The French and German development banks have agreed to finance the construction of a hydroelectric plant in Pakistan.
The 35MW Harpo plant will be located in north-west Pakistan. AFD, the French development agency, has agreed to lend €50mn to the project, with Germany’s KfW pledging €20mn.
Harpo will be the largest power generation facility in the Gilgit-Baltistab region of the country. The borrower is the Pakistani government, which struck the deal in a meeting with the German equivalent.
The facility, to be built on a tributary of the Indus river will include three grid stations, a 132kv transmission line of 70km and a bridge across the river, accessing the main road.
Earlier in the month, KfW agreed to lend US$125.4mn to the 122MW Keyal Khwar plant, also to be constructed on a tributary of the Indus River, but this time in the Dasu district of the country. The construction will be undertaken by China’s Sinohydro Corporation.
The government has in recent months made serious promises to the hydroelectric sphere. In November 2013, the minister of finance Muhammad Ishaq Dar pledged support for the Dasu and Diamer Basha projects, which would add a total of 8,800MW to the grid.
He said that the IFC would lend US$3bn to the projects, but when contacted by GTR, the IFC said that this hadn’t yet been approved.
For parts of Pakistan, the renewed focus on the energy sector could not come soon enough. The country is crippled by chronic power shortages. In the north, around the Swat and Chitral regions, the outages often last for 12 hours a day. It’s thought that the country’s demand is currently running at 17,000MW, but current output potential is around 13,000MW.
The government’s policy of load-shedding has had a major impact on the country’s industries. Saad Abdul Aziz, a relationship manager at Habib Bank, tells GTR that clients in the textiles sector find it difficult to compete with overseas rivals due to the inability to operate round the clock.
He says: “These firms could be highly-competitive. They’ve seen a market and capitalised on it. But there are issues, namely around power shortages which have been somewhat remote in recent past. That has been alleviated a little. Textiles companies in Punjab have access to biofuels and alternative energy and aren’t dependent on government energy, which means they can manage their costs. But in Sindh, where Karachi is, not a lot of companies use alternative fuels, so power issues are a big thing for them.”