This summary covers 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 investors have applied for MIGA guarantees of $83 million for a period of up to 15 years against the risks of breach of contract.
The project consists of the construction, operation, and maintenance of a 102 megawatt run-of-the-river hydropower plant in the Kotli administrative district of Azad Jammu & Kashmir, the Pakistani administered semi-autonomous region, on the Poonch River under a build-own-operate-transfer basis. The project site is 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 is a category A under MIGA’s Policy on Environmental and Social Sustainability. Click here to view the Environmental and Social Review Summary prepared by the International Finance Corporation (IFC) for their investment in the project. MIGA and IFC intend to present the project for consideration jointly to their Boards of Executive Directors.
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.
The World Bank Group has embarked upon a “Transformational Power Initiative,” to support significant new investments and reforms in the power sector. The program aims to mobilize 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 improves sustainability of the energy sector.