The Asian Development Bank (ADB) has greenlit a $330 million loan package for Pakistan’s Second Power Transmission Strengthening Project, a strategic move to bolster the country’s clean energy transmission infrastructure. The financing, comprising a $285 million loan from ADB’s ordinary capital resources and a $45 million concessional loan, will empower the National Grid Company of Pakistan (NGC) to expand and modernise its transmission assets, build institutional capacity, and enhance financial management.
The project, a top priority for Pakistan’s national government, aims to strengthen the domestic transmission network to carry low-cost renewable and hydropower to major load centres. It includes the construction of a new 500kV transmission line spanning approximately 290km, along with upgrades to critical grid infrastructure serving Islamabad and Faisalabad. These investments target longstanding constraints in Pakistan’s north-south power corridor, facilitating the transfer of up to 3,200MW of clean energy from northern hydropower plants.
The initiative is poised to cut Pakistan’s dependence on imported fuels, bolster energy security, and support the country’s transition to a more affordable and sustainable energy mix. It also advances wider power sector reforms and supports state-owned enterprise reforms by enhancing institutional, financial, operational, and governance improvements at NGC.
Emma Fan, ADB Pakistan country director, emphasised the project’s significance: “This project represents ADB’s strong partnership with Pakistan and our shared commitment to accelerate clean energy transition and integration, and to achieve a resilient and sustainable energy sector. By expanding transmission capacity and enabling the delivery of low-cost hydropower, the project aims to improve access to clean energy in the power mix, reduce system costs, and support Pakistan’s long-term and sustainable economic development.”
The Second Power Transmission Strengthening Project aligns with Pakistan’s goals to advance energy security, climate resilience, affordable clean power, and sustainable development. The proposed infrastructure is expected to lower technical losses, improve grid reliability, and support the domestic energy sector’s financial sustainability.
This development follows ADB’s December 2024 sanction of a $200 million loan to modernise Pakistan’s power distribution infrastructure, indicating a concerted effort to overhaul the country’s energy sector. The project’s success could set a precedent for similar initiatives in the region, potentially influencing other countries to prioritise clean energy transmission infrastructure. Moreover, the focus on institutional and governance reforms at NGC could inspire broader reforms in state-owned enterprises, fostering a more efficient and transparent energy sector.
As Pakistan grapples with energy challenges, this project offers a glimpse into a more sustainable and secure energy future. The outcomes will be closely watched by industry stakeholders, policymakers, and international observers, as they could shape the trajectory of Pakistan’s energy sector and its commitment to clean energy transition.