ADB approves $1.4b for Pakistan energy sector

The Asian Development Bank said Friday it has approved combined loan assistance to Pakistan of nearly $1.4 billion for programmes targeting its power sector, a crucial boost as Islamabad struggles to resolve a years-long energy crisis.

The Manila-based bank said $990 million would go to a power distribution enhancement programme that would introduce a metering system for power companies across the country, helping to reduce loss and improve revenue collection and load management.

A second programme will receive a $400 million loan to support ongoing policy reforms aiming to build an affordable, sustainable energy sector, the ADB statement said.

Pakistan has been struggling to provide enough power to its nearly 200 million citizens for years, and solving the energy crisis was a key campaign pledge for Prime Minister Nawaz Sharif in the run-up to the 2013 general election.

Chronic infrastructure problems and daily-load shedding are complicated by the vicious cycle of "circular debt", brought on by the dual effect of the government setting low electricity prices and customers failing to pay for it, resulting in state utilities being unable to pay their bills and suppliers cutting them off.