WASHINGTON: International Finance Corporation (IFC), a member of the World Bank, is investing $100 million in the 720-megawatt Karot run-of-river hydro project in Pakistan that will help boost power supply.
Karot is one of the largest private sector renewable energy projects in the country, to help address power shortage and spur growth, according to a statement from the IFC.
IFC's support for the $1.7 billion project on the Jhelum River, which has now reached financial close, marks IFC's first project finance engagement with China Three Gorges Corporation (CTGC), one of the world's largest renewable power companies.
IFC has 15 percent stake in China Three Gorges South Asia Investment Limited, acquired in 2015. CTGC is renewable energy platform company in Pakistan, to help develop a series of renewable energy projects in Pakistan that are expected to provide electricity to more than 11 million people.
Pakistan has suffered from a severe power deficit. Before the government of Prime Minister Nawaz Sharif took over in 2013, load-shedding lasted for 18 hours a day on average during the peak hours.
But, as a result of concert government efforts, load-shedding has been reduced to six hours a day, and new supplies added to the national grid has helped spur growth which averaged 3.3 percent for five years till 2013.
The Karot plant, which should be operational in five years, is expected to generate 2,970 gigawatt-hours of net energy annually, providing affordable, clean power to about 3 million residential customers.
Bernard Sheahan, IFC Global Director for Infrastructure and Natural Resources said that improving access to electricity in Pakistan is a priority for IFC and the World Bank Group.
"Our priority has been to support the sponsor and the company in the project's development by strengthening their environmental, social, and corporate governance capabilities, to ensure power is delivered sustainably."
Karot is IFC's largest hydroelectric power project to date and represents IFC's first major collaboration with the China Export Import Bank, China Development Bank, and Silk Road Fund. IFC was able to bring its considerable Pakistan experience and global project finance expertise to help finalize the deal.
The project is a major contribution to the joint World Bank Group Transformational Energy Initiative and Joint Implementation Plan in Pakistan, which aims to mobilize $10 billion in new generation investments to address Pakistan's acute power shortage and improve sector sustainability, the statement said.
Pakistan represents IFC's second-largest engagement in the Middle East and North Africa region, with over $5.6 billion in cumulative investments committed to date.
IFC is supporting a number of hydropower plants in the Jhelum-Poonch Watershed, totalling some 2,750 megawatts. This has been complemented by advisory work supporting river basin management and biodiversity risk mitigation.
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