Power grid upgrade: K-Electric, US OPIC commit to 10-year $250m project

WASHINGTON: K-Electric Limited, Pakistan and United States (US) Overseas Private Investment Corporation (OPIC) on Wednesday executed a commitment letter for a $250 million 10-year financing project.

The OPIC loan ─ to be facilitated by CitiBank ─ will be used by K-Electric to undertake a comprehensive and transformative upgrade of K-Electric's power grid.

It is expected that the K-Electric grid strengthening project will significantly improve the reliability, stability and efficiency of the K-Electric power network and increase K-Electric’s transmission system capacity by 33 per cent or up to 1000MVA, thereby allowing it to deliver more electricity to customers.

Read: US private investment in energy sought

The signing ceremony held at the US Chamber of Commerce, was witnessed by Finance Minister Ishaq Dar who is accompanying Prime Minister Nawaz Sharif on his four-day official visit to Washington.

Ishaq Dar expressed hope that K- Electric would utilise the loan to effectively improve its transmission system and decrease loadshedding in Karachi.

The Finance Minister said that energy is among the PML-N government's top priorities, adding that the government is incentivising private sector investment in energy projects and also initiating pubic sector energy projects.

Earlier in October, Prime Minister Nawaz Sharif vowed the get rid of energy issues during his five year term. He said his 'hard working' team is making all efforts to overcome the energy shortage by 2018.

Also read: Senators hold Sindh govt, K-Electric responsible for heatwave deaths

Follow Dawn Business on Twitter, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and across the world.

Well aware of our Constitutional limits, expect others to uphold same: COAS Munir

3 terrorists killed in intelligence-based operation in KP’s Tank district: ISPR

FO ‘categorically rejects’ ex-SAPM Shahzad Akbar’s claim regarding state involvement in acid attack

Hyundai’s ‘Made Cooler by Hyundai’ campaign: Revolutionising car comfort in Pakistan

On DawnNews

دبئی کنسرٹ میں ارجیت سنگھ ماہرہ خان کو پہچاننے سے قاصر، معافی مانگ لی

24 سال تک اپنے ہی گھر کے تہ خانے میں قید رہنے والی لڑکی کی لرزہ خیز داستان

پاکستان بچوں کو محفوظ بچپن فراہم کرنے میں ناکام کیوں ہے؟

Dawn News English

Student protests in US

Human Rights Activist Nasir Mansoor Reveals Facts Regarding Baldia Fire Incident

Explained: How Vampire Facial Infected Women With HIV

Meddling In Judicial Affairs: How Should The Top Court Address Concerns?

Pressure Mounts On Norway’s Wealth Fund Faces Over Israel Investments

Explained: ICJ Verdict In Nicaragua V. Germany Case

Washington Post Reveals Indian Role In Assassination Plots On Foreign Soil

All You Need To Know: Israel-Hamas Talks So Far

Comments (15) Closed

Parvez

Oct 22, 2015 12:24pm

Who are the REAL owners of K-Electric ?

Recommend 0

Ahmed

Oct 22, 2015 12:35pm

This will not be enough. there are reports talking about population of KHI increasing by 50% in in 20 years and per person consumption of electricity will increase even faster. This rate of increase will not even compensate for these factors let alone make the grid more stable.

Recommend 0

Egoistic

Oct 22, 2015 01:17pm

initiating PUBIC sector energy projects? that will be interesting.

Recommend 0

Syed Hassan

Oct 22, 2015 01:26pm

Has GoP issued a guarantee to OPIC for this loan? If yes, then the question Why? K-Electric is a private entity managed by private individuals owned by non-Pakistani. They should arrange such funding on their own. Lastly, why Minister of Power was not part of this arrangement? After all, its his subject. I reckon the expansion or the upgrade works will be awarded to US companies as generally this is a pre-condition of any OPIC loans. If you visit OPIC's website, you will learn an interesting aspect about the organization, it is US Government's development finance institution yet it runs on a self-sustaining basis at no net cost to American tax payers. No need to guess who eventually pays for the organization's finances.

Recommend 0

Abdulla Hussain

Oct 22, 2015 02:01pm

Do the Pakistani leaders have anything else to do than to go on raising funds in the name of Pakistan. I dont understand why they fail to understand that with this scenario Pakistan will fail to stand on its own feet. If pakistan is ever blessed with intelligent leaders the first thing they will do is to reduce reliance on foreign aid, grands & kind. They will create environment for attracting business investments in Pakistan

Recommend 0

abdullah

Oct 22, 2015 02:03pm

@Syed Hassan .well it does not mention that they have provided the guarantee.so no need to build a case which doesnt even exist.

Recommend 0

Shakil Ahmed Khan

Oct 22, 2015 02:07pm

K-Electric is private entity what government has to do with it? Its owners still a mystery. If K Electric is upgrading its transmission better switch to underground.

Recommend 0

Muhammad Usman

Oct 22, 2015 02:38pm

KE was sold for few million $. Government has already provided subsidy more than the purchase cost. $250 Million could be spend to make small hydral dam.

Recommend 0

Ahmad Bilal Abdul Wahid

Oct 22, 2015 05:26pm

5 million dollars per year is nothing, it aint a project, 250 million for 10 years is nothing.

Recommend 0

Shahzad

Oct 22, 2015 05:31pm

the whole transmission / transformation system needs an upgrade to sustain the requirement of the country. with present situation even if we produce the energy required by the country the infrastructure would not be able to support.

Recommend 0

khanm

Oct 22, 2015 06:13pm

@Shakil Ahmed Khan ... Pal every thing about this is underground... it is an interesting world out there

Recommend 0

saeed

Oct 22, 2015 06:35pm

Why PMLN government always hire outside companies for infrastructure improvements? That too is when they are taking lot of foreign loans. Very bad economic policies.

Recommend 0

Khan

Oct 23, 2015 05:14am

@Syed Hassan Your understanding of the OPIC stipulations is wrong. OPIC is offering what is called a concessionary loan whereby Pakistan pays lower interest rates than it otherwise would on open Market. This is what China's EXIM bank is doing as part of CPEC project. The CPEC project has several stipulations, one of which is that a certain percentage of contractors must be Chinese. This is the same thing OPIC does. America isn't trying to force Pakistan into economic submission anymore than China is. It is in America's own interest to see a stable and prosperous Pakistan, and our relations since 2013 are proof of that.

Recommend 0

saqueb

Oct 23, 2015 05:29pm

@abdullah OPIC Financing is backed by a government guarantee. thats the basis principle of these agencies. i am a banker myself with the same organization and have worked on many Opic deals previously.

Recommend 0

ABDUL RAUF

Oct 24, 2015 10:25am

I hope that K- Electric would utiliese the loan to effectively improve its transmission system and decrease load shedding in Karachi.

Recommend 0

Read more