ADB pledges $7.5bln in loan financing over three years

KARACHI: The Asian Development Bank (ADB) will provide more than seven billion dollars in loan financing and grants to Pakistan over the next three years for energy and transport infrastructure uplifts as well as domestic resources mobilisation, The News learnt on Thursday.

Manila-based lender will allocate almost one-third of the total financing to address power sector deficiencies, its country operations business plan (2019-2021) revealed.

“ADB’s non-sovereign operations will continue to focus on energy security to increase electricity supply,” the bank said in the document. The lender said the proposed sovereign lending program for 2019–2021 is $7.528 billion, consisting of $5.370 billion from regular ordinary capital resources (OCR) lending and $2.158 billion from concessional OCR lending, which includes a carryover of $600 million from 2018. The non-lending program for the period is $21.7 million, including transaction technical assistance for various pipeline projects. “The final allocation will depend on available resources, project readiness, project performance and debt distress rating of the country among others,” the lender said. “ADB’s nonsovereign operations will supplement these resources. ADB will also explore cofinancing from other sources and seek financing from the regional pool under concessional resources and regular OCR for regional cooperation and integration.”

The ADB will provide loan financing of $2.245 billion over the next three years to strengthen transmission network of the National Transmission and Despatch Company, develop hydropower project and support the Turkmenistan-Afghanistan-Pakistan-India gas pipeline project. The bank will loan another $1.394 billion to support sustainable national highway and Sindh Hyderabad southern bypass projects, help revitalise Pakistan Railways to improve transport sector sustainability, including exploring nonconventional financing arrangements.

For the agriculture sector, natural resources and rural development, the lender allocated $794 million in loan financing for the Greater Thal canal irrigation, Kurram Tangi water resources and smaller Cholistan water resources development projects.

ADB also earmarked $470 million in loan for a cross-sector project readiness facility for Punjab and the Punjab cities improvement project. It will provide $2.4 billion in loan financing for public sector management sectors. The business plan includes projects, such as trade and competitiveness program, financial markets development in 2020, infrastructure financing and public-private partnerships (PPPs) in 2021, as well as the second phase of support for the Benazir income support program in 2020.

For education and health sectors, there will be a loan of $225 million under the three-year financing program.

“ADB will continue to facilitate trade finance, introduce supply chain finance, and seek opportunities to support demonstrative projects in mining, agribusiness and social development, as well as strengthen private sector financial institutions,” the bank said.