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|July 29, 1998||
World Bank's power sector loans to Pakistan blocked
The World Bank suspended $ 750 million in power sector loans to Pakistan, which was to be provided during July 1998 to June 1999, the Karachi-based English language Daily Business Recorder reported on Tuesday.
It also includes a $ 350 million power sector adjustment loan, the report said, quoting bank sources. The decision to block the funds was taken after Pakistan tested its nuclear devices in May this year in response to Indian tests, but it has been confirmed now, the report said.
The report said loans might be cancelled in the next meeting of the Board of Directors of the World Bank. The International Finance Corporation has also stopped any major funding to Pakistan's power sector.
The IFC, an important donor in the World Bank group, had approved $ 900 million for the nine power projects in Pakistan for fiscal 1998-99. This amount is also under threat of suspension or cancellation, report said.
The report said the blockade of funds is also a result of ongoing government and independent power projects row over tariff issue as some IPPs are beneficiary of World Bank funds.
The government of Prime Minister Nawaz Sharief is seeking reduction in power tariff charged by the IPPs accusing them of using illegal business practices and payment of kickbacks to get fixed higher tariff. The IPPs denied the allegations.
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