The Asian Development Bank announced on Thursday that Pakistan will get a $330 million loan to modernize its electricity grid, enabling hydropower to reach major towns.
According to government data, the 250 million-person nation is dealing with persistent power outages, skyrocketing electricity prices, and a spiraling circular debt in the power industry that has reached 1.7 trillion rupees ($5.9 billion).
“These investments will address long-standing constraints in Pakistan’s north-south power corridor, enabling the transfer of up to 3,200 megawatts of clean energy from hydropower plants in the north,” the ADB, which approved the loan on Thursday, said in a statement.
Pakistan’s ageing power grid is plagued by inefficiencies, with significant amounts of energy lost during transmission and widespread theft.
The bank said the loan would “help reduce reliance on imported fuels, improve energy security, and support Pakistan’s transition to a more affordable and sustainable energy mix”.
“This project represents ADB’s strong partnership with Pakistan and our shared commitment to accelerate clean energy transition,” said ADB’s Pakistan director Emma Fan.
In November 2023, Pakistan received a $250 million loan from the ADB to develop its high-voltage transmission network in the districts of Punjab and Khyber Pakhtunkhwa.
A $410 million package to develop Pakistan’s Reko Diq copper and gold mine was also approved by the lender in August.
Pakistan, which is largely dependent on foreign borrowing, just escaped default in 2023 after an economic downturn was exacerbated by a political crisis.
A $7 billion IMF bailout prevented collapse by enabling additional loans from friendly countries.
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