Press release

Japan pledges $52 million in a soft loan to support the energy sector reform in Pakistan


Islamabad: 24 April 2014

The Government of Japan has expressed its intention to provide a concessional loan of JPY 5 billion (approximately $52 million) to the Government of Pakistan for supporting Pakistan’s energy sector reforms.  H.E. Mr. Hiroshi Inomata, Ambassador of Japan conveyed this message during his recent call on Senator Ishaq Dar, Minister of Finance, Revenue, Economic Affairs, Statistics and Privatization of Pakistan.  This loan is planned to be co-financed by the Asian Development Bank and the World Bank.  The Government of Japan and the Government of Pakistan will work together to prepare for signing a bilateral agreement on Japan’s loan at an early stage.   

“Japan recognizes that the energy sector reforms are a matter of critical urgency in Pakistan,” stated H. E. Mr. Hiroshi Inomata.  “We are pleased to work with the Government of Pakistan to tackle the power crisis in cooperation with other development partners.” 

The Asian Development Bank, the World Bank and Japan have worked with the Government of Pakistan to develop a reform program and set agreed policy targets to (i) manage tariff and subsidy, (ii) improve sector performance and open the market to private participation, and (iii) improve accountability and transparency in the energy sector.  This loan is provided to facilitate the Government of Pakistan to achieve these targets.  It is expected that pursuing this program will not only promote the energy sector reforms but also improve the government’s fiscal situation and stimulate economic activities.

Japan has been extending active support to the energy sector of Pakistan over the last three decades.  For example, Japan financed thermal power stations in Bin Qasim and Jamshoro, and the Ghazi Barotha Hydropower Project.  Japan has also supported the National Transmission and Dispatch Company to expand its grid systems by building 12 new grid stations, networking 1,487km-long transmission lines and upgrading training facilities.  In power distribution, Japan has contributed a lion’s share in electrification of over 6,000 villages. 

Japan intends to continue to provide necessary assistance in the energy sector at appropriate junctures, while closely monitoring the progress of the reforms by the Government of Pakistan and coordinating with other development partners.