ISLAMABAD (APP) – World Bank approved the second Development Policy Credit (DPC-II) worth US $500 million to support Pakistan’s energy reforms.
This operation focuses on structural reforms to the electric power sector that will improve its financial, technical and commercial performance, said a statement of the World Bank.
The first operation that was approved in May last year,reflected prior actions taken by the government to support the most pressing needs to stabilize the sector, while the second operation in the series works towards longer term structural reforms that are aimed at restoring the viability of the electric power sector.
“This operation will further support the country’s efforts in overcoming the energy crisis.It supports Government of Pakistan to implement key reforms towards an efficient and consumer-oriented electric power system,” Patchamuthu Illangovan, World Bank Country Director for Pakistan said.
He said the reforms are aimed at meeting the needs of the country and its people, economy sustainably and affordably. The Power DPC-II focuses particularly on policy and institutional actions that will improve financial viability and thus reduce the burden of public financing for the sector.
The programmatic operation is structured around three objectives. First to reducing general subsidies and improving tariff policy.
It is essential to reduce across-the-board subsidies, make them more transparent and target them better if the sector is to become financially viable and the government’s fiscal position is to improve.
Second to improve sector performance and opening the market to private participation.
This will help increase the supply of gas through better and more transparent pricing, and move the electricity sector towards market oriented commercial operation, thus opening it up for privatization.
Third to ensure accountability and transparency. Better monitoring, governance, transparency and rigor in reporting of results in the energy sector are important for implementation of reform and to ensure broader stakeholder support for reforms.
“This second operation builds on the achievements of the first”, says Richard Spencer, Lead Energy Specialist. “The reforms undertaken by the government will have marked economic impacts by bringing better governance and regulation to the sector.
Its efforts towards making all the cash flows into the sector transparent so that people are accountable will benefit the power sector in the long run”, he added.