international markets. The State Bank of Pakistan offers various refinancing schemes with favourable terms to SMEs. However, calls have been made recently for the Bank to expand their schemes to offer green financing to SMEs willing to adopt eco-friendly technologies and practices.

Several initiatives are underway in Pakistan to support the development of women-owned SMEs. SMEDA has set up women business development centres in various cities. Karaandaaz runs a ‘Women Venture’ initiative to address female bias in financial institutions. including women entrepreneurs. A dedicated “Refinance and Credit Guarantee Scheme for Women Entrepreneurs” that guarantees low interest rates to women entrepreneurs and reduces risks of participating financial institutions through coverage of up to 60% of losses in outstanding principal.

Pillar 5: Procurement Operations

Various tools and procurement approaches can be employed to help procurers more easily identify environmentally friendly goods and services and attract a competitive market response.

Sustainable procurement is not a current practice in Pakistan public agencies. A 2019 study examined the tender documents of 75 public university buildings in Pakistan and found an absence of any sustainability elements in the documents. The lack of sustainability concepts in the current procurement rules and lack of stakeholder pressure were identified as the major barriers to SPP adoption.

Work is underway to facilitate the adoption of SPP by making it easier to identify and afford green alternatives. The 2017 National Policy on SDG 12 calls for a tax rebate on energy efficient appliances, incentives for the purchase of solar PV systems and eco-labelling of agricultural products.

To promote green buildings, the Pakistan Green Building Council launched a ‘Sustainability in Energy & Environmental Development (SEED)’ rating system in 2016 and offers SEED trainings, certifications as well as an online assessment tool. The SEED rating assesses and identifies greening opportunities for new and existing buildings from architectural design, site selection, water conservation, energy efficiency, building materials, indoor environmental quality and innovation. Building on this experience, a national level document “Policy Guidelines for Green Building Code” has been developed to achieve the Sustainable Development Goals in the construction industry in an initiative led by the Federal Ministry of Climate Change with the financial support of the

United Nations Development Account (UNDA). In 2022, a Model Green Building Code Provisions for the Five Million Housing Programme in Pakistan aligned with the SDGs was developed with technical assistance of the EU Switch-Asia Programme in support of the Ministry of Climate Change. This document offers a source of ideas for green criteria that procurers can specify for new buildings and building upgrades in Pakistan. A Roadmap exists to develop a formal Green Building Code by 2030.

While sustainable public procurement practices are still in their infancy, environmental considerations have been integrated into existing infrastructure projects through Strategic Environmental Assessments, such as Hydropower Development in Azad Jammu Kashmir State. The SEA recommended a coordinated approach to hydropower development that groups multiple projects to ensure critical natural habitats and threatened fish species are protected. A WWF initiative was launched in 2019 to identify opportunities to green the infrastructure development planned under the China Pakistan Economic Corridor (CPEC) project under the Belt and Road Initiative (BRI). Under the BRI, CPEC projects have considered environmental, ecology and biodiversity considerations and expanded renewable energy through the completion of five wind, one solar and one hydropower projects with three additional hydropower projects underway in 2022.

These projects align with the Green Investment Principles (GIP) adopted by the BRI in 2018. Principle 6 calls for signatories to adopt green supply chain management including life-cycle accounting on GHG emissions and water use. The GPI offers a Climate and Environment Risk Assessment Toolbox (CERAT) that quantifies the environmental risks and benefits of investment projects. China has expressed its willingness to help deliver low-carbon technologies to BRI Member Countries, including solar panels, wind turbines, batteries and electric vehicles (EVs). China has launched collaborative projects in Pakistan to accelerate renewables, boost green hydrogen, promote green technology transfer, and support local production of EVs and lithium batteries. Green investments have been proven to offer multiplier effects, with over 90,000 jobs created for Pakistan to date under green CPEC projects.

Pillar 6: Monitoring & Impact Measurement

Monitoring systems are essential to gather the information needed to keep SusPP implementation on course and communicate on the benefits achieved for the country.

The Public Procurement Regulatory Authority is endowed with the responsibility of monitoring procurement by public sector agencies/organizations and has been delegated necessary powers under the Public Procurement Regulatory Authority Ordinance 2002. The violations done by procuring agencies have significantly reduced i.e. 95% in 2004-05 to 20% in 2009-10.

The Government has prioritized the development of an e-procurement system and piloted a Software-as-a-Service (SaaS) based e-procurement platform in 2020. The National Action Plan on SDG 12 sets out following indicators to monitor the implementation of SPP in the country:

• No. of studies undertaken to review and streamline Public Procurement rules and regulations with SCP to include energy efficiency criteria (“Energy” focal area)
  
• No. and type of industries following green procurement system based on quality compliance and standard rating scale of the product (“Industry” focal area)
  
• No. of programmes developed for sensitizing business and government for sustainable procurement. (“Education” focal area)
  

The Vision 2030 for a Green Building Code in Pakistan emphasizes the importance of tracking “impact” indicators on the adoption of a proposed Green Building Code. Both techno-economic (e.g. energy efficiency, materials, comfort) and social criteria (e.g. affordability) are recommended for tracking to gain a holistic understanding of impacts. However, it is not clear if any of these indicators are being monitored at present.

Projects Supported by ADB

to come

Other Initiatives supported by National/International Agencies

The National Action Plan on SDG 12 outlines on-going donor funded projects related to Sustainable Consumption and Production in its Annex II.

GEF (2019-,$7.4 million): Pakistan’s $7.4 million USD GEF project “Delivering the Transition to Energy Efficient Lighting in Residential, Commercial, Industrial, and Outdoor Sectors” was formally launched in February 2019. The project, through the U4E team of experts, provided technical assistance to the National Energy Efficiency and Conservation Authority (NEECA) in the promotion, demonstration, deployment, and transfer of innovative high efficiency and usage-controlling lighting technologies.

In June, 2019, WWF-Pakistan formally launched its Sustainable Infrastructure initiative vis a vis its Developing greening guidelines for Sustainable Infrastructure Initiative under the Belt and Road Initiative and harnessing the opportunity to develop Greening the China Pakistan Economic Corridor (CPEC) Action Plan project.

EU-Switch Asia: Implements the program on “Strengthening the capacity of developing country policymakers, investment promotion officials and academia in two priority sectors to attract investment for sustainable and inclusive development.

GIZ (2022-2023) Project “Achieving better energy efficiency in Pakistan through better energy management systems”

Resources

State Bank of Pakistan, World Bank. Diagnostic Survey Report - “Designing and Implementing Women Linkage Program”.

World Bank Group. 2022. Pakistan Country Climate and Development Report. CCDR Series;. World Bank, Washington, DC. © World Bank Group. https://openknowledge.worldbank.org/handle/10986/38277 License: CC BY-NC-ND

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