On June 30, 2015, MIGA issued guarantees of $82.7 million covering investments by Korea South-East Power Co. Ltd.; DAELIM Industrial Co. Ltd.; and Lotte Engineering and Construction Co. Ltd. of Korea in Gulpur Hydropower Project Pakistan. The coverage is for a period of up to 15 years against the risk of breach of contract.
The project consists of the construction, operation, and maintenance of a 102-megawatt run-of-the-river hydropower plant under a build-own-operate-transfer scheme. The project is located on the Poonch River, approximately 167 kilometers south-east from Islamabad and 28 kilometers upstream of the Mangla Dam Reservoir. The project will be the third independent power producer of hydropower in Pakistan and will sell all of its electricity to the National Transmission and Despatch Company Limited under a 30-year power purchase agreement.
The project will provide additional power generation at a time when Pakistan is facing a critical power deficit (peak deficit of 6,000-7,000 megawatts) and produce lower cost electricity than imported heavy fuel oil and other renewable alternatives. Fuel imports are a key contributor to the country’s balance of payment stress in recent years.
This project forms part of the World Bank Group’s “Transformational Power Initiative” which aims to support significant new investments and reforms in the power sector—including mobilizing over $10 billion to support new generation in a mix of public and private projects that address current supply gaps and future needs. The program will also support significant reforms for enhancing the financial viability of the sector. The objectives pursued under this program include significant reduction in load-shedding, reduction in energy production costs, and improved sustainability of the energy sector.