World Bank approves $375.9 million to modernize Pakistan's power grid

The World Bank's Board of Executive Directors has approved USD 375.9 million in financing for Pakistan's Grid Stability Enhancement Project, the first phase of a 10-year program to modernize the country's electricity transmission network, reduce power outages and integrate more renewable energy into the national grid.

The project falls under the Boosting Energy Security through Transmission in Pakistan (BEST-PAK) Multiphase Programmatic Approach and aims to strengthen Pakistan's power transmission infrastructure, improve grid reliability and support the country's clean energy transition.

"Pakistan's energy challenges are deeply interconnected with its broader economic stability," World Bank Country Director for Pakistan Bolormaa Amgaabazar said. "By investing in advanced technologies for more resilient transmission infrastructure, this project will help reduce electricity costs, bring more renewable energy onto the grid and lay the groundwork for a power sector that better serves households, businesses, industries and the broader economy."

Pakistan's electricity transmission network has long faced grid instability and capacity constraints that limit the delivery of reliable electricity and leave renewable energy projects underutilized. These bottlenecks contribute to frequent power outages, higher electricity costs and lost economic opportunities.

The project will install advanced grid-stabilizing equipment, including Static Synchronous Compensators (STATCOMs) at three 500-kilovolt substations, along with fixed reactors and capacitor banks at 26 substations across the country.

The upgrades are expected to enable 640 megawatts of currently curtailed wind power to reach the national grid, allowing the full utilization of 1,840 MW of installed wind capacity in southern Pakistan. They will also facilitate the integration of about 491 MW of planned private sector renewable energy projects.

The World Bank said the project supports Pakistan's goal of generating 60% of its electricity from renewable sources by 2030, in line with its commitments under the Paris Agreement. It is expected to avoid about 832,500 metric tons of carbon dioxide emissions annually, or more than 20.8 million metric tons over its 25-year lifespan.

"A reliable and modern transmission grid is essential for Pakistan's energy future," said Waleed Saleh Alsuraih, the World Bank's lead energy specialist for the BEST-PAK program. He said the project would pave the way for large-scale renewable energy deployment, stronger energy security and a more commercially oriented transmission sector through infrastructure investment and institutional reforms.

The project also supports the government's plan to restructure the National Transmission and Dispatch Company into specialized successor entities to improve governance, accountability, operational performance and the long-term sustainability of the power sector.

Designed to withstand climate-related risks, the project requires all new installations to meet climate-resilient standards, including elevated platforms to reduce flood risks and equipment capable of operating in temperatures of up to 55 degrees Celsius, helping ensure reliable performance during floods and heatwaves.