Miga backs Pakistan hydropower plant
The Multilateral Investment Guarantee Agency (Miga) is insuring a US$148.5mn equity investment made by Korean company Star Hydro Power for the construction of a hydro-electric plant in Pakistan.
The organisation is covering the risk of breach of contract over a 20-year period.
Star Hydro Power, a joint venture between Korea Water Resources Corporation (K-Water) and Daewoo, has also received US$327mn of project finance loans from the International Finance Corporation (US$60mn), The Asian Development Bank (US$97mn), the Export-Import Bank of Korea (US$110), and the Islamic Development Bank (US$60mn).
This is the first time Miga has insured a loan by a Korean investor, and the first overseas hydropower project entirely implemented by a Korean company, from construction to operation.
Miga says the Patrind project will cement its relationship with Korea, as it has recently undertaken “extensive investor outreach in Korea in collaboration with various institutions including the government of Korea, export credit agencies, and commercial banks”.
The insurance arm of the World Bank adds that its contribution is playing an important role in providing protection against political risks at a time when private insurers are reluctant to cover long-term loans in Pakistan.
Located 120km from Islamabad, the 147MW, run-of-the-river Patrind plant is the largest privately financed hydro-power development in Pakistan, and will revert to government ownership after 30 years.
It will reduce Pakistan’s reliance on imported fuel oil and lower the country’s electricity generation costs.
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