ISLAMABAD: The Asian Development Bank (ADB) on Monday approved a loan of $900 million for a coal-fired generation unit which will add an additional 600MW of electricity to the national grid.

This will be the first plant in the country to use supercritical boiler technology and will be set up at the existing power plant in Jamshoro.

The project is expected to be completed by December 2018, and its outcome will be a more efficient energy mix through diversification from expensive furnace oil to less expensive coal.

The ADB assistance, which includes $870m from ordinary capital resources and $30m from its concessional Asian Development Fund, will be complemented by co-financing of $150m from the Islamic Development Bank and counterpart funds of $450m from the government.

The ADB assistance will also provide five years of operation and maintenance support after its completion.

The total cost of the Jamshoro project is estimated to be $2.6 billion. Exim Bank of China and the Japan International Cooperation Agency are also expected to contribute funding for the project.

The ADB assistance will add 600MW, Pakistan plans to generate about 9,800MW of electricity through coal to contain rising electricity generation cost.In a statement issued on Monday, Prime Minister Mian Muhammad Nawaz Sharif lauded the loan approval by ABD. He further directed the ministries of finance and water and power to proceed with the conclusion of agreements swiftly and expedite the implementation process.

Mr Sharif said that the project will not only add much needed power to the national grid but also open up the window for bilateral, multilateral and concessional financing for Gaddani Power Park and other conversion projects.

The prime minister was confident that the move will also provide a lease of life to the possibility of using world’s second largest coal reserves at Thar. “As an elected prime minister of Pakistan, I am on track to deliver on promise in bringing the cost of electricity down in the next three to five years,” concluded Mr Nawaz Sharif in the statement.

Finance Minister Ishaq Dar termed the loan approval as a breakthrough and said that it would pave way for constructing more coal-fueled power plant projects.

In his comment, Minister for Water and Power Khwaja Mohammad Asif stated that the bidding documents were currently under preparation expeditiously.

International tenders are expected to be invited by the end of February next year, and the power plant will set precedent for other coal-fire projects and would also help in developing indigenous source of coal at Thar coal deposits.