Economic growth: Energy deficit big constraint: ADB report

RECORDER REPORT

ISLAMABAD: The Asian Development Bank (ADB) in its recent report has said that the energy deficit is a major constraint on efficient economic growth in Pakistan.

The report titled '2011 Clean Energy Investments' notes that energy deficit is a major constraint on efficient economic growth in Pakistan. To ensure a sustainable supply of energy, the government of Pakistan launched a number of initiatives to promote private sector participation in the country's energy infrastructure, including the power sector. The two wind projects, Foundation Wind Energy I and II Projects, will help Pakistan meet the electrical capacity shortfall in the country.

The report says that the sponsors of the project requested that all financing for the two projects be obtained in compliance with Islamic Shariah principles. Islamic Development Bank and local banks are raising financing on this basis. To meet the needs of the client, the ADB committed to make innovative use of partial credit guarantee, allowing the project companies to raise all financing in line with Shariah. This would be the first time ADB participates in a debt financing that is entirely compliant with Shariah.

The two projects, the report adds, will encompass engineering, design, procurement, construction, turbine erection, grid tie-in, commissioning, and operation and maintenance (O&M) for two 50 MW wind power plants. They will be located in the Gharo wind corridor 54 kilometers southeast of Karachi, Pakistan's industrial and commercial hub. The projects will be constructed under a date-certain, lump-sum, fixed-price engineering, procurement, and construction contract. Power evacuation from both projects to the national grid will be through a 132-kilovolt line to be built and operated by the National Transmission and Dispatch Company (NTDC), the national grid operator. Power off take arrangements will be through a 20-year take-or-pay energy purchase agreement (EPA) signed by each project company and NTDC through its Central Power Purchasing Agency.