Pakistan inks $248mn loan agreement with ADB

Mubarak Zeb Khan Published December 12, 2014

ISLAMABAD: Pakistan on Friday inked a loan and project agreement worth $248 million with Asian Development Bank (ADB) for power transmission enhancement investment programme.

The project is expected to be completed by the end of 2016.

The power transmission tranche-4 aims to improve energy supply and security by reducing transmission infrastructure bottlenecks and transmission losses and expanding the national transmission grid by connecting generation sources and load centers.

The transmission system is currently unable to cope with existing demand in some areas at peak times. There are voltage control issues and a high risk of instability under certain outage conditions.

Thus, the major aim of the project is enhancement in the capacity of the transmission system by rehabilitation, extension, augmentation and expansion of existing 500 kV and 220 kV network of NTDC, to meet the growing power demand in the country.

Muhammad Saleem Sethi, Secretary Economic Affairs Division (EAD) and Werner E. Liepach, Country Director ADB signed the Loan Agreement here on Friday.

Also read: ADB approves $400mn loan to boost Pakistan's energy sector

The Asian Development Bank has been providing a multi-tranche financing facility (MFF) amounting to $800 million for Power Transmission Enhancement Investment Program since 2006.

The investment program has supported the rehabilitation, augmentation and expansion of the transmission substations, transmission lines of 220 kv and above installation of static var compensator (SVC) equipments.

Tranche-4 is the last tranche of transmission MFF under which four new grid stations of 220 kv would be constructed in D I Khan, Nowshera, Lalian and Chakdara. A new transmission line of 500 kv would also be constructed for dispersal of power from 747 MW Power Plant at Guddu.

Secretary EAD Sethi appreciated ADB’s investments for the Jamshoro Coal Power Project, Budgetary Support Program for energy sector and upcoming Multi-tranche Financing Facility (MFF) for the Smart Metering System amounting to $ 990 million.

Werner E. Liepach, on the occasion, reaffirmed ADB’s support and cooperation for development projects in Pakistan.

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Pakistan

Mubarak Zeb Khan is a senior staff correspondent for Dawn, bringing over two decades of experience to his coverage of political economy, trade, taxation, and public finance. He is a former Innovation Journalism fellow at Stanford University and a Chevening Scholar. He tweets @mubarakzebdawn.

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Gaurav Arya

Dec 12, 2014 08:00pm

Again???

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Norozkhan

Dec 12, 2014 08:17pm

It seems like a priority and a mission for Pakistan Government to get as much loan as possible at any conditions and any interest rates. Nawaz Sharif and Ishaq Dar are so proud of loans but do they realize that this loan has to return. By the way is any one keeping track of all this money , is it being really spent in Pakistan or it is being deposited in foreign banks with certain names.

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Pali

Dec 12, 2014 08:46pm

@Gaurav Arya pakistans foreign loans 57 billion dollars,India's 390 billion, mind your own business

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Dec 12, 2014 08:47pm

What is wrong with this country. It is being sold in bits and pieces. An old idiom as it says RAGS TO RICHES, but it is the other way around where Pakistan is concerned RICHES TO RAGS. Message to all those hard liners and faithfuls of PML(N) PPP MQM JUI (F) JI BNA ANP blame this also on Imran Khan. My father always told me be wise live wise never borrow and never lend. Always live within your means, how true he was I don't owe a cent to anyone and no one owes me any cent. All the way a peaceful life I live in.

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Arslan

Dec 12, 2014 08:57pm

How about some more details on the loan? Who are the local contractors, what is the interest on the loan, what are the other relevant details? If the government is not declaring its actions, the Fourth Estate should continue to present all the facts to make sure that there are less chances for "backroom deals".

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a ercelan

Dec 12, 2014 09:03pm

Such a waste. On site generation would avoid transmission losses altogether. As an example biofuel and solar energy. It would also end the subsidy to the rich by the poor caused by average cost pricing. And end subsidies to fossil fuels. And new decentralised energy could target those excluded otherwise. But bureaucrats and contractors benefit more from large projects of bricks and mortar where bribes and profiteering are easily hidden. Plus state control over citizens is maintained.

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Shozab

Dec 12, 2014 09:08pm

This is right step to right direction. Such constructive loans are required to modernise system.

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Khopdee

Dec 12, 2014 09:15pm

Wow...finally some good news for us. There is a smile finally on Saleem Sethi face. Bravo!

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Mamata_Begam

Dec 12, 2014 09:19pm

These loan repayment would be passed down to future Pakistani generations. Enjoy what you can.

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Interdependent

Dec 12, 2014 09:23pm

Another Greece like situation in the making......lot of loans, poor tax collection and further loans.

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Yumi

Dec 12, 2014 09:32pm

Loan taking is this government's priority mainly because this money gets distributed to the beurocratic sharks who keep them in political arena alive, help them get elected and favour their businesses. It is spent on political agendas of their parties and some goes into accounts of their own. Whatever is left is spent on the project which ends up in delays for the inflation to take its effect which prompts them to ask for more money. By the time project is initiated is already outdated or agreements finish with the stake holders.

