World Bank approves $375.9 million loan to upgrade Pakistan’s power grid

The World Bank has approved a financing package of $375.9 million for Pakistan to support the first phase of a long-term program aimed at modernizing the country’s electricity transmission infrastructure

ISLAMABAD: The World Bank has approved a financing package of $375.9 million for Pakistan to support the first phase of a long-term program aimed at modernizing the country’s electricity transmission infrastructure, improving grid reliability, and accelerating the integration of renewable energy into the national power system.

According to an official announcement, the funding marks the launch of the first phase of a 10-year energy sector development program designed to strengthen Pakistan’s aging power transmission network. The investment will primarily be utilized to upgrade the national electricity grid, improve transmission efficiency, and reduce the frequency of power disruptions affecting millions of consumers across the country.

The initiative is expected to enhance the capacity and reliability of Pakistan’s power transmission system, enabling it to handle a greater share of electricity generated from renewable sources. As part of the project, an additional 640 megawatts (MW) of wind energy will be integrated into the national grid, supporting the government’s broader objective of increasing clean energy generation and reducing dependence on costly fossil fuels.

The World Bank said that a modern and more resilient transmission network would improve the overall efficiency of electricity delivery while helping to lower system losses and operational costs. These improvements are expected to benefit residential, commercial, and industrial consumers through a more stable and reliable electricity supply.

Officials noted that the project has also been designed to strengthen Pakistan’s resilience to climate-related challenges by building a more secure and climate-adaptive power system. The upgraded infrastructure is expected to improve the grid’s ability to accommodate renewable energy while ensuring uninterrupted electricity transmission during periods of increasing demand and extreme weather conditions.

In addition to improving energy security, the project is projected to deliver significant environmental benefits. According to the World Bank, the initiative is expected to reduce carbon dioxide emissions by approximately 832,000 tonnes annually, contributing to Pakistan’s commitments to mitigate climate change and transition towards a cleaner energy mix.

The financing will also support the government’s ongoing power sector reform agenda by strengthening institutional capacity, improving transmission planning, and enhancing the operational performance of the electricity sector. These reforms are intended to improve the financial sustainability of the power sector while attracting greater investment in renewable energy projects.