World Bank approves $1 billion loan for Dasu hydropower project
In a significant development, the World Bank has greenlit an additional $1 billion loan for the Dasu hydropower project. This vital support ensures the project's continuity, which commenced a decade ago, overcoming challenges and setbacks, including two unfortunate terrorist incidents targeting Chinese personnel involved in its construction.
The newly approved funding, totaling $1 billion, comprises various components, including a $435 million short-term loan, $365 million from the regular IDA Scale-Up Window, and a $200 million IBRD loan. With this injection of capital, the World Bank's involvement in the project has reached 45% of the total cost.
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The Dasu hydropower project, situated on the Indus River, is poised to be a game-changer for Pakistan's energy landscape, with an anticipated installed capacity ranging from 4,320 to 5,400 MW upon completion. It's a run-of-the-river project, highlighting its sustainable energy generation approach.
The project aims not only to bolster hydropower electricity supply but also to enhance access to socio-economic services for local communities. Furthermore, it seeks to build the capacity of the Water and Power Development Authority (WAPDA) to undertake future hydropower initiatives.
Despite these positive strides, Pakistan's energy sector confronts significant hurdles, notably the ballooning circular debt, which currently stands at a staggering $18 billion. This debt accumulation poses a formidable barrier to attracting future investments in the country's energy sector, undermining its long-term sustainability and reliability.
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Acknowledging these challenges, the World Bank underscores the importance of broader fiscal and economic reforms to facilitate robust economic recovery. Additionally, it emphasizes the need for concerted efforts to address poverty and socio-economic disparities, particularly in regions like Upper Kohistan, where the Dasu project operates.
The extension of the project's closing date to December 31, 2028, provides a much-needed lifeline to ensure the completion of ongoing activities and mobilize additional financing to fulfill the project's objectives.
Source: Express Tribune