Energy: World Bank approves $825m loan for Pakistan

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By Muhammad Luqman

The World Bank has approved a loan package of $825 million for improving Pakistan’s public finance management by introducing a new law and upgrading the country’s dilapidated power transmission system to support new generation in the sector.

But the Washington-based international bank has linked the disbursement of $400 million loan for Public Finance Management with the introduction of a new law in the Parliament, highlighting adverse implications of growing dependency on the lenders on the country’s public policies. The Board of Directors of the WB also approved $425 million loan for National Transmission Modernisation Project-I.

The $425 million loan has been obtained on commercial terms that will be returned over a period of 21 years, including a grace period of six years. The PFM reform programme is financed by the International Development Association, the World Bank’s fund for the poor, with a maturity of 25 years, including a grace period of five years.

The $425 million loan will be utilised to modernise the national transmission system by ehabilitating selected 500kV and 220kV substations and transmission lines. The existing transmission system has the capacity to dispatch about 15,000–17,000 megawatts of electricity safely, which is substantially below the generation constrained peak load of over 20,000 MW, according to the World Bank communiqué.

It said that system reliability has deteriorated substantially, resulting in several instances of major system collapse in recent years, which appear to be increasing in frequency and severity.

 

 

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