Japan to provide Rs5bn for energy sector reforms

[Edevelop]

ISLAMABAD: The Government of Japan would provide a concessional loan of JPY 5 billion approximately Rs5 billion to Pakistan for supporting the energy sector reforms.

An agreement to this effect was signed between Ambassador of Japan to Pakistan, Hiroshi Inomata and Additional Secretary, Economic Affairs Division, Ms. Yasmin Masood, said a statement received here Wednesday.

Addressing the signing ceremony, the Ambassador said that Japan recognises that addressing power crisis is a matter of critical urgency in Pakistan.

"We are pleased to work with the Government of Pakistan to tackle this problem in cooperation with other development partners", he added.

This loan is provided as a part of a joint programme to support the energy sector reforms which is co-financed by the Asian Development Bank (ADB) and the World Bank (WB).

The ADB, the WB and Japan have worked with the Government of Pakistan to develop a reform programme and set agreed policy targets to manage tariff and subsidy, improve sector performance and open the market to private participation, and improve accountability and transparency in the energy sector.

This loan is provided to facilitate achieving these targets by the government and it is expected that pursuing this programme will not only promote the energy sector reforms but also improve the government's fiscal situation and stimulate economic activities.

Japan also plans to provide technical assistance for the GoP to implement some of the reform programmes, utilizing Japanese knowledge.

This loan from Japan will be provided at a concessional rate of Yen LIBOR minus 10bp and the repayment period is 30 years, including the grace period of 10years.

Japan has been extending active support to the energy sector of Pakistan over the last three decades. For example, Japan financed thermal power stations in Bin Qasim and Jamshoro, and the Ghazi Barotha Hydropower Project.

Japan has also supported the National Transmission and Dispatch Company to expand its grid systems by building 12 new grid stations, networking 1,487km-long transmission lines and upgrading training facilities.

In power distribution, Japan has contributed a lion's share in electrification of over 6,000 villages and intends to continue to provide necessary assistance to Pakistan in the energy sector at appropriate junctures, while closely monitoring the progress of the reforms and coordinating with other development partners.

Japan to provide Rs5bn for energy sector reforms