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ADB agrees to give $245m to revamp energy distribution

The Asian Development Bank (ADB) will provide a loan of $245 million to Pakistan to invest in the country’s aging power distribution system aimed at reducing line-losses and minimising unscheduled power breakdowns due to infrastructural bottlenecks.

The financing agreement was signed on Monday by Economic Affairs Division Secretary Nargis Sethi and ADB Country Director for Pakistan Werner Liepach.

“The investment will help upgrade Pakistan’s aging power distribution infrastructure allowing the power generated to reach the consumers,” said Werner Liepach, after the signing ceremony.

The loan is the third tranche of the power distribution enhancement investment programme under the multi-tranche financing facility (MFF). The MFF was approved in 2008 to invest $810 million in priority areas to improve distribution systems and help Pakistan meet its pressing energy needs.

The first tranche of $252 million and second tranche of $242 million were released in 2009 and 2011, respectively. Under the existing four MFFs, the ADB will invest $2.9 billion in Pakistan’s power sector over a ten-year period, according to an ADB handout.

The programme aims to rehabilitate, augment and expand power distribution systems and remove bottlenecks in the energy system.

These power projects will be completed in the next three years and improve performance of the energy distribution system, which is critical to boost the overall efficiency and bridge the widening energy gap in Pakistan, said Liepach.

The project will add 1,881 megavolt-ampere of transformer capacity, 791 kilometres (km) of new transmission lines besides upgrading 399km of the existing transmission lines, bringing stability in the distribution network, said Adnan Tareen, senior project officer energy at ADB’s Pakistan office.

To improve the energy supply chain, the government has planned to continue to rehabilitate power plants, while continuing to upgrade electricity transmission and distribution facilities to reduce line-losses.

Under the plan, Pakistan is supposed to initiate regular efficiency testing of power generation companies by end of this month – a commitment also conveyed to the International Monetary Fund. The government is already working on rehabilitating three plants, aimed to be completed by the end of this year. This will ensure recovery of 500 megawatts (MW) and about 2% boost in overall efficiency.

Moreover, to produce more power, the government also wants to focus on developing hydropower projects.

“Success of the project depends on effective and timely implementation; therefore, we will continue to focus on timely completion of the power distribution enhancement projects,” said Nargis Sethi.

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