The Asian Development Bank (ADB) and Pakistan on Thursday signed agreements for combined loan assistance of nearly $800 million to boost Pakistan’s power sector efficiency and reforms, the ADB said.
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.
The distribution enhancement programme will be rolled out in phases, by covering 2-3 distribution companies under each tranche. The programme 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 agreement allows 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, a bank’s statement said.
The two sides also signed an agreement for a $400 million loan for the second sub-programme of the Sustainable Energy Sector Reform Programme.
The investment was directed towards supporting the ongoing policy reforms to build an affordable, efficient and secure energy sector. Pakistan’s Finance Minister Ishaq Dar witnessed the signing.
Tariq Bajwa, a senior Pakistani official at the Economic Affairs Division, and Werner E. Liepach, ADB’s Country Director for Pakistan signed an agreement for a $400 million loan for tranche one of the multitranche Second Power Distribution Enhancement Investment Programme.
“The two programmes 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 Liepach.
The Sustainable Energy Sector Reform Programme Subprogramme two 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 programme 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.