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Hello

Dec 12, 2014 09:44pm

@Pali India External debit is around $370bn and Pak is $70bn. Now, check their reserves and see who can actually pay and who has to sell country.

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Fawad

Dec 12, 2014 09:49pm

So banks who give loans dont look at the track record of the leaders? or the nation? Why give loan to a country whose leader gets to spend millions on foriegn tours and gets to reserve an airplane just for himself. Owns a mansion, gets royal protocols and is a billionaire.

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Maths

Dec 12, 2014 09:49pm

@Pali : Your comment set me doing some research.. GDP India : $2.047 trillion (expected 2014 - Nominal) GDP Pakistan : $245 billion (expected 2014 - Nominal) GDP Growth India: Increase 5.6% (2014 est.) GDP Growth Pakistan: 4.1% (FY 2013-14) GDP per capita India : $1,625 (nominal) GDP per capita Pakistan : $1,307 (nominal - 2013) Even if your data is correct India currenlty is in a better position.ie: the ratio of Loan to GDP is as follows: for India it is 19% of GDP (nominal) for Pakistan it is : 23% of GDP (nominal) This is not to promote any ill will or superiority complex but to get some factual data in place.

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A shah

Dec 12, 2014 09:54pm

Is getting a loan something to celebrate and have a photo shoot? It's not like we have won a contract or something

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Rahul

Dec 12, 2014 10:00pm

@Pali uneducated fellow.. always compare loan with the % against ur GDP and earnings to govt... China and US has mre loan than India in numericals..

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Pali

Dec 12, 2014 10:02pm

@Interdependent not even close,sky is not falling

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Vipin

Dec 12, 2014 10:04pm

@ Pali out of 11 comments 7 are saying same thing but you get Angry when same point raised by Gaurav? Now you so good at facts tell me how many time Pakistan default on these loans and How many times India did. You will have that ans

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Annon

Dec 12, 2014 10:21pm

More loan by PMLn? Is this the Naya Pakistan concept by Mr. Sharif to go for extended loans to overburden the poors as our growth index has not recovered inspit of the loans in the last 5 years. Time to think folks.

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Dec 12, 2014 10:39pm

"...a loan and project agreement worth $248 million with Asian Development Bank (ADB) for power transmission enhancement investment programme..."" Beautiful catch words. "Power Enhancement investment program". Wow!! How about those 25 or 35 Billions $ investment, that we were hearing, coming from China? Why do you then need a small paltry sum of 248 million $?? Only our financial wizard Ishaq Dar knows it better, like he distribution of Rs. 500 Billions for circular dept, which came right back.

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Raschid

Dec 12, 2014 10:47pm

Pakistan has the worst project performance record at the ADB. In the last 10 years we have pretty much failed or over run infrastructure projects financed or supported by the ADB. The IED carried out the evaluation for the period of 2002-2012 in which the ADB approved 116 loans worth $11.5 billion, out of which 69% were larger, more expensive ones. But the average success rate of the period was only 48%, underscoring the need to review the donor-funded growth model that was adding billion of dollars to the country’s debt without bringing much success...... htthttp://tribune.com.pk/story/632161/10-year-evaluation-adbs-pakistan-performance-rated-less-than-satisfactory/

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kabob bob

Dec 12, 2014 11:22pm

@Gaurav Arya again and always, as economy grows so does demand for energy.

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iqbal

Dec 12, 2014 11:32pm

Another loan. Sharif will sell Pakistan

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Qamar

Dec 12, 2014 11:38pm

We have become a nation that has a bottomless begging bowl, thanks to our democracy.

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Concerned

Dec 12, 2014 11:41pm

Not sure why this guy in the background is clapping?

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Confused

Dec 12, 2014 11:47pm

It seems that everyone is an economist. Today factories in much of the country are running at less than half capacity because of electricity shortage. IF the factories can run at full capacity due to adequate infrastructure, it increases employment, wages, and generate more than enough revenue to pay off the loan. The loan isn't the bad thing. The thing to focus on here is whether the government uses the proceeds to build transmission lines.

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Sam

Dec 12, 2014 11:50pm

Great work Nawaz I'm sure he will borrow more so that one day he will run his very own campaign Karz Utaro Mulk Sanwaro

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mian

Dec 12, 2014 11:58pm

Another loan??? My God.

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Farhana Hussain

Dec 13, 2014 01:13am

Who is going to repay?

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Karachite

Dec 13, 2014 01:32am

Incompetent Govt. surviving on loans. They have no public confidence that they can't collect taxes. God's mercy for us!

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Key Points

Dec 13, 2014 01:58am

More loans & nation goes under more debt. Who is benefitting with new loans? Still millions of children out of school, millions cannot afford medical treatment, high crime rates, high rate of unemployment etc.. continues....

