ADB to Provide Pakistan $ 150Mln for Improving Power Generation
By Sarah Kamal 'Pakistan Times' Special Correspondent

ISLAMABAD: The Asian Development Bank (ADB) and Karachi Electric Supply Corporation (KESC) here on Monday signed an agreement to provide the Corporation with a US $ 150 million loan to help increase power supply and coverage in Pakistan's biggest city, industrial and commercial heartland Karachi.

Agreement to this effect was signed by Chief Executive Officer of KESC, Syed Muhammad Amjad and Robert Bestani Director General of ADB's Private Sector Operation.

Secretary Water and Power Muhammad Ismail Qureshi and Country Director ADB, Peter Fedon also witnessed the ceremony. In his address of welcome, Syed Muhammad Amjad highlighted KESC's power expansion plan adding that present installed capacity is 1756 MW and derated capacity is 1249 MW.

He said after rehabilitation, as on June 2007 is 1464 MW. He further said that after completion of rehabilitation the total generation capacity would be augmented to 2244 MW by March 2009.

Syed M. Amjad, said he appreciated ADB's support for the utility's urgent turnaround and for its role in bringing together a big financing package.

The successful turnaround of the utility is viewed as important for future privatization in Pakistan, he remarked.

"This capital injection is essential and will greatly improve the utility's ability to provide a quality service to Karachi", said Robert Bestani, Director General of ADB's Private Sector Operations Department.

Karachi is facing energy crisis and its 16 million residents have to contend with frequent power outages.

ADB's loan will go toward on the corporation's dollars 809million (Rs. 52 billion) capital investment programme. The balance of funding will come from shareholders, the international Finance Corporation and local commercial banks. The move comes less than two years after the utility was privatized.

The investment will increase electricity generation by more than 785 megawatts, from about 1,500 megawatts today, as well as greatly improving the utility's transmission and distribution network and its commercial systems and customer responsiveness.

With the economy rapidly expanding, demand for power in Karachi is increasing well above the national average and this trend is set to continue, putting further pressure on an already strained power sector, not just in Karachi but countrywide.

The Karachi Electric Supply Corporation has an exclusive license to supply electricity to Karachi and surrounding areas, but suffered from years of under investment and poor maintenance before it was privatized.

The US $ 150 million loan is being provided from ADB's ordinary capital resources without a government guarantee.

The loan will have a maturity of 10 years and a grace period on repayments of up to three years.●