World Bank Approves $800 Million For Pakistan’s Clean Energy, Human Development Projects

KARACHI: The Board of Executive Directors of the World Bank has approved $800 million to finance the Pakistan Programme for Affordable and Clean Energy (PACE) and the Securing Human Investments to Foster Transformation (SHIFT), a statement issued by the bank said.

The $400 million PACE project focuses on the measures to improve the financial viability of the power sector and support the country’s transition to low-carbon energy.

The PACE prioritises actions needed to initiate critical power sector reforms focused on reducing the power generation costs; better targeting of subsidies and tariffs for the consumers; and improving the efficiencies in electricity distribution with the participation of the private sector.

Additional medium-term reforms are under development, focusing on subsidies, competitiveness, and the power sector sustainability. The goal is to reduce the circular debt over the long-term, it added.

World Bank Task Team Leader for the PACE Programme Rikard Liden said: “[The] power sector reforms are critical to resolving Pakistan’s fiscal challenges. Decarbonising the energy mix will reduce the dependence on fossil fuel imports and vulnerability to price fluctuations because of the movement in exchange rates.”

“[The] PACE prioritises action on such reforms, which must be sustained to address [the] circular debt and set the power sector on a sustainable path.”

The $400 million SHIFT II programme supports a federal structure to strengthen basic service delivery for human capital accumulation. The programme will help improve the health and education services, increase income-generation opportunities for the poor, and promote inclusive economic growth.

Tazeen Fasih, World Bank task team leader for the SHIFT II programme said: “[The] strengthening services that build human capital in a coordinated manner between provincial and federal authorities, along with the improved targeting of social safety nets, will better support families to recover from the Covid-19 crisis, and pave the way for more robust crisis preparedness in the future.”

The SHIFT II reforms increase budget reliability for sustainable financing of child immunisation and quality primary healthcare programmes, promote student attendance, especially for children who are out of school due to Covid-related closures, and support data-driven decision-making.

The programme also supports reforms to encourage women’s participation in the economy by improving working conditions and empowering those in the informal sector.

It supports the enhancement of national safety nets programmes and better targeting to protect the most vulnerable, building resilience to shocks like the Covid-19 pandemic, the World Bank said.

“The reforms underpinning PACE and SHIFT can contribute to facilitating sustainable investments and generate welfare gains for those most in need,” said Najy Benhassine, World Bank country director for Pakistan.

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