ADB approves US$325 mn loan to improve Pakistan’s access to clean energy

Pakistan will be able to enhance its energy security and the people’s access to electricity through the installation of clean energy sources in Khyber Pakhtunkhwa Province (KPP) and Punjab, made possible by a US$325 million loan approved by the Asian Development Bank (ADB).

AUS$750,000 technical assistance grant for capacity development and improvement of performance monitoring of the program will also be provided by ADB. The loan is part of ADB’s commitment announced last year to double its annual climate financing to US$6 billion for Asia-Pacific by 2020.

Pakistan’s efforts in development and poverty reduction are hampered by energy shortage especially in rural areas, where only 57% enjoy access to electricity.

Pakistan has abundant renewable and non-renewable energy resources, but public and private investment in energy infrastructure has remained inadequate, and the system suffers from the low efficiency of generation, transmission, and distribution networks.

“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.”

KPP, with a population of over 28 million, is one of the poorest provinces in Pakistan. The electrification rate in some of its districts 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.

It will also 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.

Out of the total project loan, US$16 million will be dedicated for climate change adaptation activities and US$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.