ISLAMABAD: The Asian Development Bank (ADB) has approved a $325-million loan to provide electricity to off-grid communities in Khyber Pakhtunkhwa (KP) and Punjab.
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, according to an official handout.
It is the second loan the ADB approved in less than 24 hours, bringing fresh approvals to $525 million. Unlike the previous loan of $200 million that will be used for budget financing, the fresh borrowings have been obtained for project implementation.
The ADB approved the loan under the Access to Clean Energy Investment Programme. France is also expected to contribute $78.6 million for this programme.
It will be implemented over a period of 10 years and will support the provincial governments of KP and Punjab to achieve increased access to sustainable and more reliable electricity services for vulnerable communities.
However, the disbursements are linked with achieving the 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, according to the ADB.
The loan will help inclusion of 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 KP and more than 65% in Punjab live below $1.25 per day. This ratio is significantly higher on the revised poverty line of $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.
