Pakistan, Japan sign $24m accord for energy project

Pakistan and Japan signed here on Thursday a loan agreement amounting to $24 million for the implementation of the second phase of 'Islamabad-Burhan Transmission Line Reinforcement' project.

The project will improve reliability of the national grid and meet the growing demand for electricity transmission through reinforcement of transmission lines necessary for power supply to the Islamabad capital territory and surrounding areas, thereby contributing to the improvement of economic infrastructure of Pakistan.

The objective of the loan is to reinforce existing 220kV transmission lines between the Tarbela hydropower plant and the Burhan substation, which will enable it to supply more than three times electricity as compared to its existing capacity. Islamabad and its surrounding area have witnessed a 20 per cent increase in the peak demand over the past two years.

Japan's State Minister for Foreign Affairs Nobuo Kishi, who arrived in Islamabad on Thursday, and Water and Power Minister Khawaja Mohammad Asif witnessed the loan signing ceremony. Ambassador of Japan Takashi Kurai and Additional Secretary of Economic Affairs Division Anjum Assad Amin inked the agreement. The loan has been granted on very concessional terms and conditions with interest rate and repayment during 30 years, including 10-year grace period.The total loan assistance from the Japanese government stands at $960m and the grant at $156m.

The World Bank has been supporting to expand the Tarbela hydropower project which will increase its generation capacity by 1410MW. The transmission lines to be reinforced by the project will increase the transmission capacity from the Tarbela power plant to the Burhan sub-station, which will contribute to the stable power supply in the Islamabad capital territory.

Japan International Cooperation Agency will implement the loan project whose scope includes civil work and equipment for transmission lines of 220kV between the Tarbela hydropower plant and the Burhan substation.

Speaking on the occasion, Mr Kishi said that so far the Japanese government had been providing assistance to Pakistan in the power sector through the Energy Sector Reform Programme and the National Transmission Lines and Grid Stations Strengthening Project. "I sincerely hope that this loan will not only contribute to bridging the current gap of supply and demand for electricity in Pakistan but will also to the further development of Pakistani economy as a whole," he added.

Japan has been extending active support to the energy sector of Pakistan for three decades. Japan has also financed construction of power generation facilities such as thermal power stations in Bin Qasim and Jamshoro and the Ghazi Barotha hydropower project, and supported the National Transmission and Dispatch Company to expand its grid systems by building grid stations, networking transmission lines and upgrading training facilities.

The Japanese government was committed to continuing providing necessary assistance to Pakistan's energy sector in the future as well, Mr Kishi said.

Prior to the signing ceremony, the Japanese minister held a meeting with Mr Asif who emphasised that Pakistan looked forward to further economic cooperation with Japan for the benefit of the people of Pakistan in line with government's priorities and strategy. He said Pakistan was fast improving its energy basket and had introduced investor-friendly policies to attract foreign investment in the energy sector.

The minister for water and power said that Pakistan's effort toward benefiting from renewable resources of energy was highly appreciated at all forums.He said the new energy mix introduced by the present government was quite rich and had the potential of bringing down the prices of electricity in the country. He invited Japanese entrepreneurs to invest in the energy sector of Pakistan.

On Friday, Mr Kishi will travel to Karachi on the last leg of his visit to Pakistan, and meet Pakistani and Japanese business leaders there.