The funds, to be released in several tranches over 10 years, will support Pakistan’s Power Distribution Enhancement Investment Program for 2008-2017 which is estimated at $5.2 billion.
The country’s national power grid is currently short of generating capacity and is suffering from insufficiently maintained transmission and distribution systems that result in supply interruptions to customers. System losses from distribution companies range from 33% to 10%, above international best practice.
ADB’s funding will support the Government’s ongoing power sector reform program that is designed to provide a safe, reliable supply of power and to meet an estimated annual 8% rise in GDP growth from 2005-2015, and to expand power coverage in rural areas.
“A secure and predictable electricity supply will lead to social and economic benefits and improve conditions for schools, hospitals and other social services,” said Mr. Rune Stroem, a Principal Energy Specialist of ADB’s Central and West Asia Regional Department.
ADB’s investment program will focus on the distribution sector which is burdened with worn out and overloaded infrastructure, power losses, capacity shortfalls, and other constraints. It aims to help the distribution companies provide an additional 12,000 gigawatt-hours (GWh) of electricity towards meeting expected peak demand and to give an additional 30 million people access to power from the national grid.
The program will ensure timely subsidy payment by the Government to the distribution companies. It also aims to improve financial management and corporate governance standards in distribution companies that should help attract more private firms to invest in the sector.