The Asian Development Bank (ADB) and the Government of Pakistan recently signed agreements for combined loan assistance of nearly $800 million to boost Pakistan’s power sector efficiency and reforms.Tariq Bajwa, Secretary Economic Affairs Division, and Werner E. Liepach, ADB’s Country Director for Pakistan signed an agreement for a $400 million loan for tranche 1 of the Multitranche Second Power Distribution Enhancement Investment Program. This will allow Pakistan to introduce for the first time, an Advanced Metering Infrastructure (AMI) system for power distribution companies across the country to improve load management and strengthen the financial viability of the sector by reducing electricity losses and increasing revenue collection.
The two sides also signed an agreement for a $400 million loan for the second sub-program of the Sustainable Energy Sector Reform Program. The investment is directed towards supporting ongoing policy reforms to build an affordable, efficient and secure energy sector. Senator Muhammad Ishaq Dar, Pakistan’s Finance Minister witnessed the signing.“The two programs are major steps towards resolving Pakistan’s energy crises. The state-of-the-art new metering system will minimize losses and allow effective load management and transparency, thus ensuring a robust and sustainable power supply needed to lift growth and job creation,” said Mr. Liepach.
Power shortages are a major obstacle in Pakistan’s economic development. With demands for electricity outpacing supplies, 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.The distribution enhancement program will be rolled out in phases, by covering 2-3 distribution companies under each tranche. The program includes installation of advanced ‘smart’ meters at major cities, and industrial and commercial hubs, as well as introducing a modern, computerized customer billing and information system to improve service quality and reduce losses.
The Sustainable Energy Sector Reform Program Subprogram 2 will support policy measures to address gaps in the electricity sector, as well as further market reforms to integrate energy planning and efficiency of public sector power companies. The program supports establishment of an independent central power purchase agency, electricity data consolidation, measures to boost transparency and stakeholder participation, as well as steps to encourage increased private sector participation in both the electricity and gas sectors.ADB is Pakistan’s largest development partner in the energy sector with investments including five multi-tranche financing facilities and a project loan for the Jamshoro power generation plant, as well as providing support for policy reforms, energy planning, preparation of feasibility studies, capacity development, and promotion of regional power and gas trading initiatives.