950804

$200m ADB loans

to help restructure

and privatise KESC

KARACHI: Loans worth $200 million approved by the Asian Development Bank (ADB) for Karachi Electric Supply Corporation (KESC), besides enabling KESC to meet load forecast for 1998, also aims to facilitate restructuring and privatisation of the corporation by strengthening its technical capability and financial viability.

The loans for the sixth power project of the corporation, will help implement the government's and Bank's strategy to increase the private sector participation in Pakistan's power sub-sector.

The project whose completion is planned in 1998 will finance part of the foreign currency cost required to improve the power system in the city. It will address the problem of frequent and prolonged power outages and will make the corporation's operations more efficient.

The Bank is providing two loans to Pakistan, one is a $100 million loan from the Bank's ordinary capital resources with a repayment period of 25 years, including a grace period of five years, at an interest rate to be determined in accordance with the ADB's pool-based variable lending rate system for US dollar loans.

The other is and SDR 69,287 million loan (100 million dollars equivalent) from the Bank's concessional Asian Development Fund. This interest free loan from the ADB's soft loan window, has a repayment period of 35 years and a grace period of 10 years and will carry a service charge of one percent per annum.

The government will onlend the proceeds of the two loans to KESC, which will use the funds to reinforce and expand its transmission and distribution system in the greater Karachi area to meet the load forecast for 1998, reduce system losses and increase the reliability of power supply.

Two advisory technical assistance grants for restructuring and the privatisation of KESC (3,00,000 dollars) and for developing a demand side management programme for the corporation (90,000 dollars) have also been provided.

The total cost of the sixth power project is $678 million equivalent comprising a foreign exchange cost of $300 millin and a local currency cost of $372 million equivalent.-PPI