Pakistan on Monday secured a $180 million loan from a foreign development bank for the construction of Mohmand Dam and Hydropower Project. It is still seeking over $500 million to bridge the financing gap.
Pakistan and the Islamic Development Bank (IDB) have signed framework agreements amounting to $180 million for the Mohmand Dam and Hydropower Project, according to the Ministry of Economic Affairs. The financing agreements were signed by Economic Affairs Division Secretary Mian Asad Hayauddin and Special Adviser to the President of IDB Mohammad Jamal Alsatti.
The signing ceremony was witnessed by IDB President Dr Muhammad Al Jasser and Minister for Economic Affairs Omar Ayub Khan.
The total project cost as per approved PC-1 is Rs310 billion, including local funding of Rs238 billion. However, the government needs foreign funding equivalent to $700 million and there is still a gap of about $520 million, according to the ministry officials.
They said that the country was holding negotiations with the OPEC Fund for International Development, Saudi Fund for Development, Kuwait Development Fund and other lenders to secure the remaining financing.
Pakistan has already signed contract with a joint venture comprising CGGC and Descon in March 2019. Prime Minister Imran Khan had performed the groundbreaking ceremony despite the fact that his government could not achieve financial close of the project.
The government faces serious financing constraints after it slashed the Public Sector Development Programme by one-third to Rs700 billion. A few weeks ago, the Ministry of Water Resources requested additional funds for the completion of ongoing schemes in the current fiscal year.
Mohmand Dam and Hydropower Project is a multi-purpose concrete faced rockfill dam being constructed on Swat River located at a distance of about 48 km from Peshawar and 5 km upstream of Munda Head Works in Mohmand District of Khyber-Pakhtunkhwa.
In addition to generating 1,300 megawatts of electricity, it will enhance Pakistan’s water storage capacity by 1,293 million acre feet (MAF), provide food security buffer, supply 13.32 cubic of clean drinking water to the residents of Peshawar and create more than 6,000 direct job opportunities for the local people.
Referring to the agreements, Dr Muhammad Al Jasser stated “the bank takes pride in working alongside its partners to support Pakistan in a strategic project of national importance.”
“We are working with other partners from the Arab Coordination Group along with one of the most experienced authorities in Pakistan, Wapda, to develop a multi-purpose dam that will not only enhance energy and water supply but also improve the livelihoods of local communities and protect them against floods,” said the bank president.
The signing of the framework agreements for Mohmand Dam and Hydropower Project is a testimony to the continuity of the strong partnership between Pakistan and the IDB group, in alignment with the country’s priorities and the bank’s commitments to allocate more financing to climate-friendly projects.
“We are looking forward to ensuring the smooth implementation of the project and we hope to witness its operation in due time,” he said.
IDB President Dr Muhammad Al Jasser also called on Minister for Economic Affairs Omar Ayub Khan. Both sides discussed the ongoing and future economic cooperation between Pakistan and the IDB.
The bank agreed to continue technical and financial assistance for Pakistan.
The IDB president is in Islamabad on a three-day visit to attend the 48th session of the OIC Council of Foreign Ministers.
Khan recognised the bank’s longstanding and trusted partnership with Pakistan and its cumulative financing of $14.5 billion in diverse sectors such as energy, finance, transportation, education and health.
He acknowledged the IDB’s co-financing amounting to $180 million for Mohmand Dam, which would significantly enhance Pakistan’s electricity generation and water storage capacity and create employment opportunities in Khyber-Pakhtunkhwa.
Published in The Express Tribune, March 22nd, 2022.
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