The Asian Development Bank (ADB) has approved a loan of $300 million to finance the construction of a 300 MW hydropower plant that will increase Pakistan’s share of clean energy and improve its energy security.
The plant that will be built on the Kunhar River near Balakot in Khyber Pakhtunkhwa (KP) and will be commissioned by 2027, is to add 1,143 gigawatt-hours of clean energy annually to the country’s energy mix while enhancing the energy sector’s reliability and sustainability. It will also incorporate seismic strengthening and climate-proofing measures in its operations.
“Pakistan is highly vulnerable to climate change, with water resources and energy particularly at risk from floods, droughts, high temperatures, and other extreme weather events,” said the ADB Principal Energy Specialist, Adnan Tareen.
He added, “In line with Pakistan’s climate change adaptation and mitigation priorities, this climate-resilient hydropower plant will boost the country’s clean energy generation while effectively utilizing its vast water resources”.
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Although Pakistan is rich in hydropower resources, only around 16 percent of its identified hydropower potential has been harnessed. Its power sector is reliant on imported fuel-based power generation and is burdened with a stressed transmission and distribution network. Therefore, to balance the energy mix and reduce its dependence on imported fuel, the government has committed to increasing its untapped renewable energy potential from water, the sun, and wind.
The Balakot Hydropower Plant will also generate economic activity and improve the skills of the local communities. During construction, the project will generate more than 1,200 jobs, about 40 percent of which will be sourced locally and will provide livelihood skills development for women. A community development program will help to improve livelihood opportunities for the affected households and adjacent communities, including women and the vulnerable segments of the population.
This will help to build economic resilience and improve the capacity of the affected people to cope with climate change, natural disasters, and other risks.
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The plant will substantially increase the revenue of the state-owned Pakhtunkhwa Energy Development Organization (PEDO), which is responsible for operating hydropower plants in KP. It will also help to reduce the average daily load shedding in the province and serve the national demand.
The government will invest $175 million in the project and has requested a loan of $280 million in project co-financing from the Asian Infrastructure Investment Bank (AIIB) as well.
