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ISLAMABAD: Islamic Development Bank (IsDB) and OPEC Fund are said to have cancelled loans amounting to $ 172 million for 660-MW Jamshoro coal power plant on the request of Government of Pakistan(GoP), well informed sources in EAD told Business Recorder.

IsDB has given a reference of Economic Affairs Division (EAD) letter of October 18, 2021, in which the latter conveyed request of the government of Pakistan (GoP) to cancel $ 100 million financing for the Jamshoro Coal Power Plant Project (Lot-II).

According to IsDB’s Officer in charge, Hammad Hundal, Jamshoro project was approved by the Bank on April 11, 2019 and the financing agreement was signed on November 22, 2019 but the project was never declared effective since all required effectiveness conditions were not fulfilled. As such, no disbursement has been made against the project.

IsBD is of the view that in line with the request of GoP, it is providing notification of the cancellation of full amount of the originally approved financing of $ 100 million for the project and will update the systems and portfolio information accordingly.

“We look forward to continuing our work with the government and partners to further the development agenda of the country, through sustainable interventions that have robust designs with lessons drawn from previous projects and best practices,” said Hundal in his letter to the EAD.

Power projects: Banks are put off financing by rising circular debt

Meanwhile, Director General, OPEC Fund, Abdulhamid Alkhalifa, in a letter to Secretary EAD, Mian Asad Hayaud Din, stated that loan agreement on Jamshoro coal-fired power plant was signed on February 25, 2020 but not been declared effective.

According to Director General OPEC Fund, EAD (GoP) has also informed the Fund through a letter on October 18, 2021 that it has decided to discontinue the project due to significant challenges and environmental concerns related to the project.

OPEC Fund, in its letter of November 8, 2021, informed the Government of Pakistan that the loan agreement amounting to $ 72 million stands cancelled, effective from the date of this letter (November 9, 2021).

“We note Pakistan’s request to re-allocate the financing for this project to Mohmand Dam Hydropower Project. Our operational team is currently considering this project with interest and will contact EAD,” said, Director General, OPEC Fund, in his letter to Secretary EAD.

On February 3, 2022, EAD informed Power Division and its attached organisations about cancellation of loan agreements amounting to $ 172 million for Jamshoro coal fired power plant project Lot-II.

Copyright Business Recorder, 2022

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