Capacity building: ADB provides $513m for agri, energy projects

Soft loan to be used for construction of new Khanki Barrage and improvement of power transmission systems.


Express January 18, 2012

ISLAMABAD:


The Asian Development Bank has decided to lend $513 million to Pakistan for building a new barrage and improving the country’s deteriorating transmission systems.


The Manila-based lending agency and the government signed two separate agreements on Wednesday. The pacts were singed by Secretary Economic Affairs Abdul Wajid Rana and ADB’s Country Director to Pakistan Werner Liepach.

“The ADB would provide a soft loan of $270 million for building new Khanki Barrage and $243 million for improving the country’s power transmission systems on terms of London Interbank Offered rates,” said Abdul Wajid Rana. He said the energy sector project will cover the main cities and also link cities in Punjab and Sindh.

The agreements would largely soothe market nerves as Pakistan has been facing difficulties in seeking new international loans due to strained relations with the US and suspension of budgetary support by the international lenders in response to Pakistan’s failure to introduce power and taxation reforms.

“The projects are absolutely crucial for Pakistan’s economy and it is not every day the ADB signs over half a billion dollar agreements,” said Liepach.

The $270 million would be disbursed as tranche-II of the Punjab Irrigated Agriculture Investment Programme having total estimated cost of $900 million. Similarly, $243.3 million is the third tranche of the Power Transmission Enhancement Programme. The total cost of this programme is $810 million.

Liepach said that the ADB’s executive board is only approving those projects which are ready for implementations in a bid to save commitment charges that Islamabad has to pay if the approved amount remains unutilised.

He said the new barrage will reduce water leakages and lessen flood risks in an irrigated agricultural area of about 1.2 million hectares, which will help ensure prosperity for a large number of farming families.

The new Khanki Barrage on River Chenab in central Punjab will replace the existing headwork built in 1892. The condition of this vital headwork has deteriorated over the years, threatening the water supply to a large area of irrigated plains in Punjab, which is considered to be the country’s bread basket. Current estimates suggest that about 447 million cubic metres of water is lost each year due to the existing barrage’s shutter gates, said Rana.

The new barrage will connect the Lower Chenab Canal with a new head regulator through a lead channel, ensuring a reliable flow of water to the canal and increase the flood-bearing capacity of the structure.  The new barrage is expected to benefit two million people directly or indirectly, boosting economic activities of more than 568,000 farming families depending on the Lower Chenab Canal, where the average farm size is 2.65 ha (6.5 acres).

The power projects will be completed by June 2016 which will augment the network and improve performance of the transmission system, which is critical to increase the overall energy efficiency and to bridge the widening energy gap.

Published in The Express Tribune, January 19th, 2012.

COMMENTS (2)

XX | 10 years ago | Reply

How come they only keep doling out these billions for these projects that are "absolutely crucial for Pakistan's economy" when Zardari and Co. are in power, where were all these loans when Musharraf was there. Weren't these projects crucial to the Pakistani economy then? We know these guys are just gonna pocket all the money and it's us that's going to have to pay for it later on. They probably know it too. Why are they lending so much then?

khan | 10 years ago | Reply

wastage of money... it will be eaten up in no time by the "all powerful group"

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