Soft loan: France pledges Rs9 billion for hydropower project

Both governments ink the credit facility agreement.

ISLAMABAD:

France has pledged Rs9 billion (€68.3 million) for the construction of the second plant of a hydropower project in Azad Jammu and Kashmir (AJK) to help the country address the current energy crisis.

A financing agreement was signed between the two governments in Islamabad on Friday, said a press release issued by the French embassy.

The agreement was inked by Additional Secretary of Economic Affairs Division Iftikhar Ahmed Rao, French Ambassador to Pakistan Philippe Thiebaud and French Development Agency (AFD) Country Director Nicolas Fornage.

The 48 megawatts (MW) Jaggran II hydropower plant is being constructed about 90 kilometres northeast of Muzaffarabad in AJK, downstream of the existing 30.4MW Jaggran-I project, completed in 2000 also with French support.

Besides the soft loan of €68 million provided to the Government of Pakistan, AFD is also providing a grant for capacity-building of the Hydro Electric Board of AJK.

The project will operate as a run-of-the-river scheme and will not entail any major environmental or social constraints. It will be connected to the national grid, and will help alleviate the energy crisis in Pakistan. Upon its commissioning in 2015, it will provide a reliable source of renewable energy and a permanent supply of electricity for the 1.2 million people residing in Muzaffarabad, with strong social and positive economical impacts.

To reduce the power demand, France, through AFD, is co-financing with the Asian Development Bank a multi-tranche programme on energy efficiency in domestic and industrial sectors. To improve the power supply, AFD is supporting the development of renewable energy sector in the country.

Proparco, a subsidiary of the AFD for the private sector development, has also invested €40 million during the last 3 years in the energy sector and is looking forward to support independent power producers, energy efficiency, agro-industries and microfinance institutions.

As a member of the group of Friends of Democratic Pakistan, France pledged €300 million at the Tokyo ministerial conference in 2009. With the funding agreement for Jaggran II signed with Economic Affairs Division, France has a portfolio of projects amounting to €213 million for the water and energy sector in Pakistan, corresponding to 73% of its pledge.

Published in The Express Tribune, July 7^th, 2012.