The Japan Bank for International Cooperation (JBIC) has signed a loan agreement for up to ¥3.702bn (US$31mn) with the government of Pakistan for the Dadu-Khzudar Transmission System Project.


The loan will finance the installation of a new transmission line from Dadu, Sindh to Khuzdar, Balochistan. The installation is expected to ensure an adequate and stable supply of electric power to Balochistan. The electric power demand in the region’s agricultural sector is 4.6 times greater than the national average, as the power is required to pump groundwater. Demand is also growing in the cotton and mineral industries and for the provision of cold storage facilities for crops.


At present Balochistan’s electric power is supplied through a single transmission line that extends from Guddu in neighbouring Punjab Province to northern Balochistan. The development of agriculture and other industries is being hindered by power cuts of up to eight hours a day.


The loan was signed in conjunction with a ¥19.455bn (US$164mn) with the government of Pakistan for the Indus Highway Construction Project (III).


Pakistan has seen strong economic growth in recent years, in spite of the earthquake of October 2005, with real GDP growth at 6.6% in fiscal year 2005. With a gross national income per capita of US$690 in 2005, Pakistan is still classified as a low income country, however. Infrastructure development of the type facilitated by this loan will play a key role in achieving the sustained economic growth planned by the Pakistani government in its Ten-Year Plan and Poverty Reduction Strategy Paper.


Japan resumed ODA lending to Pakistan in 2005. Lending had been suspended following the country’s nuclear tests in 1998.