MANILA, Nov. 9 (Xinhua) -- The Asian Development Bank (ADB) has approved an equity investment of 2.75 million U.S. dollars and a guarantee for a 44-million-dollar loan for a gas-fired power plant in Pakistan, said the bank in a press release on Friday.

    The project, involving the development of a 171-megawatt combined cycle low-Btu gas-fired power plant, will provide additional low-cost electricity to consumers to address a looming power shortage, said the multilateral finance institution. Btu, or British thermal units, is a basic measure of thermal energy.

    The facility will be located in Pakistan's south-eastern province of Sindh. Gas will be supplied from the nearby Mari gas fields.

    The power plant will raise the net electricity generation capacity of Pakistan which should help reduce constraints on economic growth caused by power shortages, said ADB. About 60 percent of Pakistan's population have access to electricity from the national grid, and the rest of the population use kerosene, wood and other bio-fuels for lighting, cooking and heating.

    The project will promote efficient management of natural resources, as it will tap an otherwise idle gas resource and pave the way for lower-cost generation given the proximity of the plant to the gas field, said ADB.

    The project, estimated to cost approximately 200 million dollars to complete, will be the first gas-only plant developed under the 2002 power policy of Pakistan and is expected to begin commercial operations in the fourth quarter of 2009.

    A growing population and thriving economy mean that power demand is always accelerating. The average annual electricity demand of Pakistan is currently increasing by 11 percent, with urban areas experiencing significantly higher demand growth. However, power supply has not kept pace. ADB estimates that Pakistan needs to add about 2,000 megawatts of new capacity every year to avoid power shortages.

    ADB is a major source of external investment in the energy sector in Pakistan, having provided about one third of the total finance from external sources.