MANILA, PHILIPPINES — The Asian Development Bank (ADB) has approved combined loan assistance of nearly $1.4 billion for two programs that will help Pakistan resolve some of the key issues in the power sector, allowing it to lift growth, boost incomes, and cut poverty.
The $990 million multitranche Second Power Distribution Enhancement Investment Program will introduce an Advanced Electricity Metering Infrastructure (AMI) system for power distribution companies across the country, which will help reduce losses, improve revenue collection and load management, and strengthen the financial viability of the sector. The $400 million loan for the second subprogram of the Sustainable Energy Sector Reform Program supports ongoing policy reforms, which aim to build an affordable and secure energy sector.
“Nearly 20% of generated electricity is lost due to high technical and commercial losses and measures like the installation of the AMI system are necessary to counter this,” said Adnan Tareen, Senior Energy Specialist. “The two programs, collectively, will help create a more efficient, transparent, modern and sustainable energy sector.”
Pakistan is struggling with an ongoing power crisis which puts pressure on real GDP growth. The electricity supply-demand gap of 5,000 megawatts is blamed for a sharp decline in manufacturing.
The Government of Pakistan—with ADB as its lead donor partner—has been taking a number of measures to overhaul and reform the sector, but inefficiencies and gaps remain due to the growing demand for electricity. Distribution power companies face financial problems with customer tariffs being lower than the cost of service, and high system losses resulting in delayed payment to generating companies.
The distribution enhancement program will install advanced ‘smart’ meters at distribution companies across the country to reduce power losses and boost company revenues. A modern, computerized customer billing and information system will also be put in place to improve service quality. This infrastructure will be rolled out in phases, covering Pakistan’s major cities and industrial and commercial hubs.
The Sustainable Energy Sector Reform Program Subprogram 2 supports policy measures to address extensive debts in the electricity sector, as well as further market reforms to improve the efficiency of public sector power companies and to encourage competition through more private sector participation. To improve energy efficiency, minimum energy performance standards have been prepared for different electric appliances, and the government has also launched a privatization program for distribution and generation companies. The subprogram also takes steps to increase access to energy sector data that will encourage demand for information and a culture of transparency and public participation in monitoring the sector.
ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, it is owned by 67 members – 48 from the region. In 2014, ADB assistance totaled $22.9 billion, including cofinancing of $9.2 billion.