ISLAMABAD: The Japanese government on Tuesday announced to provide a concessional loan of $43 million (Rs5 billion) to Pakistan for the second phase of energy sector reforms programme.

The development policy credit for which the agreement was signed is part of the ‘Energy Sector reform Programme’, co-financed by the Asian Development Bank, the World Bank and the Japanese government.

The Japanese government had provided last June a loan of similar amount for the first phase of the programme. The ADB, World Bank and the Japanese government have worked with the government 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.

The loan was facilitated to achieve the targets by the government.

Briefing a group of newsmen, Takashi Harada, Counselor of Economic and Development at the Japanese Embassy, said: “Our first year target has been achieved, and now we move to the second year of the project with the fresh loan.”

About the structural problems facing the project, Mr Harada opined that the government needs some time to overcome the difficulties. The Japanese government believed that the reform programme would not only promote the energy sector reforms but also improve the government’s fiscal situation and stimulate economic activities.

Notes for the second loan were signed and exchanged between Ambassador of Japan, Hiroshi Inomata and Secretary Economic Affairs Division, Tariq Bajwa.

In his remarks, Ambassador Hiroshi Inomata applauded the government’s efforts towards the energy sector reforms.

“The government of Japan expects the energy sector reforms will contribute to the economic stability of Pakistan as it is the highest priority of the government of Pakistan to resolve the energy issues, and we recognise that the energy sector reforms will unleash the huge economic potential of Pakistan,” he said.

The Japanese government intends to continue providing necessary assistance to Pakistan in the energy sector, while closely monitoring the progress of the reforms in coordination with other development partners, he said.

Speaking on the occasion, Mr Tariq Bajwa thanked the government of Japan for extending their timely development support to the efforts of Pakistan government to address the ongoing energy crises in the country.

Furthermore, this loan is expected to contribute to efficient production of electricity and energy conservation, so as to mitigate the emission of greenhouse gases from the energy sector.

Japanese Prime Minister Shinzo Abe has recently pledged to provide 1.3 trillion yen of public and private climate finance in 2020 to assist developing countries including Pakistan at COP 21 in Paris.

Japanese government will cooperate with the Pakistan government for a fair and effective international framework in which all countries will participate to achieve the below 2C objective.

Representative of Japan Inter­national Cooperation Agency, Kenji Ogasahara told newsmen that a feasibility study has been completed for setting up of a new 660MW Lakhra coal project. The cost of financing of the project is yet to be determined but 80 per cent requirement of the project will be imported while remaining 20pc will be from domestic coal reserves.

Published in Dawn, February 3rd, 2016