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Loan helps privatise power utilities and stem losses

Pakistan will privatise its loss-making power utilities with the help of two loans approved on Thursday by the Asian Development Bank (ADB) totalling US $350 million. A reform programme, supported by the World Bank and the IMF, aims to restructure and privatise Pakistan’s two major utilities, the national Water and Power Development Authority and the Karachi Electric Supply Corporation. The ADB said the Energy Sector Restructuring Programme would reform and restructure “a sector in crisis”. Between 40 and 60 percent of industry, commerce and domestic households commonly avoided paying bills. Another common practice was to siphon off electricity from power lines, it said. In addition, weak governance and a disregard of prudent business practices, meant the sector was suffering from rising fuel prices and the adverse impact of power purchases from independent power producers. This had raised the cost for genuine consumers. “The best way to turn the situation around is to privatise the major power utilities. In addition, reforms and adjustment measures, including the introduction of a market-driven system, are needed to restore the sector’s financial and operational viability and make it self-sustaining,” said ADB project leader Sadiq Zaidi. The long-term goal was to ensure a self-sustaining, efficient and competitive energy sector that could provide the required quantity and quality of power supply competitively to genuine consumers.

This article was produced by IRIN News while it was part of the United Nations Office for the Coordination of Humanitarian Affairs. Please send queries on copyright or liability to the UN. For more information: https://shop.un.org/rights-permissions

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