ISLAMABAD

The Asian Development Bank (ADB) is likely to approve $400 million for Pakistan within current week for the much-needed energy sector reforms.

The ADB in June this year had delayed the approval of the second tranche worth $400 million of a $2 billion loan for energy sector reforms due to the government’s failure in meeting the required actions demanded by the lender. “We are hoping that board of the ADB in its meeting, to be held on Friday, would approve $400 million for Pakistan as we have taken all the agreed actions,” said an official of the Economic Affairs Division while talking to The Nation.

He further said Pakistan had received $500 million from the World Bank last week, adding that our energy sector reforms package is on track.

The ADB along with Japan and the World Bank have been working with the Pakistan government to formulate and implement a five-year plan targeting increased power supply, reduction of losses and boosting the efficiency of the power sector.

Under the Asian Development Bank’s five-year $6 billion loan for Pakistan, over $2 billion will be spent on the energy sector for improving the crumbling state-owned distribution and transmission networks and ensuring the financial viability of the sector by reducing electricity subsidies and line losses due to theft. The Manila-based lender had released the first tranche of $400 million in June last year.

The ADB’s sustainable energy sector reform programme targets robust policy, capacity development and institutional strengthening action to reduce crippling power shortages that according to estimates, are costing the country about 2 per cent of its GDP growth every year. The programme would support government’s plans to rationalise tariffs and eliminate subsidies by 2016, except for low income customers.

The ADB is committed to provide $1.02 billion to Pakistan during ongoing financial year 2015-2015. The bank had so far provided $83.19 million to Islamabad under foreign economic assistance during first quarter (July-September). Meanwhile, Pakistan received $1.7 billion as economic assistance from multilateral and bilateral donors in first quarter (July-September) of the current financial year, which is18.4 percent of the annual estimated foreign assistance of about $9.18 billion.

Pakistan’s foreign exchange reserves will increase to nearly $21 billion after receiving $500 million from World Bank and $400 million from Asian Development Bank. The country’s current foreign exchange reserves are $19.75 billion wherein State Bank of Pakistan’s held reserves (SBP) are $14.7 billion and $5.04 billion of commercial banks.