The World Bank has approved a USD 500 million loan to cash-strapped Pakistan for energy sector reform in the country reeling under frequent power cuts. The loan, scheduled to be issued in April, was delayed due to government’s failure to implement key conditions imposed by the bank.
After the government fulfilled over half a dozen conditions, including setting up an independent entity to purchase electricity from producers, the loan was finally approved by the World Bank (WB). Finance ministry confirmed in a statement on Thursday that “USD 500 million loan was approved”.
The loan will be utilised for budget financing, unlike project loans that are used for creating assets, it said. Among the conditions met included giving an application to the power sector regulator for determining multi-year electricity tariffs to make power distribution companies attractive for privatisation.
The government also agreed to submit the Energy Efficiency and Conservation Bill to the parliament. It also agreed to set up the Central Power Purchasing Agency (CPPA) Guarantee Limited.