ISLAMABAD: Pakistan on Wednesday sought substantive additional debt from the Asian Development Bank (ADB) to payoff remaining Rs1.7 trillion circular debt and refinance part of recently acquired Rs1.25tr commercial financing in one-go at longer terms for bringing down expensive power tariffs and improving grid stability through demand growth.
The request was formally made by Power Minister Sardar Awais Leghari to a visiting ADB delegation led by Ms Leah Gutierrez, Director General, Central and West Asia Department though he did not pitch size of the proposed loan to be discussed subsequently. ADB’s total debt stock currently stands at $17bn, the third largest after China and the World Bank.
Informed sources told Dawn that the minister proposed that the Manila-based lending agency should come up with financing instruments and arrangements that could directly make power sector debt more affordable through longer payback period and cheaper interest rates than commercial financing from the market. The ADB’s financing and other instruments could also be leveraged to prolong debt-repayment periods.
This would enable the government to avoid budgetary injections and instead finance debt repayments through power tariff at lower than existing rates and help revive power consumption that had been struggling to pickup for years due to unaffordable electricity rates and resultant expansion of the solar revolution, leading to stability challenges to the national grid and power utilities.
Govt requests lender to help stabilise national grid, improve debt affordability, foster private investment
The government had recently contracted around Rs1.25tr from local commercial banks at Kibor minus 0.9pc to replace previous debts but the central bank’s policy rate has since dropped with a similar pathway projects going ahead. The new debt is being financed through a permanent Rs3.23 per unit debt servicing surcharge on consumers. The government team also sought additional financing for smart metering expansion across distribution companies.
The minister also made a case for increased external support for Pakistan’s contribution towards lowering carbon footprint through solar revolution in the country that had also created challenges to the grid stability. The government team argued that combination of financial support for cheaper debt swaps, smart metering and global environmental contribution could significantly reduce average power rates and help stabilise system through new technologies and demand growth for grid supply.
An official statement confirmed that Mr Leghari “sought ADB’s support in addressing power sector debt repayment challenges, and in building confidence among private investors” and briefed the delegation on key challenges facing the power sector.
“He highlighted constraints in financing, issues related to rupee cover, and high upfront costs,” the statement said, adding that the government was engaging local investors through the Pakistan Business Council to attract private investment in the power transmission sector and to improve market visibility.
The minister also explained to the ADB that under the Indicative Generation Capacity Expansion Plan (IGCEP), excess power capacity which was not required in the future had been removed and the government will not procure additional power as it was now moving towards a competitive electricity market.
He said Pakistan had already transitioned around 20GW to clean energy. “However, despite this significant transition, no dedicated financing was provided for the clean energy shift, nor was funding made available to ensure grid stability,” he was quoted as saying, adding that the transition to renewable energy continued despite these limitations.
He emphasised that serious and coordinated efforts, supported by adequate financing, were now required to keep the grid stable. The ADB team was also apprised about the details of the recently introduced Energy Surplus Package to increase electricity demand and encourage higher power offtake by the private sector.
“He requested ADB’s support on the financing side, particularly in addressing debt repayment challenges, and in building confidence among private investors,” the statement said.
The minister promised that a feasibility report aimed at private investors will be presented soon.
He also shared that the government was planning the rollout of smart meters through the private sector participation under public-private partnership model, with a focus on technology integration and improved efficiency.
Published in Dawn, December 18th, 2025
