ISLAMABAD: The Asian Development Bank (ADB) on Thursday approved a $330 million loan for Pakistan to expand the national power transmission network under its Second Transmission Strengthening Project that aims to help Islamabad cut reliance on imported fuels and boost energy security, ADB said on Thursday.
The country of 250 million faces chronic power outages, soaring electricity costs and a ballooning circular debt in the power sector that has reached 1.7 trillion rupees ($5.9 billion), according to government data.
The ADB project entails the construction of a new 500-kilovolt, approximately 290-kilometer transmission line and upgrading grid infrastructure that serves Pakistan’s capital Islamabad and the city of Faisalabad.
It is expected to improve electricity reliability and could also benefit millions of households and industries while enhancing energy efficiency and supporting long-term economic growth in the South Asian nation.
“This project represents ADB’s strong partnership with Pakistan and our shared commitment to accelerate clean energy transition and integration, and to achieve a resilient and sustainable energy sector,” the bank quoted its Country Director for Pakistan Emma Fan as saying.
“By expanding transmission capacity and enabling the delivery of low-cost hydropower, the project aims to improve access to clean energy in the power mix, reduce system costs and support Pakistan’s long-term and sustainable economic development.”
ADB said the investments will enable the transfer of up to 3,200 megawatts of clean energy from hydropower plants in the north of Pakistan, highlighting that it will also help reduce reliance on imported fuels and support the country’s transition to a sustainable energy mix.
“ADB’s financing package comprises a $285 million loan from its ordinary capital resources and a $45 million concessional loan,” it added.
The loan will support state-owned enterprise reforms by “solidifying institutional, financial, operational and governance improvements” of the National Grid Company (NGC) of Pakistan Limited, ADB said.
Pakistan relies heavily on external borrowing and narrowly avoided default in 2023 after a political crisis compounded an economic downturn. A $7 billion International Monetary Fund (IMF) bailout helped unlock further loans from friendly nations, staving off collapse.
In Aug., ADB had approved a $410 million package to develop Pakistan’s Reko Diq copper and gold mine, which is one of the largest underdeveloped mines in the world. In late 2023, the bank had loaned Pakistan $250 million to expand its high-voltage transmission network in Punjab and Khyber Pakhtunkhwa provinces.
