Published On: Wed, Dec 18th, 2013
Published in Category: Islamabad

ADB approves loan to improve power distribution in Pakistan

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ISLAMABAD: The Asian Development Bank (ADB) has approved a loan of 167.2 million U.S. dollars to improve the power distribution system in Pakistn to provide reliable and regular electricity to businesses and domestic consumers.

The loan is part of the 810 million U.S. dollars Power Distribution Enhancement Investment Program approved by ADB in 2008, a statement issued by the ADB Islamabad office said on Tuesday.

The multi-tranche financing facility (MFF) targets investment in priority areas to reduce power losses and increase the reliability of the power distribution system.

“There is an urgent need for more dependable power distribution and this loan underscores ADB’s commitment to work with the government to resolve the current power crisis,” said Klaus Gerhaeusser, Director General of ADB’s Central and West Asia Department.

The country’s energy crisis has led to a sharp reduction in investment, badly hurt industry and small businesses, and in 2012 lopped an estimated two percentage points off annual gross domestic product, the ADB said.

“The rising costs of imported fuel oil which accounts for over a third of the country’s energy generation are also putting an increasingly unsustainable burden on national finances,”it added.

Through the MFF, ADB has already provided financial assistance for the upgrading of 360 grid stations, of which 175 stations have already been completed.

The loan is the fourth of the MFF and will increase distribution capacity at 282 grid stations, adding 5,021 megavolt- amperes (MVA) of transformer capacity.

The investments are divided among all eight publicly owned power distribution companies. The first tranche of the MFF is already completed and has shown satisfactory results across Pakistan. The second and third tranches are on track.

The Manila-headquartered ADB is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth and regional integration. Established in 1966, it is owned by 67 members 48 from the region. In 2012, ADB assistance totalled 21.6 billion U.S. dollars, including co financing of 8.3 billion dollars.