The Asian Development Bank (ADB) and the government of Pakistan on Friday signed a $300 million loan agreement to finance the construction of a 300-megawatt hydropower plant in Balakot, Khyber-Pakhtunkhwa.
The ADB Acting Country Director, Cleo Kawawaki, and Ministry of Economic Affairs Division Secretary Noor Ahmed signed the loan agreement for the project, which was approved by the ADB on March 30, 2021.
Minister for Economic Affairs Omar Ayub Khan, Chief Minister Khyber-Pakhtunkhwa Mahmood Khan, and ADB Director General for Central and West Asia Yevgeniy Zhukov, witnessed the ceremony.
Total cost of this project is $755 million out of which the ADB has committed to provide $300 million, while AIIB will provide $280 million.
For this project, the ADB is providing financing at highly concessional rates, ie, LIBOR (6-Month) + 0.5 percent per annum (currently 0.7 percent per annum) for a period of 27 years including a grace period of seven years.
The Energy and Power Department, Government of Khyber-Pakhtunkhwa will be the executing agency, while Pakhtunkhwa Energy Department Organisation (PEDO) will be implementing agency for the project, which is expected to be commissioned by 2026.
While speaking on the occasion, Omar Ayub stated that this run-of-river hydropower project will be constructed on Kunhar River in District Mansehra and generate 300 megawatt electricity. Balakot Hydropower Project will not only help unleash hydropower potential of the country but also improve energy security by increasing clean and affordable energy share in the country’s energy mix.
“The government is working on renewable energy policy to harness immense potential in solar, wind and hydel resources and have good opportunities for investments,” he added.
The minister appreciated the ADB’s valuable support for financing this highly important project.
Mahmood Khan reiterated that the government of Khyber-Pakhtunkhwa is working on development of hydropower potential of the province on fast track basis.
He mentioned that the PTI government was already making huge investments in development of various hydro sites in the province.
Balakot Hydropower project will provide livelihood by providing more than 1,200 jobs during the construction of the project in Khyber-Pakhtunkhwa Province.
Once completed, this hydropower project will provide reliable and cheap energy to national grid.
It will also improve provincial revenues streams for the provincial government and boost economic activities in the country.
“This project shows the strong commitment of PTI government to address the challenges of climate change through development of clean and renewable energy in line with the vision of Prime Minister Imran Khan,” the chief minister added.
Eugene Zhukov, director general ADB assured of the bank’s continued support to help Pakistan diversify its energy sources, increase energy security through renewable and affordable energy mix and implement critical economic reforms.
The director general reiterated the ADB’s commitment to further strengthen and expand its partnership with Pakistan in the priority sector for socio-economic development of the country.
“As Pakistan’s largest development partner in the energy sector, the ADB has been supporting Pakistan as it aims to build its renewable energy resources and cut its heavy dependence on fossil fuels,” said Zhukov. “The Balakot hydropower project will play an important role in helping to advance this objective. ADB will continue to support Pakistan to diversify its energy sources, implement critical reforms, increase energy security, and grow the share of clean power in its energy mix.” The Balakot hydropower project will generate economic activity and improve the skills of local communities.
During construction, the project will generate more than 1,200 jobs, about 40 percent of which will be sourced locally.
A community development program will help to improve livelihood opportunities for affected households in the project surroundings. The project will help meet future national demand for clean and affordable energy and generate revenue for Khyber-Pakhtunkhwa.
It is expected to be commissioned by 2027.
The ADB has helped Pakistan undertake wide-ranging energy sector reforms designed to boost generation, transmission, and distribution capacity by rehabilitating aging power infrastructure. The ADB is also supporting energy efficiency initiatives and public and private sector-led clean energy development projects, the bank stated in an official statement.