Pakistan receives $1.54 billion loan from the Asian Development Bank to develop its energy, transportation, and urban sectors

Pakistan and the Asian Development Bank (ADB) signed six loan and grant agreements worth $1.54 billion on Tuesday to boost energy, transportation, irrigation, and urban infrastructure. 

The loan and grant agreements were signed by ADB country director Yong Ye and secretary of the economic affairs division Mian Asad Hayaud Din. Last Thursday, the ADB Board of Directors authorised the projects. 

The signing event was witnessed by Minister of Economic Affairs Omar Ayub Khan, ADB Vice President (Operations 1) Shixin Chen, and Director General of Central and West Asia Yevgeniy Zhukov. 

Under the $300 million policy-based loan for the energy sector, the ADB is supporting technical and governance changes to boost Pakistan’s energy sector and financial sustainability. 

The funding is part of the ADB’s Energy Sector Reforms and Financial Sustainability Program’s second subprogram, which aims to decrease and manage the cumulative financial shortage known as circular debt across the power supply chain. 

The Asian Development Bank will lend $235 million to rehabilitate the 222-kilometre Shikarpur–Rajanpur portion of National Highway 55 from two to four lanes. 

The N55 is part of CAREC Corridor 5, which connects the ports of Karachi and Gwardar to national and international economic centres to the north. The project will improve network operations and increase the National Highway Authority’s capacity. 

The $650 million loan will be used to upgrade urban infrastructure and extend access to reliable services in five cities in Pakistan’s Khyber Pakhtunkhwa (KP) region. 

The project consists of a $380 million ADB loan and a $5 million grant, with the Asian Infrastructure Investment Bank co-financing a $200 million loan to enhance water supply and sanitation in the cities of Abbottabad, Kohat, Mardan, Mingora, and Peshawar, benefiting up to 3.5 million people. 

The ADB will also provide $15 million under the Second Project Readiness Financing (PRF-2) for Khyber Pakhtunkhwa Cities Improvement to plan and design three subsequent loans over the next three years to provide sustainable urban services and mobility across multiple cities in the province, using a systematic approach to planning, higher project readiness, and a greater focus on institutional capacities for long-term project operations. 

The $603 million results-based loan scheme will use conditional cash transfers to strengthen social security services in Pakistan. Ehsaas, Pakistan’s national social protection and poverty reduction policy, will be supported through the initiative. 

ADB will provide a $600 million regular loan and a $3 million grant from the Asian Development Fund, as well as administer a $24 million grant from the Education Above All Foundation, as part of the Integrated Social Protection Development Program. 

The Kurram Tangi Integrated Water Resources Development Project will receive $5 million in “project readiness financing” from the Asian Development Bank. The facility will ensure high-quality design, stakeholder participation, and project preparedness for quick approval and cost-effective execution in the future. 

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