Japan inks accord to extend Rs 5 billion loan for energy sector

The Government of Japan formally agreed to extend a concessional loan of JPY 5 billion (approximately Rs 5 billion) to the Government of Pakistan for supporting the energy sector reforms in Pakistan. The agreement was signed between Hiroshi Inomata, Ambassador of Japan to Pakistan and Ms Yasmin Masood, Additional Secretary, Economic Affairs Division, Government of Pakistan here on Wednesday.
"Japan recognises that addressing power crisis is a matter of critical urgency in Pakistan," Inomata stated at the signing ceremony. "We are pleased to work with the Government of Pakistan to tackle this problem in co-operation with other development partners." This loan is provided as a part of a joint programme to support the energy sector reforms which is co-financed by the Asian Development Bank (ADB) and the World Bank (WB). The ADB, the WB and Japan have worked with Pakistani Government to develop a reform programme and set agreed policy targets to (i) manage tariff and subsidy, (ii) improve sector performance and open the market to private participation, and (iii) improve accountability and transparency in the energy sector. This loan is provided to facilitate achieving these targets by the Government of Pakistan. It is expected that pursuing this programme will not only promote the energy sector reforms but also improve the government's fiscal situation and stimulate economic activities. Japan also plans to provide technical assistance for Pakistan to implement some of the reform programmes, utilising Japanese knowledge.
This loan from Japan will be provided at a concessional rate of Yen LIBOR minus 10bp. The repayment period is 30 years, including the grace period of 10years. Japan has been extending active support to the energy sector of Pakistan over the last three decades. For example, Japan financed thermal power stations in Bin Qasim and Jamshoro, and the Ghazi Barotha Hydropower Project.
Japan has also supported the National Transmission and Dispatch Company to expand its grid systems by building 12 new grid stations, networking 1,487km-long transmission lines and upgrading training facilities. In power distribution, Japan has contributed a lion's share in electrification of over 6,000 villages. Japan intends to continue to provide necessary assistance to Pakistan in the energy sector at appropriate junctures, while closely monitoring the progress of the reforms and co-ordinating with other development partners.-PR