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World Bank Grants Over $1bn to Power Pakistan

Posted by on Thursday, March 22, 2012, 9:15
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The World Bank has approved over $1 billion in loans for expansion of Tarbela dam, adding another 1,410 megawatts of electricity into the grid, and for introducing modern irrigation techniques.


The Executive Board of the Washington-based lending agency approved two projects totalling $1.09 billion, said the World Bank’s country office in an announcement on Wednesday.

The Tarbela IV Extension Hydropower Project will add 1,410 megawatts to the dam’s existing power generation capacity, and the Punjab Irrigated Agriculture Productivity Improvement Project is geared towards maximising water use efficiency for increased yield per unit of water.

Cost of power outages

Widespread load shedding is disrupting the lives of Pakistanis and the economic impact of energy shortages is estimated at upwards of 2% of Gross Domestic Product, said the World Bank. Between 2004 and 2009, electricity consumption rose by 22%, while generation capacity remained practically stagnant, it added.

By developing its vast hydropower potential – of which only 15% has been developed so far – Pakistan can significantly reverse the situation and reduce the cost of energy supply mix, the bank suggested.

Tarbela extension

The Tarbela IV Extension Hydropower Project will use the existing dam, tunnel, roads and transmission line for generating additional electricity in summer months when demand for electricity and river flows are high.

The project includes $400 million loan from the International Bank of Reconstruction and Development with a 21-year maturity period, including a grace period of six years. The remaining $440 million will be a concessionary loan.

“The project will enhance Pakistan’s energy security by adding low-carbon, least-cost and renewable hydel power to its energy portfolio,” said World Bank Country Director for Pakistan Rachid Benmessaoud.

“The beauty of this project is that it will help Pakistan reduce the gap between supply and demand of electricity by maximising the benefits of the existing infrastructure of Tarbela Dam, without requiring any land acquisition or relocation of population,” he added.

Irrigation project

The challenges in the water sector are equally daunting, said the World Bank, adding that Pakistan’s water availability is shrinking but vast amount of water is lost due to deteriorating watercourses and wasteful on-farm water use.

The $250 million Punjab Irrigated Agriculture Productivity Improvement Project aims to wean farmers away from traditional flood irrigation to modern methods like drip and sprinkler systems.

“High efficiency systems to be installed in over 120,000 acres of irrigated lands in Punjab would promote water conservation and increase crop yields,” said World Bank’s lead water specialist Masood Ahmad.

Funding for the project comes from the International Development Association, the World Bank’s concessionary lending arm. It carries a 0.75% service charge, 1.25% interest rate, a five-year grace period and a maturity of 25 years.

The World Bank said the project will ensure huge efficiency gains. The overall irrigation efficiency is currently at around 35 to 45%, while efficiency with drip and sprinkler irrigation systems is up to 95%. Precision land levelling saves up to 30% irrigation water and increases fertiliser uptake efficiency which enhances crop yields by up to 20%, the statement added.

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