ISLAMABAD - World Bank on Monday signed two agreements with Pakistan for provision of US $ 294.7 million loan to improve electricity distribution system and manage water sector. Pakistan has obtained an amount of US $ 256.7 million to improve electricity distribution and transmission. The federal government will re-lend this money to National Transmission & Dispatch Company (NTDC) Limited (WAPDA), and four Electricity Supply Companies in Hyderabad, Lahore, Multan and Islamabad. The ratio of loss of electricity from grid stations to the consumers is high in Pakistan than other regional countries. According to a study, the electricity loss in Pakistan is about one-fourths. Other than theft, obsolete electricity transmission system is also one of the main reasons. Pakistan will pay an interest of 4.2 per cent on US $ 173.6 million, 5.5 per cent on US $ 30.6 million and remaining amount of US $ 52.6 million will carry 1.25 per cent charges in terms of services fee. Pakistan will return this amount during the next 30-35 years. Acting Secretary Economic Affairs Division Junaid Iqbal Chaudhry and Country Director of the WB Yousapha B Crookes inked the agreements. Crookes said the project was a part of a bigger lending programme for the power sector. The total cost of the programme is US $ 500 million and for rest of amount, US $ 244 million, both the parties were doing the necessary work, he added. Junaid said, "Electricity transmission system, which is very old, is causing both energy and revenue losses." The project would assist the distribution and transmission companies to strengthen capacity of the distribution and transmission networks to meet increasing electricity demand. The project would also glue the institutional capacity of the distribution companies. Crookes termed the distribution sector as the most crucial one, as it generates revenue for the rest of the power system. The WB is financing a water sector project in Pakistan after ten years, as Ghazi Brotha was the last mega project financed by the WB. The WB singed the second agreement for water sector capacity building and advisory services. It would lend an amount of US $ 38 million and charge 1.25 per cent interest rate in terms of services fee. The objective of the project is to improve the management and investment planning of water resources in the Indus River System. The WB will also provide support to federal institutions in water resources planning and management. The venture also included better water resources management and development in WAPDA. Two studies will be conducted, which will underpin future investment in the water sector.