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WB supports hydropower plant in Pakistan

The Multilateral Investment Guarantee Agency (MIGA), the political risk insurance arm of the World Bank Group, has announced to support a hydropower plant in Pakistan, according to a statement issued by the World Bank.

In addition to alleviating chronic power shortages, the plant will contribute to lowering the country’s average electricity generation costs and greenhouse gas emissions and reducing reliance on imported fuel oil, it said.

The project’s demonstration effect is also significant, as it shows other potential investors that experienced and reputable foreign sponsors are implementing a high-profile project in Pakistan, it said.

MIGA has issued guarantees of $148.5 million to cover an equity investment by Korea Water Resources Corporation (K-Water) and Daewoo Engineering and Construction (Daewoo) in Star Hydropower Limited, the statement said, adding that MIGA’s coverage is for a period of 20 years against the risk of breach of contract.

The project is also supported by project finance loans from the International Finance Corporation (IFC), the Asian Development Bank (ADB), the Export-Import Bank of Korea, and the Islamic Development Bank (IDB), it said.

Korea’s Global Infrastructure Fund — established by public funds and private investors to promote foreign investment of Korean companies — is also investing in the project.

The project represents MIGA’s first guarantee in support of a Korean investor, the statement said, adding that for the project, K-Water and Daewoo will develop, construct, and operate a 147 megawatts run-of-the-river hydropower plant situated 120km from Islamabad under a 30-year build-own-operate-transfer scheme. Electricity generated by the plant will be sold to the state-owned utility under a power purchase agreement.

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