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ADB approves third tranche of $245m loan for power distribution companies

The Asian Development Bank (ADB) has approved a loan worth $245 million as third tranche for eight power distribution companies to improve distribution system in Pakistan, according to a statement on Monday.

According to ADB, the investment is part of the ongoing $810 million power distribution enhancement investment program agreed in 2008.

The multi-tranche financing facility targets investment in priority areas to reduce losses and increase the reliability of the distribution system, it said.

Through this facility, the ADB has already provided financial assistance for the upgradation of 250 grid stations (66kV and 132kV) across the country, of which work relating to 125 grid stations has been completed.

The third tranche approved on December 14 will increase the distribution capacity of 106 grid stations, including construction of 14 new grid stations, it said.

“Pakistan’s energy sector is suffering due to shortages in generation and system bottlenecks at distribution and transmission levels. The ADB has made available four multi-tranche financing facilities, amounting $2.9 billion to address these system constraints and will continue to assist Pakistan in the energy sector,” said Werner E Liepach, country director of ADB in Pakistan. The project will help distribution companies improve reliability and quality of power supply to customers. The outcome will be removal of power system bottlenecks through distribution system rehabilitation, augmentation, and expansion, according to the statement.

“Energy conservation and efficiency is the fastest and cheapest way to increase electricity supply. This project will not only reduce electricity losses during delivery to the customers but will also improve the quality of service,” said Rune Stroem, director for energy division of ADB. He encouraged the government to continue with more focused reforms in the sector.

Without effective reforms, the investment in the sector will lose its real impact, he said.

The project will add 1,881 megavolt-amperes (MVA) of transformer capacity and will improve the transmission system by adding 791 kilometres of new transmission lines and upgrading 399km of the existing 66kV and 132kV transmission lines.

“The investments are divided among all eight publicly-owned distribution companies, totaling 106 subprojects. The first tranche is already completed and has shown satisfactory results. The second tranche is also on the track. The newly approved tranche is expected to further improve the distribution system,” said Adnan Tareen, senior project officer at the ADB Pakistan Resident Mission.

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