ISLAMABAD, Nov 29: The Asian Development Bank will provide $810 million to help Pakistan overcome line losses in its power distribution system, now approaching 40 per cent.

An agreement was signed by the government and the ADB here on Saturday. The $810 million 10-year power distribution enhancement programme was approved by the bank in September this year.

The agreement comprises two immediate components --- periodic financing request (PFR) of $242 million and multi-tranche facility (MFF) support component of $10 million. The rest of the amount will be disbursed in a period of 10 years.

The agreement papers for PFR component was signed by Rune Stroem, ADB’s country director, and Farrakh Qayyum, secretary of the economic affairs division, while documents of the MFF support fund was signed by Rune Stroem and Fazal Ahmed Khan, managing director of the Pakistan Electric Power Company, and chief executives of eight power distribution companies (Discos).

“We understand and support government’s efforts to address power distribution constraints to improve efficiency and minimise losses in the system,” Mr Stroem said.

A stronger power distribution system, in addition to an efficient power transmission system, would not only help increase power generation capacity, but also go a long way in managing future power requirements of Pakistan, he added.

Pakistan’s power distribution system is facing serious technical and fiscal challenges, including deterioration in system efficiency, reliability and quality of electricity supply.

High technical and commercial losses and resultant shortage of electricity and low-voltage profile are other major problems. The system is also affected by aging machineries, overloading and poor maintenance.

The programme is part of ADB’s support for Pakistan’s long-term investment plan for energy security and power transmission and distribution development.

It aims at enhancing the efficiency of Discos by improving reliability, quality and stability in the distribution system.

The ADB programme is structured in three tranches with a batch of subprojects and their implementation support. The first PFR under the MFF will finance about 160 subprojects and a subproject support component.

The subprojects will improve power distribution infrastructure through rehabilitation, augmentation and expansion of the secondary (below 132kV) transmission network and relieve the power system of distribution bottlenecks and constraints.