ISLAMABAD: Pakistan and the Asian Development Bank have signed two major financing agreements worth a combined 730 million dollars to strengthen the national power transmission system and accelerate long pending reforms in state owned enterprises. Officials said the initiatives aim to stabilise the energy sector and improve governance across key public entities.
The agreements include a 330 million dollar second power transmission strengthening project and a 400 million dollar programme focused on accelerating SOE transformation. The projects are designed to reduce pressure on overburdened transmission lines improve operational efficiency and support structural reforms critical for economic stability.
ADB Country Director Emma Fan welcomed the agreements and praised Pakistan’s commitment to reform. She said the SOE transformation programme comes at a critical time and will reinforce governance and performance improvements across the public sector while power sector investments will help modernise the national grid.
The latest signing follows earlier ADB support of 200 million dollars for power distribution upgrades and recent approval of loans for a new Islamabad to Faisalabad transmission line. These initiatives underline ADB’s expanding engagement in Pakistan’s energy sector at a time when system constraints and losses continue to weigh heavily on the economy.
Energy and policy experts however caution that infrastructure investment alone will not resolve deep rooted inefficiencies. According to analysts accumulated losses of major SOEs have crossed 5.8 trillion rupees with power distribution companies losing hundreds of billions annually due to technical losses weak recoveries and governance gaps which fuel circular debt.
Experts argue that meaningful reform must prioritise restructuring of loss making SOEs including power distribution companies through privatisation concessions or performance based management. Without fixing distribution losses gains from improved transmission risk being absorbed by systemic leakages.
Analysts also link the reforms to Pakistan’s broader energy transition noting that rising capacity payments surplus generation and growing rooftop solar adoption are creating fiscal stress. They say ADB support should eventually extend to managing stranded thermal assets and aligning SOE reform with long term clean energy goals to ensure sustainable economic impact.
