ADB to loan $284 million toimprove transmission network

ISLAMABAD: The Asian Development Bank (ADB) and Pakistan on Thursday signed loan and grant agreements worth $284 million to improve power transmission network.

The agreement was signed by ADB Country Director for Pakistan Xiaohong Yang and Secretary of the Economic Affairs Division Noor Ahmed at a ceremony in Islamabad.

The World Bank’s latest report on power sector in South Asia had pointed out that distortions in Pakistan’s power sector were causing a loss of $18 billion or 6.5 percent of GDP on annual basis, and it could not be fixed without improving governance structure, investing into transmission and distribution network, transforming regulatory framework and changing energy mix.

“The project will help provide a more stable and secure electricity supply, so people and businesses can continue their productivity and contribution to the economy,” said Yang.

“ADB is working with the government and the private sector to further develop Pakistan’s power supply chain, including expanding the power transmission network.”

The agreement is the third tranche of a multi-tranche financing facility (MFF) under the ADB-supported Second Power Transmission Investment Program. The MFF aims to develop a stronger, smarter, greener, and more climate resilient power transmission system in Pakistan.

The tranche is comprised of a $280 million loan from ADB’s ordinary capital resources and a $4 million grant from the High-Level Technology Fund (HLTF) to help the National Transmission & Dispatch Company Limited (NTDC) meet the country’s electricity demand of 1,150 megawatts efficiently and reliably. To achieve this, it will deploy high-level technologies and climate-resilient transmission systems through load centres in Punjab.

The investment in the power transmission network—the first investment of its kind by ADB in Pakistan—will pilot large-scale, grid-connected battery energy storage system, which will help NTDC comply with national standards and best practices in power distribution.

It will also enhance the NTDC’s capacity to dispatch intermittent renewable energy. This investment will also facilitate the development of ancillary services market which is an important component of the future competitive power market.

“The capacity building component of Tranche 3 will support the government in preparing an energy storage system roadmap to leverage the country’s rich indigenous renewable energy potential for longer term energy security,” said Yang. ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 67 members—48 from the region. In 2017, ADB operations totalled $32.2 billion, including $11.9 billion in co-financing.