The European Investment Bank (EIB) has granted a EUR 100 million long-term loan to the Government of Pakistan for the construction of the Keyal Khwar Hydropower project. A Declaratory Statement was signed by EIB Vice-President Magdalena Álvare and Ms Nargis Sethi, Secretary of Pakistan Economic Affairs Division, at a ceremony in Islamabad on 17 February 2014.
EIB Vice President Magdalena Alvarez, who is in charge of the EIB operations in Asia, highlighted that “the European Investment Bank is committed to supporting investment in renewable energy and helping countries around the world reduce carbon emissions. At the same time the EIB is pleased to be able to support Pakistan in this important sector, addressing the increased demand of energy in the country. The investment will provide a clean and reliable supply of electric power contributing to climate change mitigation, which is a fundamental goal of the European Union”. Secretary EAD in her remarks appreciated EIB financial assistance for the energy sector project, which will not only help in tackling the energy crisis but will prove to be a source of clean renewable energy.
The Secretary invited EIB for participation in financing of energy efficient projects in future as well. Ambassador of the European Union to Pakistan, Mr. Lars-Gunnar Wigemark said, “Coming shortly after the granting of GSP+ trade preferences, the visit by the EIB, which is the Investment bank of the EU, shows how the EU is committed to expand its investments in Pakistan, especially in the energy sector”. The Water and Power Development Authority (WAPDA), which will construct the plant, has considerable experience with similar hydropower pants. It is estimated that the construction period will be four years starting from January 2013.
The project consists of a 128 MW run-of-river hydropower plant with a small 1.5 ha reservoir for daily regulation. The aim of the scheme is to provide a clean and reliable supply of energy, thus avoiding significant volumes of CO2 emissions. The project will feed the renewable energy into Pakistan national power grid, generating significant economic benefits. The project is also receiving financial support from KfW and has been structured under the mutual reliance initiative. This collaborative approach will make it possible to exploit synergies between the two financial institutions.
The EIB is providing this loan under the current lending mandate for Asia and Latin America (2007-2013). The project will contribute to climate change mitigation and environmental sustainability in Pakistan, which are key priorities of the European Union and also key operational priorities of the EIB. This is the fifth project supported by the EIB in Pakistan. Since it began lending in Asia in 1993, the EIB has provided more than EUR 5.1 billion for long-term investment projects, including EUR 2.4 billion in the energy sector.