The International Finance Corporation (IFC), the World Bank's private investment arm, has agreed to invest $50 million in a new hydropower plant in Pakistan and mobilise a further $72 million for the project in a bid to address the country’s power shortage through the development of renewable energy sources.
The institution has committed to five power projects worth $230 million in Pakistan since 2010, including Laraib, the country’s first private hydropower plant. Last year, IFC helped raise $148 million to support the construction of Star Hydro Power project, a private 147-megawatt run-of-the-river greenfield hydroelectric power plant.
“Our aim is to help address Pakistan’s power shortage by supporting the development of renewable energy resources that will reduce the country’s reliance on more expensive fuel imports for power generation. We also hope to encourage other international investors to invest in Pakistan’s power sector,” said Wiebke Schloemer, IFC's regional industry head for infrastructure, Europe, Middle East and North Africa.
The Gulpur Hydro project, developed by Mira Power, a subsidiary of Korea South East Power Company (KOSEP) will see the construction, operation and maintenance of a 102MW hydropower plant on the Poonch River, approximately 167 kilometres from Islamabad.
“This is KOSEP’s first power generation project in Pakistan. This investment will help us utilise Pakistan’s significant hydropower resource and help address the energy crisis in a cost-effective and environmentally friendly way,” said Yi Bo Seuk, general manager of KOSEP.
Pakistan has been facing a severe power deficit in recent years with daily blackouts of up to six hours or more in many areas, hindering industrial growth and adversely affecting the quality of life for millions.
The IFC estimates that those shortages are incurring economic losses worth about 2 percent of the country’s annual GDP.
Pakistan represents IFC’s second-largest exposure in the MENA region, with over $5.6 billion in cumulative investments committed to date. IFC’s current investment exposure in Pakistan is about $1.1 billion in more than 45 companies in sectors including infrastructure, financial markets, and general manufacturing and services.
In fiscal year 2014, the institution invested $453 million in the country, including $23 million raised from other investors and lenders. Its current committed portfolio in Pakistan stands at around $960 million.