The government of Pakistan has outlined an ambitious plan to secure $2 billion in external financing for the power sector over the next three years (2024-27). This funding will come from various international financial institutions, including the Asian Development Bank (ADB), World Bank, Islamic Development Bank (IsDB), Korean EXIM Bank, and Kuwait Fund for Arab Economic Development (KFAED). The financing will be used to modernize the country’s power transmission and distribution systems, enhance renewable energy access, and support large-scale infrastructure projects.
Power Distribution Strengthening Project-1 (2024-25): The ADB will provide $400 million in Ordinary Capital Resources (OCR) funding for this project. Its aim is to modernize the transmission and distribution systems and implement revenue collection measures through an Asset Performance Management System (APMS) in Hyderabad Electric Supply Company (HESCO), Lahore Electric Supply Company (LESCO), Multan Electric Power Company (MEPCO), and Sukkur Electric Power Company (SEPCO). The project’s scope has been finalized, and the preparation of the Project Concept (PC-1) is ongoing in consultation with these four Distribution Companies (DISCOs).
Pattan Hydropower Project Readiness Financing (PRF): ADB will extend $14.8 million under Concessional OCR Lending to update the feasibility study, prepare detailed engineering designs, and create tender documents for the construction of the Pattan Hydropower Project (400 MW). The Central Development Working Party (CDWP) has cleared the concept proposal, directing that the project costs be financed from WAPDA’s own resources.
Access to Clean Energy Investment Program (2025-26): ADB will provide $200 million in OCR Result-Based Lending (RBL) for the second phase of this program aimed at improving access to energy in remote and underserved areas of Sindh and Punjab using renewable energy resources. Renewable-based mini and micro grids will offer sustainable solutions in areas without grid connections. ADB is currently engaged with the Punjab government to finalize the project scope.
Power Transmission Strengthening Project (2026-27): ADB will extend $200 million in OCR funding to expand transmission capacity to evacuate renewable energy and improve the quality, stability, and reliability of the south-to-north transmission network. This includes constructing a new 500 kV DC transmission line from Matiari to Rahim Yar Khan and installing reactive compensation devices in selected substations. The project is in the preparation stage, and phasing and co-financing arrangements are being considered due to its large financing requirements.
Floating Solar Project: The World Bank will provide $340 million in Investment Project Financing (IPF) for generating 300 MW of solar power in the Tarbela-Ghazi complex and an additional 25 MW in the Tarbela reservoir. The project is currently under preparation and approval at the WAPDA level.
National Transmission Modernization Project Phase-II (2026): The World Bank is expected to approve financing of $350-400 million for this project. It is at the inception stage, and its launch depends on the speedy implementation of the first phase, which has faced significant delays.
Mohmand Dam Evacuation Project: IsDB will provide $140 million for this project, including funding for the second power transmission strengthening project.
Swat Mingora Transmission Line: Korean EXIM Bank is expected to extend a loan of $165 million over the next three years for this transmission line, which will connect hydropower projects being constructed by the Pakhtunkhwa Energy Development Organization (PEDO) in Swat to the national grid.
KFAED will provide a $100 million loan for the construction of the Mohmand Dam Hydropower Project. The first agreement for $25 million is expected to be signed during the current fiscal year (CFY). Additionally, the Saudi Fund for Development (SFD) is anticipated to provide financing for the Diamer Bhasha Dam Project, although final agreements are yet to be made. The project brief and PC-1 for the power generation component of the Diamer Bhasha Hydropower Project were shared with SFD on August 17, 2023, and a response is awaited.
