Pakistani authorities on Friday signed an agreement with the Asian Development Bank (ADB) for a multi-tranche loan of 510 million U.S. dollars for the development of renewable energy.
The program is the first of its kind in Pakistan, and is one of the first to be developed under ADB's evolving clean energy and efficiency initiative, ADB said in a news release.
Pakistan's energy supplies are highly dependent on oil imports, the cost of which accounts for a large share of the country's total import bill. In addition, demand for power is outstripping supply. Electricity needs are projected to reach 162,590 megawatts (MW) by 2030, from 15,000 MW in 2005.
While thermal power (coal, oil and gas) is expected to meet much of the future demand, there is enormous scope for more environment-friendly options. Renewable energy accounts for only 180 MW of Pakistan's present power output, said the Manila-based finance institution.
The first project under the ten-year loan will finance a set of small to medium hydropower plants in Pakistan's Northwest Frontier Province and Punjab.
The program will expand Pakistan's power supply, especially in rural areas, to serve about 600,000 new domestic connections for 4.8 million people.
"Small to medium-sized hydropower plants offer the greatest renewable energy potential for Pakistan, while possibilities also exist in promoting greater use of wind, solar, and biomass power," said Mr. Peter Fedon, ADB's Country Director for Pakistan.
Power and energy, together with transport connectivity and water, are major constraints in Pakistan to achieving the kind of high economic growth that can benefit the poor.
Under its clean energy and efficiency initiative, ADB is planning to expand energy efficiency operations in its developing member countries to 1 billion dollars per year.