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Raising Development Impact through Evaluation

Sector Assistance Program Evaluation for the Pakistan Power Sector

Evaluation Document | 31 January 2019

Pakistan has endured a severe energy crisis over the past decade, with long blackouts and industries unable to operate at optimal levels because of the inadequate power supply. The share of oil-fired power plants in the energy mix for power generation in Pakistan contributes disproportionately to the high average cost of power supply, impacting on the welfare of the overall population, particularly the poor.

The Asian Development Bank (ADB) has been the leading development partner in Pakistan, supporting the energy sector with $7 .8 billion approved and $6.2 billion committed from 2005 to 2017. ADB support across all energy subsectors has helped expand and strengthen the national power grid, build power plants, increase access to electricity, and initiate important sector reforms.

As a result of this support, the power system's reliability and efficiency have increased over the years, but only limited progress has been made in addressing the underlying causes of circular debt (i.e., cash shortfalls across the power supply chain) and in strengthening the financial sustainability of the energy sector. Despite these limitations, the situation of the sector would have been even more precarious without ADB support.

Several challenges continue to threaten the Pakistan energy sector, particularly ballooning circular debt that is reaching unsustainable levels. Good governance, financial sustainability, and institutional efficiency are the cornerstones of an energy sector that is functioning well. A comprehensive multipronged approach is needed to help overcome Pakistan's energy hurdles. This evaluation offers a set of strategic and operational recommendations to help ADB make a more meaningful contribution to the sector.

Independent Evaluation's consultations with the government have validated the findings, issues, and recommendations offered by the report and key stakeholders have expressed their commitment to address the issues that affect the sustainability of the energy sector in Pakistan. Abundant opportunities exist for ADB and the government of Pakistan to work together constructively, in collaboration with other development partners, to develop a sustainable and efficient energy sector in Pakistan.