News Column

ADB approves $400 million for Pakistan to tackle energy problems

April 25, 2014

The Asian Development Bank (ADB) has approved a $400 million loan to support the Government of Pakistan's ongoing reforms to tackle the energy issues.

A statement issued by the ADB on Thursday said that the loan was part of an assistance programme which would underwrite reforms needed to make the energy sector affordable, reliable, sustainable and secure.

This in turn would accelerate industrial activity needed to boost economic growth and help create jobs, which were key to reducing poverty levels, the ADB said.

Pakistan's economy had been devastated by power shortages which were estimated to have slowed GDP growth by at least 2 percentage points a year, and private investment had been sharply reduced and power sector subsidies had caused high fiscal deficits and elevated public debt, it added.

The government was implementing the National Power Policy which had been approved in July 2013 to resolve these problems.

Building on the firm commitment of the government to reforms exemplified in this policy, ADB, Japan and the World Bank had worked with the government to develop a five-year plan and set milestones to implement the policy, the ADB statement said.

It further said that ADB was the lead development organization in Pakistan's energy sector supporting energy efficiency, transmission, distribution, cross-border natural gas pipelines, power generation, and renewable energy projects.

The sustainable energy sector reform programme would support the overhaul of existing tariffs and subsidies as the government had moved to eliminate subsidies by 2016, except for low income customers, the ADB said.

It will also back reforms to reduce power losses and encourage more sector involvement from the private sector and improving transparency and accountability.

The statement said that full programme was expected to total $1.2 billion, with future amounts subject to further discussions between ADB and the government.

For the first sub-programme, co-financing from Japan of $49 million and the World Bank of $600 million was expected. The full programme was due for completion by June 2018.

For more stories on investments and markets, please see HispanicBusiness' Finance Channel

Source: Pakistan Press International