World Bank approves $800m to improve Pakistan’s power sector, human capital

Published June 29, 2021
The World Bank's (WB) board of executive directors on Tuesday approved loans worth $800 million for financing two programmes in Pakistan. — AFP/File
The World Bank's (WB) board of executive directors on Tuesday approved loans worth $800 million for financing two programmes in Pakistan. — AFP/File

The World Bank's (WB) board of executive directors on Tuesday approved $800 million for financing two programmes in Pakistan.

According to a press release, the programmes include the Pakistan Programme for Affordable and Clean Energy (PACE) and the Second Securing Human Investments to Foster Transformation (SHIFT II).

WB Country Director for Pakistan Najy Benhassine said that the reforms underpinning the two programmes can contribute to facilitating sustainable investments and generate welfare gains for those most in need.

According to the statement issued, the $400 million project for clean energy focuses on measures to improve the financial viability of the power sector and support the country’s transition to low carbon energy.

"PACE prioritises actions needed to initiate critical power sector reforms focused on reducing power generation costs, better targeting of subsidies and tariffs for consumers, and improving efficiencies in electricity distribution with the participation of the private sector," the statement said.

Additional medium-term reforms are under development, focusing on subsidies, competitiveness, and power sector sustainability. "The goal is to reduce circular debt over the long-term," the press release said.

WB task team leader for the programme, Rikard Liden, said that power sector reforms were critical to resolving the country's fiscal challenges.

“Decarbonising the energy mix will reduce dependence on fossil fuel imports and vulnerability to price fluctuations because of movement in exchange rates. PACE prioritises action on such reforms, which must be sustained to address circular debt and set the power sector on a sustainable path," he said.

Meanwhile, the second $400 million supports a federal structure to strengthen basic service delivery for human capital accumulation.

"The programme will help improve health and education services, increase income generation opportunities for the poor, and promote inclusive economic growth," the statement said.

According to the WB, these reforms will increase budget reliability for sustainable financing of child immunisation and quality primary healthcare programmes, promote student attendance and support data-driven decision-making.

"The programme supports reforms to encourage women’s participation in the economy by improving working conditions and empowering those in the informal sector. It supports the enhancement of national safety nets programmes and better targeting to protect the most vulnerable, building resilience to shocks like the Covid-19 pandemic," the press release said.

Tazeen Fasih, the WB task team leader for the SHIFT II programme, said: "Strengthening services that build human capital in a coordinated manner between provincial and federal authorities, along with improved targeting of social safety nets, will better support families to recover from the Covid-19 crisis, and pave the way for more robust crisis preparedness in the future."

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