ISLAMABAD: After the implementation of key power sector reforms, the board of the Asian Development Bank (ADB) is likely to approve a loan of $242 million on December 10 to help Pakistan improve its electricity transmission infrastructure in Manila.
According to official sources, the ADB board would approve financing the power distribution enhancement project, which focuses on improving electricity transmission. The financing will help remove bottlenecks in the power distribution system by rehabilitating and expanding the infrastructure.
The government has already accepted the key demands of the international financial institutions (IFI) for reforms in the power sector with the Pakistan Electric Power Company (PEPCO) already been dissolved, autonomous board of directors for distribution, generation and transmission companies would be formed shortly and power tariff would be gradually increased to eliminate the $2 billion power subsidies.
The project will be implemented in Faisalabad, Gujranwala, Hyderabad, Islamabad, Lahore, Multan, Peshawar, and Quetta to address the gap between the power demand and generation, which has emerged as the core problem. The rapid growth in the demand of electricity in the country has put the existing power infrastructure under severe stress and has caused power transmission and distribution system bottlenecks resulting in prolonged power cut offs.
This has badly affected the industrial productivity as well as slowing down the economic growth. Sources said the IFIs have stressed that the power sector reforms would help in cost recovery tariffs, enabling power generation and distribution companies to strengthen their financial position. It would help attract additional investment for system expansion and rehabilitation.
The lack of investment is attributed as one of the major reasons for the poor power distribution infrastructure in the country. They said the government has assured adopting ADB’s procurement guidelines to hold international competitive bidding (ICB) for supply contracts of or more than $500,000 and for works costing more than $5 million.
While national competitive bidding (NCB) would be used for goods and works above $100,000. The ADB financing would be utilised in investing in subprojects including secondary transmission grids (STG), expansion, augmentation, extension, conversion and rehabilitation.
The installation of STG transmission lines for energy loss reduction would be an important objective. The project will add 3,380MVA of transformer capacity, 387 km of new distribution lines and improve supply to customers.
