The ESRP comprised three loans. The largest (Loan 1807) was for $300 million and was designed as a three tranche plus incentive tranche program loan. The other two loans were a $50 million Asian Development Fund loan (Loan 1808) and a $5 million TA loan (Loan 1809). The government availed of the first and incentive tranches of Loan 1807 for $150 million as well as the $50 million Asian Development Fund loan when it complied with the first tranche loan conditions. The second and third tranches of Loan 1807 and Loan 1809, totaling $155 million, were declined by the government in 2003, when overall economic conditions improved. The cancellation of the balance of Loan 1807 meant that ADB no longer had leverage to ensure compliance with second and third tranche conditions, particularly the requirement that the unbundled WAPDA entities be privatized. The lesson here is that ADB should stay engaged with the government to enable follow-up of unfulfilled commitments and covenants as a condition for subsequent assistance in the energy sector. ADB also has a long history of being a major development partner in the energy sector in Pakistan and will continue to be so. Coordination among development partners and the government, particularly in the energy sector, is also strong, as evidenced by the joint preparation of an integrated energy sector recovery plan in 2010. 26 ADB therefore has the opportunity to engage the government in policy dialogue with respect to several critical issues and to formulate an updated plan of action with other development partners on how to best help resolve the current crisis in the energy sector.
Energy Sector Restructuring Program