ISLAMABAD: The European Investment Bank will provide credit financing of 100 million euros for the Keyal Khwar hydropower project which is being built in Dasu district of Khyber-Pakhtunkhwa.

To formalise the euro credit, an agreement was signed here on Wednesday at the end of the fifth round of sub-group on development cooperation between Pakistan and the European Union (EU). The sub-group reports to the Pak-EU Joint Commission which is scheduled to meet in early 2014.

The development cooperation dialogue between Pakistan and EU takes place in the context of the Co-operation Agreement between the EU and Pakistan of 2004.

The Pakistan delegation was led by Yasmeen Masood, Additional Secretary Economic Affairs Division (EAD), while the EU delegation was headed by Dirk Meganck, Director Asia Central Asia, Middle-East/Gulf and Pacific in EuropeAid.

Keyal Khwar is the right tributary of Indus River. The project is expected to be completed by October 2016 at an estimated cost of 192 million euros. The project will have a capacity of 122MW.

Pakistan and EU also signed an agreement for the district governance and community development project in Khyber-Pakhtunkhwa under which 80m euros will be provided as part of budget support, technical assistance and community mobilisation in six selected districts of Malakand. The programme will introduce output based budgeting (OBB) to 6 districts of Malakand providing fiscal space for challenge fund community driven development. The programme will be accompanied by technical assistance and support for social mobilisation to provide complete cover of all 206 Union Councils together with other programmes.