Pakistan: Renewable Energy Development Sector Investment Program - Tranche 2

Sovereign Project | 34339-033

Summary

The Project, with focus on wind and other renewable energy projects, will provide power supply to consumers in the region. Specifically the guaranteewould help mobilize long-term debt and equity from domestic and international investors needed to fund wind and other renewable energy power plants operated by independent power producers (IPPs). It is expected that these IPPs would add cumulative generating capacity of 150 megawatts (MW) to 250 MW.

Latest Project Documents

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Consulting Notices

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Procurement Notices

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Procurement Documents

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Project Name Renewable Energy Development Sector Investment Program - Tranche 2
Project Number 34339-033
Country Pakistan
Project Status Approved
Project Type / Modality of Assistance Loan
Source of Funding / Amount
Loan 2726-PAK: MFF - Renewable Energy Development Sector Investment Program PFR2
Ordinary capital resources US$ 200.00 million
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Drivers of Change
Sector / Subsector

Energy - Renewable energy generation - wind

Gender Equity and Mainstreaming No gender elements
Description The Project, with focus on wind and other renewable energy projects, will provide power supply to consumers in the region. Specifically the guaranteewould help mobilize long-term debt and equity from domestic and international investors needed to fund wind and other renewable energy power plants operated by independent power producers (IPPs). It is expected that these IPPs would add cumulative generating capacity of 150 megawatts (MW) to 250 MW.
Project Rationale and Linkage to Country/Regional Strategy

The guarantee, with direct counter-indemnity from the Government, would help mobilize long-term debt and equity from domestic and international investors needed to fund wind and other renewable energy power plants operated by independent power producers (IPPs). It is expected that these IPPs would add cumulative generating capacity of 150 megawatts (MW) to 250 MW.

One of the aims of REDSIP is to foster private sector investment in renewable energy. Despite efforts by the Government, private sector investment into this subsector has not been forthcoming, especially for technologies like wind power generation that is not yet proven in Pakistan. Further, long-term commercial bank debt for energy projects is constrained because of the existing heavy exposure of the banks to the sector and the higher power sector off-take risk caused by the below cost recovery electricity tariff. For these reasons, IPP-operated renewable energy power plant projects are the least of the priorities of banks and have failed to reach financial closing especially for technologies not proven in Pakistan. Letters of intent (LOIs) for wind power plants have been issued since 2006, but so far none has materialized to a full scale operation.

Impact Increase production and use of clean energy
Project Outcome
Description of Outcome Increase financing to renewable energy projects
Progress Toward Outcome
Implementation Progress
Description of Project Outputs Underwrite up to $200 million of guarantees for the benefit of renewable energy project lenders
Status of Implementation Progress (Outputs, Activities, and Issues)
Geographical Location Country wide
Safeguard Categories
Environment B
Involuntary Resettlement C
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects

Only category B subprojects will be eligible for the Project. The IPPs are responsible for the conduct of environmental assessments for the subprojects in compliance with the following documents: (i) ADB's Safeguard Policy Statement (2009). (ii) the REDSIP environmental assessment and reporting framework, and (iii) national environmental regulations and guidelines. For each subproject, an initial environmental examination (lEE) report and environmental management plan (EMP) with a corresponding implementation budget will be prepared.

For the sample subproject sites, the perceptible negative environmental impacts such as noise and visual intrusion are negligible, mainly because of the considerable distance between the turbines and the nearest settlements.

Involuntary Resettlement Only subprojects classified as category C projects that do not have land acquisition or through private negotiated sales without incurring right of eminent domain, under ADB's Safeguard Policy Statement (2009) will be selected. The sample subprojects are located on barren unoccupied land and very little impact is expected, if any at all. The land has been leased to AEDS for the duration of the subprojects by the Sindh Government, and will be or has been subleased to the IPPs.
Indigenous Peoples Indigenous peoples plan will be implemented in conformity with: (i) all applicable laws and regulations of Pakistan, and (ii) ADB's Policy on Involuntary Resettlement (1995), or equivalent guidelines acceptable to ADB, if deemed necessary. All candidate subprojects are expected to be classified as category C under ADB's Policy on Indigenous Peoples (1998), and a indigenous peoples' plan is not required.
Stakeholder Communication, Participation, and Consultation
During Project Design For the initial projects, it is envisaged that the sites will be barren and not occupied with the nearest villages at least 5 kms away. Stakeholder consultation was performed at the initial stages during the feasibility study of the subprojects. During tafiff determination, National Electric Power Regulatory Authority held public hearings. Additional consultation will be held during the investment due diligence for the subprojects.
During Project Implementation
Business Opportunities
Consulting Services No consulting services requirements are envisaged.
Procurement For each subproject, relevant goods and works financed by ADB guaranteed loans will be produced with due attention to economy and efficiency, and in accordance with procedures which meet the relevant requirements of ADB's Procurement Guidelines (2007, as amended from time to time) for guarantee operations. Given that the Subprojects under consideration are privately-owned IPPs, capital expenditure will be taken into account in NEPRA's tariff determination (economy) and operational performance will be critically dependent on the quality of goods and services procured (efficiency).
Responsible ADB Officer F. Cleo Kawawaki
Responsible ADB Department Central and West Asia Department
Responsible ADB Division Energy Division, CWRD
Executing Agencies
Alternative Energy Development BoardMujahid Sadiq, Head, Int'l Assistance Mgt. Officemujahid@aedb.org344-B, Prime Minister's Secretariat nister's Secretariat" Pakistan
Timetable
Concept Clearance 08 Sep 2005
Fact Finding -
MRM 18 Nov 2009
Approval 13 Dec 2010
Last Review Mission -
PDS Creation Date 27 Jul 2010
Last PDS Update 30 Mar 2015

Loan 2726-PAK

Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 200.00 Cumulative Contract Awards
ADB 200.00 - 0.00 0.00 %
Counterpart 0.00 Cumulative Disbursements
Cofinancing 0.00 - 0.00 0.00 %

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Safeguard Documents

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Evaluation Documents

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