Sustainable Energy Sector Reform Programme: government, ADB sign $400 million loan accord

Pakistan and Asian Development Bank (ADB) on Friday signed $400 million loan agreement for financing of Sustainable Energy Sector Reform Program.Talking to Business Recorder, Secretary Finance Tariq Bajwa said that $300 million would be provided by ADB and €100 million in co-financing by the Agence Francaise de Development (AFD). He further stated that the amount would be disbursed to Pakistan in one go before Eid-ul-Fitr. Finance Minister Ishaq Dar witnessed the signing ceremony of the agreement for the loan between government of Pakistan and ADB, which was signed by Tariq Pasha, Secretary Economic Affairs Division (EAD) with Ms Xiaohong Yang, Country Director ADB.
According to Finance Division, the objective of the program is to improve government's energy sector in order to support economic growth. The reform program will help in improving the financial viability of the power sector by better managing tariff and subsidies, improving sector performance and opening the market to private participation. This will result in better transparency and accountability of institutions in the power sector.
Speaking on the occasion, the Finance Minister acknowledged ADB's support and partnership with Pakistan in the energy sector and emphasized on government's determination to resolve the issue of energy in Pakistan. He said that additional electricity will be added to the national grid by early 2018 through completion of ongoing projects, which will significantly reduce load-shedding.
A statement issued by EAD after the loan signing ceremony stated that ADB and AFD have approved over $400 million in loans to support Pakistan's efforts to provide a more reliable and secure energy sector. The $300 million ADB assistance, the third such loan under the Sustainable Energy Sector Reform program, brings the bank's total financing to $1billion since 2014. AFD will add €100 million in co-financing.
Under the program, Pakistan is undertaking reform initiative that will reduce energy subsidies and adjust tariff policy, besides improving sector performance and open the market to private participation, and increase accountability and transparency. The reform measures aim to address financial viability and reduce costs to taxpayers. Specific measures include recently agreed legislation that will improve governance through more clearly defined roles for both the government and the energy sector regulator, and reduce debt levels in the energy sector.
"As co-financing partner in the reforms project, AFD is committed to promoting green energies in Pakistan through investments in low-carbon-emission energy generation in line with COP21 Paris agreement approved by the Parliament of Pakistan" said Jacky Amprou, AFD Country Director for Pakistan.The statement added that ADB and AFD are committed to support the Government of Pakistan's strategy to solve the energy crisis and to fight climate change, including through Vision 2025, Pakistan's comprehensive plan for economic growth. The plan aims to increase power generation, provide uninterrupted electricity to all, and improve demand management.