The Asian Development Bank (ADB) has announced it is to provide loan assistance of up to $65 million for a new private sector hydropower project in Pakistan.
The funds will go to Mira Power Ltd, a special purpose company controlled by three Republic of Korea companies that will build and operate the 102MW run-of-river facility on the Poonch River in Kotli district.
The project will be carried out on a build-own-operate-transfer basis over 30 years, with the electricity sold to the state-owned National Transmission and Despatch Company Limited under a take-or-pay power purchase agreement. The special purpose company is majority-controlled by Korea South-East Power Co. Ltd. a subsidiary of listed Korea Electric Power Company, with other stakes held by units of the Daelim Business Conglomerate and Lotte.
According to the developers, social and environmental concerns about the project have been addressed through a number of measures which include the construction of a weir designed to prevent flooding, and the development of a fisheries and wildlife conservation plan which will help protect endangered species. Cash compensation and livelihood support will be provided to households affected by the project.
Other project loan assistance for the project will be provided by Export-Import Bank of Korea, the International Finance Corporation and its parallel co-financiers, along with equity from the special purpose company’s shareholders, for a total investment cost of over $367 million. The project will be carried out over 55 months, with expected completion in March 2019.
"Severe power shortages remain a major constraint on Pakistan’s economy, and scaling up the use of hydropower is essential for meeting demand and reducing the country’s reliance on costly imported fossil fuels for electricity production," said Mohammed Azim Hashimi, Investment Specialist in ADB’s Private Sector Operations Department. "This project also supports the Government of Pakistan’s policy of tapping the private sector for power industry investment."
