ISLAMABAD: The Asian Development Bank has decided to allocate $3.25 billion under a new lending programme for next three years (2014-16), focusing on reforms in the energy sector and the challenges faced by the state-owned enterprises.

According to the ‘Country Operations Business Plan’ made available to Dawn on Monday, the total firm lending programme amounts to $3.2 billion for 27 loans, an annual average of $1.061bn.

About 26 per cent of this will be provided through multi tranche facilities. The non-lending technical assistance programme for 2014-16 currently stands at $15.6 million for 16 technical assistance projects.

Efforts will be made to mobilise co-financing for both investment and technical assistance projects, document reveals.

The current environment in the power sector, in which receipts do not cover costs, means that every unit of power is sold at a loss that is either covered by a government subsidy or becomes part of the continuously accumulating arrears of the state-owned power companies.

The new government settled outstanding arrears in the sector in July 2013, but there are indications that debt will build up again unless structural reforms are undertaken in the sector.

The business plan has allocated a major part of the available resources to address energy sector needs, both through investments and policy reforms. Planned interventions aim at a more efficient system for generating, transmitting, and distributing electricity; improving collection, adjusting pricing mechanisms; and improving management.

Other sector allocations for 2014–2016 are spread relatively equally to address infrastructure needs in transport, including regional connectivity, irrigation, and urban services.

In the business plan, ADB will introduce policy-based lending to support the government’s medium-term reform agenda agreed with the IMF, and the addition of a project pipeline for 2015–2016.

In addition to focusing on energy reforms and challenges being faced by SOEs, Punjab and Sindh, interventions have been proposed for the provinces of Balochistan and Khyber Pakhtunkhwa to broaden the geographic coverage of ADB assistance for development in these two regions, subject to prevailing security considerations.

The work on a new Country Partnership Strategy (CPS), 2014–2018 for Pakistan has been initiated following the installation of new government in Pakistan as well as completion of the CPS, 2009-2013.

With the approval of a new CPS by ADB targeted in 2014, the country operations business plan for Pakistan functions as a bridge between the CPS, 2009–2013 and the new CPS.