ADB agrees to disburse $800mln loan for power sector

KARACHI: The Asian Development Bank (ADB) on Thursday agreed to disburse $800 million to Pakistan to help the country improve efficiency of its power sector.
Tariq Bajwa, Secretary Economic Affairs Division, and Werner E Liepach, ADB’s Country Director for Pakistan signed loan agreements for the two programs, said an ADB statement.
Finance Minister Ishaq Dar witnessed the signing.
The statement said $400 million worth of loan will be sanctioned for tranche 1 of the multitranche second power distribution enhancement investment program.
“This will allow Pakistan to introduce for the first time an advanced metering infrastructure system for power distribution companies across the country to improve load management and strengthen the financial viability of the sector by reducing electricity losses and increasing revenue collection,” it said.
The ADB agreed to disburse another $400 million loan for the second sub-program of the sustainable energy sector reform program.
“The investment is directed towards supporting ongoing policy reforms to build an affordable, efficient and secure energy sector,” it said.
Power shortages are a major obstacle in Pakistan’s economic development. With demands for electricity outpacing supplies, 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 two programs are major steps towards resolving Pakistan’s energy crises,” the statement quoted Liepach as saying.
“The state-of-the-art new metering system will minimise losses and allow effective load management and transparency, thus ensuring a robust and sustainable power supply needed to lift growth and job creation.”
The statement said the distribution enhancement program will be rolled out in phases, by covering 2-3 distribution companies under each tranche.
It said the program includes installation of advanced ‘smart’ meters at major cities, and industrial and commercial hubs, as well as introducing a modern, computerised customer billing and information system to improve service quality and reduce losses.
The ADB’s statement further said the sustainable energy sector reform program will support policy measures to address gaps in the electricity sector, as well as further market reforms to integrate energy planning and efficiency of public sector power companies. The program supports establishment of an independent central power purchase agency, electricity data consolidation, measures to boost transparency and stakeholder participation, as well as steps to encourage increased private sector participation in both the electricity and gas sectors.
Pakistan’s circular debt has swelled to Rs600 billion, marring the ability of the planners to bring efficiency in the power sector.