ADB to invest $2 billion in Pakistan’s energy sector

KARACHI: The Asian Development Bank (ADB) plans to invest $2 billion in Pakistan’s energy sector within the next three years, as the South Asian nation’s power supply chain is paralyzed by Rs12 billion a month in circular debt, the Ministry of Energy said in a statement.
After a Wednesday meeting with Energy Minister Omar Ayub Khan and Special Assistant to the Prime Minister on Petroleum Nadeem Babar, the ADB’s team, headed by its director for Central and West Asia, Werner Liepach, also expressed interest in facilitating technical studies for gas storage, as Pakistan is facing a gas deficit.
The Asian lender this week released $1 billion to shore up Pakistan’s public finances and help strengthen its slowing economy, while another $300 million were released to help the government address financial sustainability, governance, and energy infrastructure policy constraints in the energy sector.
In July, the International Monetary Fund (IMF) approved a three-year $6 billion extended fund facility (EFF) to finance the government’s economic reform program that aims to put Pakistan’s economy on the path of sustainable and inclusive growth. The bailout program is expected to catalyze at least $38 billion in financing from Pakistan’s development partners.
The ADB, Pakistan’s top energy sector partner with a $2.1 billion portfolio discussed energy sector projects with the ministry’s Power Division, and it was decided that a comprehensive portfolio review meeting will be held by the end of this month.
The ADB team was apprised of the New Renewable Energy Policy, which will be placed before Pakistan’s Council of Common Interest (CCI) in its scheduled meeting by the end of the month. The team was briefed on various steps that have been undertaken to boost the efficiency of the system and campaign against power theft, the ministry’s statement said, adding that the government’s circular debt capping plan has reduced the debt’s growth from Rs39 billion a month to Rs12 billion. 
On Dec. 6, Liepach observed that Pakistan’s “is a longstanding chronic issue ailing the country’s power sector.”
“A comprehensive and realistic Circular Debt Reduction Plan, assisted by ADB in close coordination with other development partners, is the cornerstone of this subprogram. The plan aims to drastically cut the new flows of circular debt and provides policy directions on addressing accumulated circular debt,” he said.