UPDATE 1-ADB seen inking $810 mln loan to Pakistan - official

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ISLAMABAD, July 9 (Reuters) - The Asian Development Bank has negotiated a credit facility of $810 million dollars with Pakistan for power projects, and the inflows are expected to begin in September, an official said on Wednesday.

"The facility to be implemented over the next 10 years has been negotiated with power distribution companies and the formal approval by the bank is expected in August," said an official with knowledge of the transaction.

"The disbursement is likely to start from September or October," said the official, who declined to be identified.

The loan will help power distribution companies upgrade equipment and systems, over-stressed by the rising demand for power, the official said.

Pakistan is facing a shortfall of about 4,000 MW because of rising demand, a failure to build more power stations and transmission line losses.

Across the country, the state power utility cuts power for an hour at a time up to an average of six times a day to handle the shortage.

Fresh foreign inflows will help boost Pakistan's dwindling foreign exchange reserves, which the central bank said last week were at $11.284 billion compared with an all-time high of $16.486 billion on Oct. 31, 2007.

Reserves have fallen sharply largely because of oil payments and withdrawals from Pakistan's stock market, analysts said.

Cash inflows from abroad will also ease pressure on the Pakistani rupee, which set new lows against the dollar this week and has fallen more than 15 percent this year. (Reporting by Augustine Anthony: Editing by Robert Birsel and Jacqueline Wong)