KARACHI: The World Bank has approved a $450 million loan to support Pakistan’s transition to clean energy as the country aims to reduce its reliance on imported fossil fuel and lower power production costs.
The financing approved by the global lender be utilized for the $727 million Khyber Pakhtunkhwa Hydropower and Renewable Energy Development project, which includes photovoltaic power generation and hydropower plants in northwestern Pakistan.
Out of the World Bank’s commitment, International Development Association (IDA) will credit $250 million, while $200 million will come from in the form of a loan from the International Bank for Reconstruction and Development (IBRD) loan.
“This project supports Pakistan’s goal to become a low-carbon, renewable energy-reliant economy by 2030 and contributes to its national target in reducing greenhouse gas emissions to combat climate change,” Najy Benhassine, World Bank country director for Pakistan, said in a statement in a statement issued by the lender in Washington on Friday.
In Pakistan’s energy-mix, 60 percent is thermal power, followed by hydropower — 30 percent. Only 4 percent comes from renewable sources. Under its new Alternative and Renewable Energy Policy, Pakistan plans to increase the share of its power generation coming from renewable sources to 20 percent by 2025, and to 30 percent by 2030.
The renewable sources will be mainly wind and photovoltaic, but also geothermal, tidal, wave and biomass energy.
The country’s installed capacity of electricity continues to grow. In April 2020, it was nearly 36,972 MW, by 7.5 percent more than in the same period last year, according to the Economic Survey of Pakistan 2019-20.
The World Bank expects the Khyber Pakhtunkhwa project funding to support the government’s clean energy expansion efforts “by identifying and preparing solar and hydropower projects that are technically sound, environmentally and socially sustainable, and investment ready,” Benhassine said.
The Khyber Pakhtunkhwa Hydropower and Renewable Energy Development project will also provide low-cost and low-carbon electricity to consumers. It will support the province’s economic development, the project’s team leader, Mohammad Saqib, said as quoted in the World Bank’s statement.
“To scale up renewable energy in Khyber Pakhtunkhwa, the project includes a comprehensive skills training program to build technical capacity in identifying investment opportunities, preparing projects, and mobilizing commercial financing,” he said.
