ADB approves $245 million loan for eight DISCOs

Loans to be used to curb transmission and distribution losses.

ISLAMABAD:

The Asian Development Bank (ADB) has approved a loan amounting to $245 million for eight power distribution companies (DISCOs) in the country. The loan has been approved as part of a project to reduce power distribution and transmission losses that plague the entire energy chain.

According to an official at the Ministry of Water and Power, some power distribution companies currently face up to 47% losses in transmission and distribution, which contributes to the other major problem of ballooning circular debt. He said that the loan will help improve the power distribution system by slashing these losses.

According to a statement issued by the ADB, the investment is part of an ongoing $810 million Power Distribution Enhancement Investment Program agreed on in 2008. The multi-tranche financing facility (MFF) targets investment in priority areas to reduce power losses and increase the reliability of the power distribution system. Through this facility, the ADB has already provided financial assistance for the upgradation of 250 grid stations (66 kiloVolts and 132 kiloVolts) across Pakistan, out of which work on 125 grid stations has been completed. Tranche 3, approved on December 14, 2012, will increase the distribution capacity of 106 grid stations and will include the construction of 14 new grid stations.



“The energy sector in Pakistan is suffering due to shortages in generation and system bottlenecks at the distribution and transmission level. The ADB has made available four MFFs, amounting to $2.9 billion, to address these system constraints,” said Werner E Liepach, ADB country director in Pakistan.

“Energy conservation and efficiency is the fastest and cheapest way of increasing electricity supply. This project will not only reduce electricity lost during delivery to customers, but will also improve the quality of service,” said Rune Stroem, director for the Energy Division in ADB’s Central and West Asia Department. He encouraged the government to continue with more focused reforms in the sector. Without effective reforms, he said the investments in the sector will lose their real impact.



The project will add 1,881 megavolt-amperes (MVA) of transformer capacity and will improve the transmission system by adding 791 kilometres (km) of new transmission lines, and upgrading 399 km of the existing 66 -kilovolt (kV) and 132-kV transmission lines.

“The investments are divided among all eight publicly-owned distribution companies. The first tranche is already completed and has shown satisfactory results. The second tranche is also on track. The newly approved tranche is expected to further improve the distribution system,” said Adnan Tareen, senior project officer at the ADB Pakistan Resident Mission. “However, in order to further improve performance, the government should prioritise the monitoring and accountability of the system,” he added.

Published in The Express Tribune, December 25^th, 2012.