Pakistan to get $250mn loan from ADB for two power projects

Pakistan is expected to get $250 million in financing from the Asian Development Bank (ADB) for two power transmission projects.

According to a media report, this initiative, as disclosed by sources from the Economic Affairs Division (EAD), involves a major loan of $235 million accompanied by a smaller $15 million loan, both designated for bolstering Pakistan’s power sector.

The primary loan entails a variable interest rate comprising the Secure Overnight Financing Rate (SOFR), a 0.60% margin minus a 0.10% credit, and a 0.20% maturity premium. 

Additionally, a commitment charge of 0.15% per annum will be applied to the unwithdrawn loan amount, starting 60 days after the loan agreement.

Scheduled for repayment over 25 years, this includes a 5-year grace period, with repayments in 40 semi-annual installments from May 2029 to November 2048. 

The borrower is also responsible for exchange risk costs, ensuring payments to the ADB are made in foreign currency and equivalent to the Rupee as per the State Bank of Pakistan’s rates. A 2% annual penal interest applies to overdue payments beyond 30 days.

The secondary $15 million loan will incur a 2% annual interest post the grace period, with similar repayment terms to the primary loan. 

Both loans emphasize the borrower’s obligation to cover all related charges and fees to foreign lenders, underscoring the commitment to improve Pakistan’s power transmission capabilities significantly.