Pakistan, ADB sign $325m loan deal for clean power supply

Project will provide vulnerable people with increased access to electricity

ISLAMABAD: Pakistan and the Asian Development Bank (ADB) on Tuesday signed an agreement for a $325-million loan to provide electricity to off-grid communities in Khyber-Pakhtunkhwa and Punjab as almost half of Pakistan’s rural population remains deprived of electricity.

With the signing of the agreement, Pakistan will be eligible to draw the money, subject to progress on the Access to Clean Energy Investment Programme.

In November last year, the board of directors of the Manila-based lender approved the loan to enhance Pakistan’s energy security by helping install clean energy sources and improve people’s access to electricity in two of the country’s provinces.



The project will be implemented over a period of five years from 2017 to 2021 and will provide support for achieving increased access to sustainable and more reliable electricity services for vulnerable communities.

A handout issued by the Ministry of Finance stated that the programme was gender-sensitive as the design envisaged provision of 7% electricity from micro-hydroelectric power plants to women-headed households in K-P.

The project will also ensure that 30% of solar facilities are installed in the girls-designated schools in each province.

The programme includes allocations for providing training to women to enable them to use these electricity instruments.



The loan disbursement is linked with achieving agreed results aimed at ensuring provision of energy to those remote and rural areas that are outside of the reach of the national power grid.

The main beneficiaries will be the off-grid communities who live in far-flung rural areas, where socioeconomic indicators are relatively lower than in the rest of the country.

The loan will help include isolated and comparatively disadvantaged segments of the rural population.

In K-P and Punjab, energy poverty coincides with economic poverty, especially in rural areas. Almost 70% of the rural population in K-P and more than 65% in Punjab live below the income threshold of $1.25 per day. This ratio is higher on the revised poverty line at $1.90 per day.

Compared to Pakistan’s overall electrification rate of 69%, only 57% of the rural population has access to electricity, according to project documents.



Electricity coverage further declines to 20% in some of the remote and rural districts in these two provinces.

K-P with a population of over 28 million is one of the poorest provinces in Pakistan and in some of its districts the electrification rate is below 20%.

Punjab, which has the largest population among all provinces, consumes around 68% of the country’s electricity and gas.

Owing to the difficult terrain and geographic location, transmission lines could not be extended to such remote regions. Additionally, such ventures are usually deemed financially unfeasible.

It is highly likely that those areas will not be receiving access to electricity from the national grid in the near future, according to ADB projections.



The programme will help install renewable energy power plants including 1,000 micro-hydroelectric power plants (MHPs) in off-grid areas of K-P. It will also provide and install rooftop solar plants for 8,187 schools and primary healthcare facilities in K-P.

In Punjab, the solar facilities will be installed at 17,400 schools and public facilities with at least 30% of these facilities being used by females.

The MHPs and solar plants will provide electricity to around 1.5 million people in rural areas and to more than 2.6 million students, including 1.2 million girls.

The project will help meet the growing energy demand to fuel economic activities and increase access to sustainable and more reliable electricity services, particularly for vulnerable communities in K-P and Punjab.