The Asian Development Bank today approved a USD 400 million loan to Pakistan to help carry out reforms for overcoming power shortages in the country.
Secretary Economic Affairs Division Nargis Sethi and ADB's Country Director for Pakistan Werner Liepach signed an agreement in this regard here.
"The ADB has approved a soft and concessionary loan for Pakistan, which has the best terms and conditions with interest rate of even less than 2 per cent annually," Pakistan's Finance Minister Ishaq Dar said.
He said the ADB had also recently approved a loan of USD 900 million for Jamshoro coal power project to produce cheaper electricity.
ADB's Country Director for Pakistan Liepach, speaking on the occasion, said the loan would support key reforms in the energy sector to ensure uninterrupted supply of cheaper and dependable power to millions of industrial and private consumers, who were presently adversely affected by long power outages.
"This important energy sector assistance will propel growth, boost businesses and create jobs that are critical to reduce poverty in the country," said Liepach.
In line with Pakistan's National Power Policy approved in 2013, the sustainable energy sector reform programme targets robust policy, capacity development and institutional strengthening action to reduce crippling power shortages that according to estimates are costing the country about 2 per cent of its GDP growth every year.
The ADB along with Japan and the World Bank have been working with the Pakistan government to formulate and implement a five-year plan targeting increased power supply, reduction of losses and boosting the efficiency of the power sector.
The programme would support government's plans to rationalise tariffs and eliminate subsidies by 2016, except for low income customers.
"The reforms will improve transparency and accountability, which will also go a long way in leveraging stronger private sector led investments in the power sector," Liepach said.
The full programme, set to complete by June 2018, spans a total of USD 1.2 billion investment by the ADB and for the first sub-programme co-financing is expected from Japan with USD 49 million and the World Bank with USD 600 million.
