ISLAMABAD  - The Asian Development Bank (ADB) has approved a loan of $167.2 million for eight distribution companies in Pakistan to improve the power distribution system to help provide reliable, regular electricity to businesses and domestic consumers.

The investment is part of an ADB $810 million Power Distribution Enhancement Investment Programme approved in 2008. The multi-tranche financing facility (MFF) targets investment in priority areas to reduce power losses and increase the reliability of the power distribution system.

“There is an urgent need for more dependable power distribution and this loan underscores ADB’s commitment to work with the government to resolve the current power crisis,” said Klaus Gerhaeusser, Director General of ADB’s Central and West Asia Department.

The country’s energy crisis has led to a sharp reduction in investment, badly hurt industry and small businesses, and in 2012 lopped an estimated two percentage points off annual gross domestic product. The rising costs of imported fuel oil, which accounts for over a third of the country’s energy generation, are also putting an increasingly unsustainable burden on national finances. Through the MFF facility, ADB has already provided financial assistance for the upgrading of 360 grid stations (66 kV and 132 kV), of which 175 stations have already been completed. The loan is the fourth of the MFF and will increase distribution capacity at 282 grid stations, adding 5,021 megavolt-amperes (MVA) of transformer capacity. The investments are divided among all eight publicly owned power distribution companies totaling 284 subprojects. The first tranche of the MFF is already completed and has shown satisfactory results across Pakistan. The second and third tranches are on track and due to be completed by September 2015 and December 2016 respectively.