International Finance Corporation Upbeat on Pakistan Hydropower Project Future

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Written by Richard Finlayson, Senior Editor for Industrial Info Resources (Sugar Land, Texas)--The 147-megawatt (MW) Patrind hydropower project in Pakistan's Khyber-Pakhtoonkhwa province is the largest privately financed hydropower project in the country. South Korean-based Star Hydro Power and Korea Water Resources Corporation (KWRC) (Daejon, South Korea) are the sponsors and developers of the run-of-river project, and equity is being provided by three South Korean companies: KWRC, Daewoo E&C (Seoul) and Sambu Construction Company (KSE:001470).

In this cross-border financed project, the World Bank's International Finance Corporation (IFC) is contributing $60 million in funds, while the Export-Import Bank of Korea, the Asian Development Bank and the Islamic Development Bank are providing $409 million.

The structuring of the project finances is seen as important for further projects developed by independent power producers (IPP) in Pakistan's hydropower sector.

Only 16% of the country's hydropower resources have been harnessed, and current foreign participation in the power sector is low. The IFC's support of the project has been key to the other entities providing funding and could lead to the model being used for other projects.

Byung Hoon Yune, KWRC's vice president of overseas business, said that a reliable power system was essential for the economic development of Pakistan, and the Patrind project would help toward that goal. "IFC's support is a vote of confidence in not only our company, but also in Pakistan's electricity sector," he said.

"IFC's partnership with Star Hydro, one of our key clients, enables us to extend additional support to the renewable sector in Pakistan," said Adil Marghub, IFC's infrastructure manager for MENA. He added that IFC hoped the project would stimulate the interest of other investors in harnessing the country's favorable hydro resources.

Hydropower schemes could assist in reducing the country's reliance on imported fuel to feed power generation. Since 1995, IFC has funded more than 3,300 MW of power projects in Pakistan.

Rahim Dad Khan, the senior minister of the province, said that the provincial government would ensure concrete steps to promote foreign investment in Khyber Pakhtoonkhwa.

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