ISLAMABAD: The Asian Development Bank (ADB) has said that it will provide $97 million to help fund a new private sector hydroelectricity plant in Pakistan, which will ease power shortages and create thousands of jobs.
“Shops and factories across Pakistan have to scale back operations because of electricity shortages. This new renewable energy generating plant will power businesses and light homes across the country,” said Takeo Koike, Principal Investment Specialist of ADB’s Private Sector Operations Department.
Pakistan is facing an acute shortage of power, estimated at over 4,200 megawatts during peak demand, which has led to worsening brownouts and blackouts across the country, necessitating power rationing, says an ADB handout.
Most of the energy is generated from imported oil, putting a severe strain on finances as global oil prices rise and the rupee depreciates, it said.
The approval of the $97 million loan by ADB board of directors for 147-megawatt run-of-the-river Patrind hydropower plant, between Kunhar and Jhelum rivers near Muzaffarabad, will help mitigate power shortages and diversify the energy mix.
The loan is being provided to Star Hydro Power Limited, which is jointly owned by Korea Water Resources Corporation (K-water), along with Daewoo Engineering and Construction Company and Sambu Construction Company, which are both listed on the Korea Stock Exchange.
The project marks the first investment in Pakistan’s power sector by a consortium of companies from South Korea.
The independent power producer (IPP) – which will revert to government ownership after 30 years – is expected to create 2,700 jobs and generate over $240 million from purchases of local goods and services. It will also avoid about 280,000 tons of carbon dioxide emissions a year. The plant is expected to be up and running in 2016.
ADB said the financing arrangements for the new plant draw on the experiences of the New Bong Escape Hydropower Project – Pakistan’s first private hydro IPP facility, which was partly financed by the bank.
Published in The Express Tribune, October 12th, 2011.