A $450 million loan has been approved by the World Bank to finance Pakistan’s transition to renewable energy resources, which will minimize its dependence on imports of fossil fuels and reduce electricity production costs.
According to a statement released by the World Bank’s local office on Friday, the Khyber-Pakhtunkhwa Hydropower and Renewable Energy Production project will help change the national energy mix to clean resources by investing in renewable energy generation, including hydroelectric power and solar power, in Khyber-Pakhtunkhwa (K-P) province.
It added that the $450 million, a mixture of commercial and concessional funding, will also help reinforce institutions in the energy sector to better manage the growing portfolio of renewable energy projects across the province.
The estimated cost of the project is $782 million, of which $450 million is the Washington-based lender’s portion.
Lending to the World Bank consists of $250 million in loans from the International Development Association and $200 million in loans from the International Bank for Reconstruction and Development (IBRD).
According to a February project paper, private and industrial capital is valued at $223 million, which will be mobilized through local commercial banks, export credit agencies (ECAs) and private sources. The document claimed that the $134 million remaining will be arranged by the government of K-P.