ISLAMABAD: The Asian Development Bank (ADB) on Tuesday approved an $810 million multi-tranche financing facility to develop Pakistan’s power transmission system aimed at improving the reliability and quality of energy supply, and to meet increasing demand for electricity.

The loan facility will help fund the staged rehabilitation and expansion of the transmission network, increasing transmission capacity and energy efficiency and security.

Under the arrangements, $800m will come from ADB’s ordinary capital resources while $10m will be financed through the Asian Development Fund.

It will also support government efforts to develop a more transparent and efficient power sector by promoting reforms in the National Transmission and Despatch Company Ltd, and the sector’s newly established commercial operator, the Central Power Purchasing Agency (Guarantee) Ltd. ADB’s facility will be delivered in tranches, implemented from 2016 to 2026.

To achieve this, the investment programme includes staged physical investments in the transmission system to increase transmission capacity, improve efficiency and energy security, and evacuate additional sources of power; and non-physical investments to support institutional efficiency, cost recovery, competition, transparency and good governance within the sector.

“A reliable and sustainable power sector is critical to the economic growth and well-being of Pakistan,” said Megan Wolf, Energy Specialist with ADB’s Central and West Asia Department. “Fast implementation of this facility and related reforms to alleviate power shortages will improve the prospects for the economy.”

Power shortages are a major obstacle in Pakistan’s economic development. With demand for electricity outpacing supply, 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.

Chronic power shortages are estimated to have reduced GDP growth by at least 2pc in 2012 and 2013, and are considered the major cause of the slowdown in large-scale manufacturing, which grew at only 1.1pc in FY12 and 4.1pc in FY13.

Published in Dawn, August 24th, 2016

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