ADB extends $810m loan to help Pakistan address energy shortage

The Asian Development Bank (ADB) has approved an $810 million multi-tranche financing facility to develop Pakistan’s power transmission system to improve the reliability and quality of energy supply, and to meet increasing demand for electricity.

“A reliable and sustainable power sector is critical to the economic growth and wellbeing of Pakistan,” said Megan Wolf, energy specialist with ADB’s Central and West Asia Department, in a statement of ADB issued on Tuesday.

“Fast implementation of this facility and related reforms to alleviate power shortages will improve the prospects for the economy,” the ADB said.

The loan facility will help fund the staged rehabilitation and expansion of the transmission network, increasing transmission capacity and energy efficiency and security.

It will also support government efforts to develop a more transparent and efficient power sector by promoting reforms in the National Transmission and Despatch Company Limited, and the sector’s newly-established commercial operator, the Central Power Purchasing Agency (Guarantee) Limited. The ADB’s facility will be delivered in tranches, implemented from 2016 to 2026.

Power shortages are a major obstacle in Pakistan’s economic development. With demand for electricity outpacing supply, inefficient and inadequate transmission and distribution systems are key bottlenecks in the development of the energy sector that is stifling growth and threatens social strife.

The ADB is Pakistan’s largest development partner in the energy sector with investments including five multi-tranche financing facilities, as well as providing support for policy reforms, energy planning, preparation of feasibility studies, capacity development, and promotion of regional power and gas trading initiatives.

The ADB’s assistance is helping the government to address the persistent energy crisis through Vision 2025, Pakistan’s comprehensive plan for economic growth.

The plan aims to increase power generation, provide uninterrupted electricity to all, and improve demand management. The ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration.

Established in 1966, ADB in December 2016 will mark 50 years of development partnership in the region. It is owned by 67 members – 48 from the region. In 2015, the ADB assistance totaled $27.2 billion, including co-financing of $10.7 billion.

Must Read