ISLAMABAD: The Japanese government on Wednesday formally agreed to grant a concessional loan of Rs5 billion to Pakistan for supporting the energy sector reforms.

This loan is provided as 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).

Formal loan signing agreement took place at Economic Affairs Division here on Wednesday. Japanese Ambassador in Pakistan, Hiroshi Inomata and EAD Additional Secretary Yasmin Masood signed the agreement on behalf of their respective governments.

“Japan recognises that addressing power crisis is a matter of critical urgency in Pakistan,” Ambassador Inomata said at the signing ceremony, and pleased to work with the government to tackle this problem in cooperation with other development partners.

Together with the ADB and WB, Japan has worked with the government of Pakistan to develop a reform programme and set agreed policy targets to manage tariff and subsidy; improve sector performance and open the market to private participation; and improve accountability and transparency in the energy sector. This loan is provided to facilitate achieving these targets by the government. 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 the government to implement some of the reform programmes, utilising Japanese knowledge, the Japanese envoy said.

Japan has been extending active support to the energy sector of Pakistan over the last three decades. Japan financed thermal power stations in Bin Qasim and Jamshoro, and the Ghazi Barotha hydropower project. Japan has also supported the National Transmission and Despatch 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, and 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 coordinating with other development partners.

Published in Dawn, June 5th, 2014