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Key Points

Dec 13, 2014 02:08am

@jj Very good. Thanks for sharing a golden rule with other readers. To your question who controls all new loan money, your guess is just as good as anyone else's. May be its controlled by few powerfull decision makers. May some with sidekicks? Dont worry, all loan would be paid off in next 150 years, For you & the rest, just keep paying your taxes on time. No there is no Baldia elections & no Nazim. May be big guys know better how to control all the money. May Almighty have mercy on helpless people of Pakistan.

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Dec 13, 2014 02:52am

I always wonder the state of mind of our politicians ... Is getting a loan an achievement and so big that we proudly post pictures on media.. I think they should hide their face after taking a loan if they have any self respect.

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observer

Dec 13, 2014 02:53am

There you go again. More of the "circular loan" strategy of Pakistan. Borrow with the right hand today to pay with the left hand the loan borrowed yesterday and the interest yesterday. Pakistan has worked this into a real science.

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fawad

Dec 13, 2014 03:40am

One of Pakistan's many achievements. Yes, these are the ONLY achievements, how much and how many times we can borrow loans, funds, aid and things like that.

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Black Sabbath

Dec 13, 2014 04:00am

Every country borrows loans & certainly Pakistan has a right to do so as well. But the Pakistani economy needs to start growing at a much faster click than it currently is & the tax collection rates need to go higher. I believe, with the right economic decisions, Pakistani economy can grow at 7-8% in the coming years.

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Shaer Khan

Dec 13, 2014 04:05am

More Loans! wao great job Mr. Prime Minister along with your brother in law. And people want to know why is Imran Khan after these people.

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Farooq

Dec 13, 2014 04:25am

What happened to the kashkol which Nawaz sharif was going to break once he comes into power. Looks like it's getting bigger.

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Abdul Malik

Dec 13, 2014 04:30am

As usual in the past, this loan amount will rot in the files of our thick headed bureaucrats, shuttling between various ministries coupled with active lobbying by our corrupt politicians to secure contracts and before we know, the entires loan or part thereof, will either lapse or interest incur, without judicious utilization for the very purpose that the loan was acquired for.

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Abdul Malik

Dec 13, 2014 04:34am

@Pali in all fairness two wrongs don't make one right. We should not make it our national duty to compare everything with India. Let them acquire as much loan as they want. Let us admit, they are much larger country and nation compared to Pakistan. We should take care of our own backyard and put our house in order.

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Jason

Dec 13, 2014 04:51am

This is what happens when governments choose to invest in guns rather than in the nations progress!

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Sayed Haider

Dec 13, 2014 05:04am

The only economic factor that Nawaz is successfully implementing is more debt for the people of Pakistan. I wonder if the financial genius, Dar has done anythi ng to improve the economy except loading on both internal and external debt.

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Dr Haroon

Dec 13, 2014 05:55am

Again? What did you give up for next generation of Pakistanis?

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MASOOD

Dec 13, 2014 07:00am

Good work Nawaz Sharif, You are committed loan/Credit line expert. In these 2 year Pakistan received loan from IMF, Asian Development Bank and other world agencies. In the same period of Time Musharaf relieved Pakistan from IMF. Political governments are run by loan and foreign assistance. It is proven again and again.

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Dec 13, 2014 07:09am

Waste mat karna

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Jaimie

Dec 13, 2014 07:36am

Many pop singes and film stars have assets greater than the paltry $248m. Here our country is so going such a distance and celebrating in hankering this sum.

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Jitender

Dec 13, 2014 07:36am

@Pali India is 2 trillion dollar economy with over $320 billion in foreign exchange reserves while you are not even $ 200 billion economy with hardly $13 billion in foreign exchange reserves.

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Jason

Dec 13, 2014 07:43am

Wondering if Pakistan even has a single rupee that it can call its own

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Dec 13, 2014 08:32am

@Interdependent Germany, and other European countries pitched in to bail Greece out. Who will bail Pakistan out? Not the "all weather friend" for sure!!!

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Saj king khan

Dec 13, 2014 09:21am

How do I get a loan ... Alone !!!!!

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khan

Dec 13, 2014 09:33am

More loan? Where does this all loan go?

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Sachin

Dec 13, 2014 09:53am

Now it will be headlines that Pakistan's Foreign Exchange reserves increases by US $ 248 Mn. Wow good going Pakistan.

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Sachin

Dec 13, 2014 09:59am

@Pali Pakistan's Foreign exchange reserves at US $ 13 and India's US $ 320, there is no comparison between Pakistan and India, Even one Public sector company of India ONGC is worth US $ 50, Now you can imagine even One Indian PSU can bail out Pakistan, If Pak requests.

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BRIJ

Dec 13, 2014 11:28pm

@Pali India has foreign exchange reserves of USD 316 Billion whereas Pakistan has foreign exchange reserves of just USD 14 Billion. Pakistan is just like younger brother to India. How can India allow to become failed, financially bankrupt and chaotic country?

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deva

Dec 14, 2014 12:14am

why loan required? how much loan make it condition like greece. loan should be used for population control and that should be first priority if pak wants to come out of this circle of debt trap

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