ISLAMABAD: The International Finance Corporation (IFC), the World Bank’s private-sector lending arm, has agreed to invest $100 million in 720-megawatt Karot hydropower project.

The run-of-the-river project, being developed on the Jhelum River by a joint venture led by a Chinese investment company, is located 74 kilometres upstream of the Mangla Dam and is about 1km upstream of the existing Karot Bridge.

According to official sources, multiple large hydropower projects, including the Karot hydropower project, are being proposed as a cascade on the Jhelum River between Muzaffarabad and Mangla Dam, with potential cumulative impacts that need to be assessed further.

The Karot project is located in natural and modified habitats where terrestrial and aquatic biodiversity values exist.

The project footprint will encompass 16 villages, and will have direct impacts on 191 households and around 78 small businesses that will either be physically or economically displaced.

The project, whose construction is expected to take five years, will include a 95.5-metre-high dam, a surface powerhouse, four headrace tunnels, a spillway and a 5km-long, 500 kilovolts transmission interconnection to the national grid.

The total project cost is currently estimated at $2 billion and is expected to be funded with 20 per cent equity and 80pc debt. The debt financing for the project is expected to be provided by a consortium of Chinese lenders and the IFC.

It was officially learnt that the IFC will leverage its extensive experience financing private power projects in Pakistan, including financing of three hydro projects, to share knowledge and help in the financing of the project. The corporation’s direct participation will help ensure that the project complies with IFC’s performance standards.

A special-purpose company incorporated in Pakistan and majority owned by China Three Gorges South Asia Investment is undertaking the construction, operation and maintenance of the hydropower plant which is expected to generate 3,174 gigawatt-hours annually and will sell all of its energy to the National Transmission and Despatch Company under a 30-year power purchase agreement.

Published in Dawn, September 18th, 2015

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