ISLAMABAD -Pakistan and Asian Development Bank (ADB) on Monday formally signed loan agreement wherein the Bank would provide $400 million to Islamabad for the much needed energy sector reforms.
Werner E. Liepach, ADB’s Country Director for Pakistan and Nargis Sethi, Secretary, Economic Affairs Division, signed the agreement. Finance Minister Senator Ishaq Dar also witnessed the signing ceremony. The Asian Development Bank on April 24 2014 has approved the loan worth of $400 million for Pakistan.
The ADB has provided financial assistance worth of $400 million to Pakistan to support government’s plans to rationalise tariffs and eliminate subsidies by 2016, except for low-income customers. The full programme is expected to total $1.2 billion, with future amounts subject to Pakistan’s ability to withdraw power subsidies and ensure accountability in the sector. The full programme, set to complete by June 2018, spans a total of $1.2 billion investment by ADB, and for the first sub-programme, co-financing is expected from Japan with $49 million and the World Bank with $600 million.
Pakistan is facing severe energy crisis from last few years, as massive loadshedding has once again started in the country with the advent of hot season. Similarly, the monster of circular debt has once again reached to Rs 300 billion after clearing it worth of $500 billion last year. The ADB loan would help in resolving the power sector issues of the country. 
“The programme loan will support key reforms in the energy sector to enable Pakistan ensure uninterrupted supply of cheaper and dependable power to millions of industrial and private consumers who are presently adversely affected by long-hours of power outages.” Werner E. Liepach, ADB’s Country Director for Pakistan said after signing the agreement. He further said, “This important energy sector assistance will propels growth, boost businesses, and create jobs that are critical to reduce poverty in the country”.
Meanwhile, according to press statement issued by ADB, In line with Pakistan’s National Power Policy approved in 2013, the 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’s about 2 percent of its GDP growth every year. 
ADB along with Japan and the World Bank had been working with the government to formulate and implement a five-year plan targeting increased power supply, reduction of losses and boosting the efficiency of the power sector.
The programme will support government’s plans to rationalise tariffs and eliminate subsidies by 2016, except for low income customers. “The reforms will improve transparency and accountability, which will also go a long way in leveraging stronger private sector led investments in the power sector,” Werner Liepach added.
The full programme, set to complete by June 2018, spans a total of $1.2 billion investment by ADB, and for the first sub-programme, co-financing is expected from Japan with $49 million and the World Bank with $600 million.
ADB is the lead development partner in Pakistan’s energy sector supporting a wide range of power sector development activities including energy efficiency, transmission, distribution, cross-border natural gas pipelines, power generation, and renewable energy projects.
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, it is owned by 67 members - 48 from the region. In 2013, ADB assistance totaled $21.0 billion, including co-financing of $6.6 billion.