New Pakistan Hydro Plant to Ease Nationwide Power Shortages

News Release | 11 October 2011

MANILA, PHILIPPINES - The Asian Development Bank (ADB) will provide $97 million to help fund a new private sector hydroelectricity plant in Pakistan, which will ease power shortages and create thousands of new jobs.

"Shops and factories across Pakistan are having to scale back operations because of electricity shortages," said Takeo Koike, Principal Investment Specialist of ADB's Private Sector Operations Department. "This new, renewable energy generating plant will power businesses and light homes across the country."

Pakistan has an acute shortage of power, estimated at over 4,200 MW during peak demand, which has led to worsening brownouts and blackouts across the country, necessitating power rationing.

Most of Pakistan's energy is generated from imported oil, putting a severe strain on the country's finances as global oil prices rise and the local currency depreciates.

The ADB Board of Directors' approval of the $97 million loan for the 147-megawatt (MW) run-of-the-river Patrind hydropower plant, between the Kunhar and Jhelum rivers near Muzaffarabad, will help mitigate power shortages and diversify Pakistan's energy mix.

The loan is being provided to Star Hydro Power Limited, which is jointly owned by Korea Water Resources Corporation (K-water), along with Daewoo Engineering and Construction Company and Sambu Construction Company, which are both listed on the Korea Stock Exchange.

The project marks the first investment in Pakistan's power sector by a consortium of companies from the Republic of Korea.

The independent power producer (IPP) - which will revert to government ownership after 30 years - is expected to create 2,700 local jobs and generate over $240 million from purchases of local goods and services. It will also avoid about 280,000 tons of carbon dioxide emissions a year. The plant is expected to be up and running in 2016.

ADB has played a leading role in the development of the power sector in Pakistan, and the financing arrangements for the new plant draw on the experiences of the New Bong Escape Hydropower Project - Pakistan's first private hydro IPP facility, which was partly financed by ADB.