ADB approved loan of $325 million to Pakistan for installing Clean Energy sources

The Asian Development Bank (ADB) has approved a $325 million loan to help enhance Pakistan’s energy security by helping install clean energy sources and improve people’s access to electricity in Khyber Pakhtunkhwa Province (KPP) and Punjab, two of the country’s largest provinces.

ADB will also provide a $750,000 technical assistance grant for capacity development and improvement of performance monitoring of the program.

“The project will help meet the growing energy demand to fuel economic activities and increase access to sustainable and more reliable electricity services particularly for vulnerable communities in KPP and Punjab,” said Adnan Tareen, Senior Energy Specialist with ADB’s Central and West Asia Regional Department. “It will increase opportunities for women and girls to obtain energy services and benefits, particularly on households headed by women.”

Energy shortage is one of the issues hampering development efforts and poverty reduction in Pakistan especially in rural areas, where only 57% enjoy electricity access. Although Pakistan has abundant renewable and nonrenewable energy resources, public and private investment in energy infrastructure has remained inadequate, and the system suffers from the low efficiency of generation, transmission, and distribution networks.

KPP, with a population of over 28 million, is one of the poorest provinces in Pakistan and in some of its districts the electrification rate is below 20%. Meanwhile Punjab, a province with the largest population in Pakistan, consumes around 68% of the country’s electricity and gas. The economy is based largely on agriculture and industry, and depends heavily on a reliable electricity supply. Geographic constraints make extending the national grid to such remote areas costly and technically difficult. In these areas, the least-cost option is off-grid renewable energy sources.

The program will install renewable energy power plants including the construction of 1,000 micro-hydropower plants (MHPs) in off-grid areas of KPP. It will also provide and install rooftop solar plants for 23,000 schools and over 2,500 primary healthcare facilities in two provinces and a university in Bahawalpur, Punjab. The MHPs and solar plants will provide electricity to around 1.5 million people in rural areas and to more than 2.6 million students, including 1.2 million girls.

The program will strengthen the capacity of provincial governments to improve the program sustainability, through enhanced monitoring, procurement and internal audit capacities, and promotion of public sector energy efficiency.  The loan is part of ADB’s commitment announced last year to double its annual climate financing to $6 billion for Asia-Pacific by 2020. Out of the total project loan, $16 million will be dedicated for climate change adaptation activities and $247 million for climate change mitigation activities.

ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, ADB in December 2016 will mark 50 years of development partnership in the region. It is owned by 67 members—48 from the region. In 2015, ADB assistance totaled $27.2 billion, including cofinancing of $10.7 billion.

Photo courtesy of Asian Development Bank