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Description |
The proposed investment program aims to (i) improve energy security by increasing the clean energy share in the energy mix currently dominated by thermal energy, (ii) promote private sector investments in hydropower development in the province of Khyber Phakhtunkhwa (KPK) which has the most hydro potential in the country, and (iii) build capacity and understanding on climate change impacts, adaptation and mitigation measures. Despite the potential to generate 60,000 megawatts (MW), Pakistan has only been able to install 7,000 MW (31% of total installed capacity) of hydropower generation, of which 3% has been developed by independent power producers (IPPs). Since 1994, IPPs have been investing in Pakistan but skewed to thermal power plants, accounting for 36% of the country's total installed capacity. With support from the Asian Development Bank (ADB) and the International Finance Corporation, IPPs recently made several investments in renewable energy projects. IPP's interest increases if the sector is supported by international financing institutions on the policy, process and investments. The provincial government of KPK plans to develop 21 run-of-the river hydropower plants (HPP) with feasibility study for most of them already completed, with a total potential of 3,600 MW over a period of 10 years with key focus on attracting IPPs. The investment program is structured to facilitate investments in the development of hydropower plants by utilizing both public and private sector investments and leveraging ADB funds through syndication and other financial structures. ADB catalytic financing in the long-term will support and create a business-friendly environment making HPP projects bankable for the private sector to mobilize and invest through debt or equity. |
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Project Rationale and Linkage to Country/Regional Strategy |
The program's aims will be achieved by: (i) developing run-of-the-river HPPs with individual plant capacity not exceeding 400 MW in KPK; (ii) promoting private sector investments through by providing access to different ADB credit enhancement products; (iii) mitigate greenhouse gases to meet the Intended Nationally Determined Contributions of Pakistan; and (iv) enhance capacity for climate change risk management in hydropower production. The program will be implemented in four tranches to cover multiple sub-projects in keeping pace with the maturity of the private sector investment. |
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Impact |
Reduced carbon footprint and energy sector made more renewable, efficient, and reliable. |
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Outcome |
Energy security enhanced. |
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Outputs |
Hydropower plants commissioned.
Private sector participation in KPK increased.
Capacity for climate change risk management in hydropower production enhanced.
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Geographical Location |
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