MANILA, Apr 24, 2014 (Xinhua via COMTEX News Network) — The Asian Development Bank (ADB) said Thursday that it has approved a 400 million U.S. dollars loan to help Pakistan end its chronic energy crisis which has crippled industries and caused social unrest.
“The loan is part of an assistance program which will underwrite reforms needed to make the energy sector affordable, reliable, sustainable, and secure,” said Klaus Gerhaeusser, ADB’s director general for the Central and West Asia department, in a statement.
The Manila-based lender noted that Pakistan’s chronic power shortages have slowed gross domestic product growth by at least 2 percentage points a year. Private investment has also been sharply reduced and power sector subsidies have caused high fiscal deficits and elevated public debt.
Pakistan’s government rolled out the National Power Policy in July 2013 to solve these problems. ADB, Japan, and the World Bank worked with the government to develop a five-year plan and set milestones to implement the policy.
ADB said the energy sector reform program will support the overhaul of existing tariffs and subsidies as Pakistan’s government moves to eliminate subsidies by 2016, except for low- income customers.
The full program is expected to cost 1.2 billion U.S. dollars, with future amounts subject to further discussions between the Manila-based lender and Pakistan’s government.
For the first sub-program, ADB said cofinancing from Japan of 49 million U.S. dollars and the World Bank of 600 million U.S. dollars is expected. The full program is expected to be completed by June 2018.