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ADB to approve $350m for reforms in energy sector

ADB to approve $350m for reforms in energy sector

ISLAMABAD: The Asian Development Bank will shortly approve the energy sector reforms and financial sustainability programme worth $350 million that aims to address fiscal, governance, technical and policy deficits in Pakistan’s energy sector.

According to media, these deficits have adversely impacted the sector’s quality and efficiency of services, and the sustainability of energy infrastructure and finances, thereby challenging Pakistan’s fiscal balance and macroeconomic stability.

The energy sector reforms and financial sustainability programme will cost $350m, out of which ADB will provide $300m and the Export-Import Bank of Korea $50m for the programme. The Ministry of Finance will execute the project in collaboration with ADB, while Ministry of Energy will be the implementing agency.

The ADB will start loan negotiations with the government next month, and it is expected that the loan signing and effectiveness of the loan will take place in November this year. A fact-finding mission of ADB has already evaluated the programme, says the project documents released by ADB on Friday.

The programme is conceived in close coordination with key development partners, and underpins the International Monetary Fund’s recently approved $6bn extended fund facility to curtail the sector’s burden on the annual budget and to stem quasi-fiscal losses and associated negative impact on economic growth.

The programmatic approach and policy-based loan will finance three sub-programmes in 2019-23, and through interlinked policy actions, reform areas of the three sequenced sub-programmes are underpinned on securing financial sustainability; strengthening governance; and reinforcing infrastructure improvements.