SEOUL, Dec 5: Pakistan and South Korea on Wednesday signed an agreement for the Malakand tunnel construction project and two memorandums of understanding in the water sector and for enhanced investment.

The loan agreement for Malakand tunnel was signed during a meeting between President Asif Ali Zardari and Kim Yong-hwan, Chairman of Export-Import Bank of South Korea. An amount of $78 million will be provided for the project.

Malakand tunnel will not only shorten distance for travellers belonging to Dir, Malakand, Swat and adjacent areas but will also provide Pakistani goods easy access to Central Asian states.

Seoul pledged to provide the $78m loan through the Economic Development Cooperation Fund.

The 9.7km project includes three bridges and approach roads on both sides of the tunnel. The initial feasibility study of the tunnel has been completed by the South Korean consultants in collaboration with the National Highway Authority of Pakistan.

The NHA will be the executing agency of the project.

Mr Zardari said it was high time for Pakistan and South Korea to take bilateral trade to new heights. He asked the business communities of the two countries to boost the trade volume from the current $1.5 billion to $2bn in the next three years.

He said the government had opened all sectors of economy to foreign investment and South Korean companies may avail of opportunities and incentives offered by Pakistan.

He said fool-proof security would be ensured and one-window operation facility would be provided to the South Korean entrepreneurs in special economic zones.

Later, President Zardari held a meeting with the chief executive officer of the Korea Water Resources Corporation, Kim Keun-ho. A memorandum of understanding was signed between the Korean corporation and Wapda.

According to the MoU, the two countries will work for sustainable water and power sector development and cooperate in development of water resources infrastructure, including dams, hydropower, flood control and canals.

Both sides will also exchange technical expertise, arrange training of engineers and technicians and conduct a study on operation and management of dams, hydropower, hydrology and sedimentation.

During the meeting, the president said Pakistan was blessed with coal reserves of over 185bn tons, which alone could produce over 100,000 megawatts of electricity for 100 years besides huge potential in hydroelectric and wind and solar power.

He invited the South Korean companies to invest in the energy sector and help Pakistan meet its growing energy requirements.

The Board of Investment of Pakistan and the Lotte Group of Korea also signed an MoU, under which the Korean group will expand its business in the country and invest in infrastructure and power generation projects.—APP