ISLAMABAD (November 30 2008): Pakistan and Asian Development Bank (ADB) here on Saturday inked a $810 million financing facility agreement, under which the latter would provide the amount for 'Power Distribution Enhancement Multi-Tranche Financing Facility (MFF)' to Pakistan help improve its power management and efficiency in the energy sector.
The Loan Agreement of the first tranche of $242 million (OCR) and $10 million was signed by ADB's Country Director Rune Stroem and Secretary, Economic Affairs Division, Farrakh Qayyum, while the Project Agreement were signed by ADB's Country Director, Managing Director Pepco Fazal Ahmad Khan and the chief executives of the eight power distribution companies (Discos). The Executing Agency (EA) for the Investment Programme is the Pakistan Electric Power Company (Pepco).
The programme will be implemented by eight power distribution companies ie Fesco, Gepco, Hesco, Iesco, Lesco, Mepco, Pesco, Qesco. Pakistan's power distribution system faces technical and fiscal deficits. The system faces major challenges which include deterioration in system efficiency, reliability and quality of electricity supply, high technical and commercial losses, curtailed availability of electricity, and low voltage profile.
EAD Secretary Farrukh Qayyum thanked ADB for extending this financial facility for improving the transmission and distribution of electricity in the country. Addressing distribution constraints through power sector reform and investment planning and financing is urgently required and is Government's top most priority, he said.
He said that the Government is exploring the financing for not only power generation projects but also for power management and efficiency to improve the distribution network. "We appreciate that this distribution enhancement facility with the ADB shall help the government to overcome the energy crisis in the country & improve distribution efficiency", he said.
This Investment project is part of the long term investment program for energy security and part of the power transmission and distribution development programme of Pakistan. The investment programme will enhance the overall power distribution system efficiency across all eight distribution companies in the country by improving the reliability, quality and stability of the distribution system.
The investment program of $252 million is structured in at least three tranches with a batch of 'Subprojects' and their implementation support. The first tranche would finance nearly 160 'Subprojects' and a Subproject support component.
The subprojects will improve power distribution infrastructure through rehabilitation, augmentation and expansion of the secondary (below 132 KV) transmission network, and relieve the power system from distribution bottlenecks and constraints.
Specifically Discos will adhere to regulatory requirements and comply with the security standards, about 12 gigawatt hours (GWh) of additional power will be supplied through the national grid annually, the system will be capable of meeting peak demand, with electricity outages significantly reduced; and 60 million additional people will have access to electricity from the national grid.
In his remarks the ADB Country Director expressed hope that this financing facility would help Pakistan improve its transmission and distribution in the power sector. He added that infrastructure can play an important role in the economic growth of any country. He assured the support of his organisation to Pakistan for achieving this objective.