Power sector: Govt anticipates $2bn financing by IFIs in 3 years

ISLAMABAD: The government has projected $ 2 billion external financing in power sector from the international financial institutions during the next three years (2024-27) under OCR (Ordinary Capital Resources), COL (Concessional OCR Lending) of ADB, IPF (Investment Project Financing) of World Bank and loans from Islamic Development Bank and Korean EXIM Bank and KFAED, well-informed sources told Business Recorder.

For Power Distribution Strengthening Project-1, Asian Development Bank will extend OCR funding of $ 400 million during 2024-25.

The project aims at modernization of transmission and distribution system, implementation of revenue collection measures through Asset Performance Management System (APMS) in HESCO, LESCO, MEPCO and SEPCO. The project’s scope has been finalized. PC-1 preparation is under process in consultation with four DISCOs.

Discos’ management: CCoP defers approval to PD proposal

The ADB will extend $ 14.8 million for Pattan Hydropower Project Readiness Financing (PRF) under Concessional OCR Lending for updation of feasibility study. Detailed engineering design, preparation of tender documents and PC-1 for construction of Pattan Hydropower Project ($ 400 MW). CDWP has cleared the concept proposal with the direction that cost of the project will be financed from WAPDA’s own resources.

In 2025-26, ADB will provide OCR Result Based Lending (RBL) of $ 200 million for second access to clean energy investment program (RBL) for Sindh and Punjab.

The project aims to improve access to energy in the remote and underserved areas using renewable energy resources. Without grid connection, renewable based mini/ micro grid will offer sustainable solutions to these areas. ADB is engaged with the Punjab government on scope finalization.

In 2026-27, ADB will extend funding of $ 200 million under OCR for second power transmission strengthening project. The project aims at expanding the transmission capacity to evacuate the renewable energy/ power and to improve quality, stability and reliability of south to north transmission network through construction of a new 500 K DC transmission line from Matiari to Rahim Yar Khan and installation of reactive compensation devices in the selected substations. The project is at preparation stage. Given the large financing requirements for the project, phasing and co-financing arrangements could be considered.

According to sources, World Bank will extend Investment Project Financing (IPF) of $ 340 million for floating solar project. Generation of 300 MW in Tarbela-Ghazi Complex 25 MW in Tarbela reservoir. The project is under preparation/approval process at WAPDA level.

World Bank is also expected to approve financing of $ 350-400 million for National Transmission Modernization Project Phase-II in 2026. The project is at inception stage. Launch of the project depends on the speedy implementation of first phase which has been considerably delayed.

Islamic Development Bank (IsDB) will give loans of $ 140 million for Mohmand Dam Evacuation Project and 2nd power transmission strengthening project.

Korean EXIM Bank is also likely to extend a loan of $ 165 million for Swat Mingora Transmission Line in three years. Pakhtunkhwa Energy Development Organization (PEDO) is constructing hydropower projects in Swat in public as well as private sector in the province.

These projects will be connected with national grid through this transmission line.

KFAED will provide a loan of $ 100 million for construction of Mohmand Dam Hydropower Project. First agreement ($ 25 million) is expected to be signed during CFY.

The sources further stated that Saudi Fund for Development is expected to provide financing Diamer Bhasha Dam Project but nothing has materialized so far. However, project brief and PC-1 for the power generation component of Diamer Bhasha Hydropower Project was shared with SFD on August 17, 2023, and response is awaited.

Copyright Business Recorder, 2024