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.
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