Modernising power distribution infrastructure: $530m loan approved by ADB

ISLAMABAD: The Asian Development Bank (ADB) has approved $530 million loan to modernise power distribution infrastructure in Pakistan and improve distribution companies’ ability to deliver reliable electricity and additional financing to strengthen the country’s federally-administered social protection programmes and services.

The ADB has approved $330 million in additional financing to strengthen Pakistan’s federally administered social protection programmes and services.

Further, the bank approved $200 million loan to modernize power distribution infrastructure in Pakistan and improve distribution companies’ ability to deliver reliable electricity.

ADB says it has 7 projects for this year, 16 for the next

The result-based loan for the ongoing Integrated Social Protection Development Program (ISPDP) will help expand the grassroots-level social protection to alleviate poverty among poor women and their families.

The programme will enhance the institutional capacity of the Benazir Income Support Programme (BISP), Pakistan’s flagship social protection agency, to transition to adaptive and climate-resilient social protection. This will include enhancing access to education pathways for children and youth from poor families and increasing access to health services and nutrition supplies for beneficiaries who are in disaster-prone areas.

“This programme strengthens Pakistan’s effort to improve human capital development and reduce intergenerational poverty, especially for women who are disproportionately affected during difficult economic situations,” said ADB Director General for Central and West Asia Yevgeniy Zhukov. “ADB’s additional financing will help boost the government’s ability to reach more of the poorest and most vulnerable in Pakistan.”

Approved in December 2021, the ISPDP includes a $600 million loan from ADB’s ordinary capital resources, a $3 million grant from the Asian Development Fund, and a $24.48 million co-financing grant from the Education Above All Foundation. The $627 million programme, in implementation since 2022, has achieved significant results.

“The programme is performing well. It has helped increase access to primary and secondary education for children and adolescents from poor families as well as improved access to health services and nutrition supplies for women and adolescent girls,” said ADB Country Director for Pakistan Xiaoqin (Emma) Fan. “Steady progress has been also made to improve the financial management, procurement practices, internal controls, and information management system for BISP, which is responsible for implementing cash transfer programmes.”

The ADB’s Power Distribution Strengthening Project aims to upgrade and modernize distribution systems to meet the country’s rapidly growing electricity demand. The project will focus on reducing significant energy losses during transit and enhancing the resilience of infrastructure against climate change and disaster-related risks. In its initial phase, the project will support three major distribution companies: Lahore Electric Supply Company (LESCO), Multan Electric Power Company (MEPCO), and Sukkur Electric Power Company (SEPCO), paving the way for more efficient and sustainable energy delivery across these regions.

“This project is part of ADB’s ongoing efforts to address challenges in Pakistan’s power sector,” said ADB Director General for Central and West Asia Yevgeniy Zhukov. “Reliable grid-connected electricity improves the quality of life. The loss reduction and revenue protection measures supported by this project will also help reduce the power sector’s financial losses – alleviating at least one source of strain on the country’s economy.” The project will fund the installation of at least 332,000 advanced metering infrastructure, along with data management and communication systems, and at least 15,800 online transformer performance monitoring systems in LESCO, MEPCO, and SEPCO.

Furthermore, the voltage of four grid stations in SEPCO will also be upgraded from 66 kilovolt (kV) to 132kV, a critical enhancement that will mitigate losses across the transmission system and address growing electricity demand. In LESCO, at least 25 grid stations will be constructed and modernised with provision of critical equipment. High-loss 11kV feeder lines will be replaced with aerial bundled conductor cables, and feeder line configuration will be improved.

“These upgrades will reduce losses, enhance revenue collection, and provide distribution companies with real-time data on electricity consumption and grid performance,” said ADB Principal Energy Specialist Seung Duck Kim. “In the event of extreme weather, they can help identify and isolate faults quickly, reducing the time required for recovery and minimizing outages.”

The project will also study reform actions and policy recommendations that would improve the operational efficiency and overall performance of these three distribution companies.

Copyright Business Recorder, 2024