ADB lends Pakistan $1.4bn to roll out smart meters
December 1, 2015
The Asian Development Bank (ADB) has approved combined loan assistance of nearly $1.4bn for two programmes that will help Pakistan roll out an AMI advanced electricity metering infrastructure.
The $990m multi-tranche second power distribution enhancement investment programme will introduce an AMI system for power distribution companies across the country, which will aim to reduce losses, improve revenue collection and load management, and strengthen the financial viability of the sector. The $400m loan for the second sub-programme of the sustainable energy sector reform programme supports ongoing policy reforms, which aim to build an affordable and secure energy sector.
“Nearly 20 per cent of generated electricity is lost due to high technical and commercial losses and measures like the installation of the AMI system are necessary to counter this,” said Adnan Tareen, senior energy specialist. “The two programmes, collectively, will help create a more efficient, transparent, modern and sustainable energy sector.”
Pakistan is struggling with an ongoing power crisis that puts pressure on real GDP growth. The electricity supply-demand gap of 5000MW is blamed for a sharp decline in manufacturing.
The government of Pakistan – with ADB as its lead donor partner – has been taking a number of measures to overhaul and reform the sector, but inefficiencies and gaps remain due to the growing demand for electricity. Distribution power companies face financial problems with customer tariffs being lower than the cost of service, and high system losses resulting in delayed payment to generating companies.
The distribution enhancement programme will install advanced smart meters at distribution companies across the country to reduce power losses and boost company revenues. A modern, computerised customer billing and information system will also be put in place to improve service quality. This infrastructure will be rolled out in phases, covering Pakistan’s major cities and industrial and commercial hubs.
The second sustainable energy sector reform sub-programme supports policy measures to address extensive debts in the electricity sector, as well as further market reforms to improve the efficiency of public sector power companies and to encourage competition through more private sector participation. To improve energy efficiency, minimum energy performance standards have been prepared for different electric appliances, and the government has also launched a privatisation programme for distribution and generation companies. The sub-programme also takes steps to increase access to energy sector data that will encourage demand for information and a culture of transparency and public participation in monitoring the sector.
“The two programmes are major steps towards resolving Pakistan’s energy crises, said Werner Liepach, ADB’s country director for Pakistan. “The state-of-the-art new metering system will minimise losses and allow effective load management and transparency, thus ensuring a robust and sustainable power supply needed to lift growth and job creation.”
ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth and regional integration. Established in 1966, it is owned by 67 members – 48 from the region. In 2014, ADB assistance totalled $22.9bn, including co-financing of $9.2bn.