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WB approves $1.09bn to support Pakistan’s growth agenda

The World Bank has approved two projects amounting to $1.09 billion aimed at supporting Pakistan’s growth agenda for reducing poverty, a bank statement said on Wednesday.

The projects included the Tarbela-IV extension hydropower project, which will add power generation capacity of 1,410 megawatts and the Punjab irrigated agriculture productivity improvement project, which is geared towards maximising water use efficiency for increased yield per unit of water, it said.

The lending agency said that the availability of electricity is of crucial importance for the economic growth and development of Pakistan.

Widespread load-shedding is disrupting the lives of ordinary Pakistanis and the economic impact of energy shortages is estimated at an upward of two percent of the GDP. By developing its vast hydropower potential – of which only 15 percent has been developed – Pakistan can significantly reverse the situation and reduce the cost of energy supply mix, it said.

“The $840 million Tarbela-IV extension hydropower project will use the existing dam, tunnel, roads and transmission line for generating additional electricity in summer when the demand for electricity and river flows are high,” the statement added.

“The Tarbela-IV hydropower project will enhance Pakistan’s energy security by adding low-carbon, least-cost and renewable hydel power to its energy portfolio,” said Rachid Benmessaoud, World Bank Country Director for Pakistan.

“It will help Pakistan reduce the gap between supply and demand of electricity by maximising the benefits of the existing infrastructure of the Tarbela Dam without requiring any land acquisition or relocation of population, it said.

The direct beneficiaries will be millions of energy users, including industry, households and farmers who would get more electricity at a lower cost and suffer a fewer blackouts,” said Benmessaoud.

The challenges in the water sector are equally daunting. Pakistan’s water availability is shrinking, while the demand is increasing. Vast amounts of water are lost due to deteriorating watercourses and wasteful on-farm water use, it said, adding that improved water use efficiency and new technology that promotes crop diversification will be critical going forward.

The statement said that $250 million Punjab irrigated agriculture productivity improvement project is aimed at getting maximum productivity out of every drop of irrigation water by weaning farmers away from the traditional and wasteful flood irrigation to more modern methods such as drip and sprinkler irrigation systems, which in turn will encourage crop diversification.

“High efficiency systems to be installed over 120,000 acres of irrigated land in Punjab would promote water conservation and increase crop yields,” said Masood Ahmad, World Bank’s lead water specialist.

“This would have demonstrative effect and the local industry would develop for installation of such systems as it happened in the case of groundwater development over the last three decades after installation of groundwater wells by the government for controlling water-logging and salinity,” said Ahmad.

Tarbela-IV extension hydropower project includes $400 million loan from the International Bank of Reconstruction and Development (IBRD).

It is a fixed spread loan with a maturity of 21 years, including a grace period of six years. The remaining $440 million of the Tarbela project and $250 million for Punjab irrigated agriculture productivity improvement project are credits from the International Development Association (IDA), the World Bank’s concessionary lending arm, it said.

These carry a 0.75 percent service charge and 1.25 percent interest rate, five years of grace period and a maturity of 25 years, the statement added.

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