DAWN.COM Logo

Today's Paper | April 20, 2024

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

Irfan Haider Published October 22, 2015

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.

Read more

On DawnNews
Dawn News English
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

Latest Stories

dawn images site

Most Popular

01
02
03
04
05
06
07
08
09

Must Read

Opinion

Editorial

X post facto
Updated 19 Apr, 2024

X post facto

Our decision-makers should realise the harm they are causing.
Insufficient inquiry
19 Apr, 2024

Insufficient inquiry

UNLESS the state is honest about the mistakes its functionaries have made, we will be doomed to repeat our follies....
Melting glaciers
19 Apr, 2024

Melting glaciers

AFTER several rain-related deaths in KP in recent days, the Provincial Disaster Management Authority has sprung into...
IMF’s projections
Updated 18 Apr, 2024

IMF’s projections

The problems are well-known and the country is aware of what is needed to stabilise the economy; the challenge is follow-through and implementation.
Hepatitis crisis
18 Apr, 2024

Hepatitis crisis

THE sheer scale of the crisis is staggering. A new WHO report flags Pakistan as the country with the highest number...
Never-ending suffering
18 Apr, 2024

Never-ending suffering

OVER the weekend, the world witnessed an intense spectacle when Iran launched its drone-and-missile barrage against...