World Bank approves $500 million to support energy reforms in Pakistan

WASHINGTON DC: The World Bank has approved $500 million to support energy reforms in Pakistan under the Second Development Policy Credit (DPC-II). The amount will be utilised for structural reforms of the electric power sector that will result in improved financial, technical and commercial performance of the electric sector.

According to the press release of the World Bank, this will improve the financial viability of the power sector and will also reduce the burden of public financing for the power sector. The program is based on three major objectives:

  • Reducing general subsidies and improving tariff policy
  • Improving sector performance and opening the market to private participation
  • Ensuring accountability and transparency

First Development Policy Credit (DPC-I) that was approved in May 2014 was to stabilize the power sector and the purpose of DPC-II is to bring long-term structural reforms for restoring the viability of the electric power sector.

“This operation will further support the country’s efforts in overcoming the energy crisis. It supports Government of Pakistan to implement key reforms towards an efficient and consumer-oriented electric power system,” says Patchamuthu Illangovan, World Bank Country Director for Pakistan. “The reforms are aimed at meeting the needs of the country and its people and economy sustainably and affordably.”

The above-mentioned objectives can be termed as the conditions set by the World Bank. WB has stated: “It is important to reduce across-the-board subsidies, make them more transparent and target them better if the sector is to become financially viable and the government’s fiscal position is to improve.”

“This second operation builds on the achievements of the first”, says Richard Spencer, Lead Energy Specialist.  “The reforms undertaken by the government will have marked economic impacts by bringing better governance and regulation to the sector. Its efforts towards making all the cash flow into the sector transparent so that people are accountable will benefit the power sector in the long run.”

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