Dasu hydropower project secures Rs144bln in local debt financing

LAHORE: A local bank-led consortium on Wednesday agreed to lend Rs144 billion to the Water and Power and Development Authority (Wapda) to build Dasu hydropower project, covering more than a quarter of the project’s total cost.

A consortium of major local banks, led by Habib Bank Limited (HBL), signed an agreement with the Wapda to lend Rs144 billion ($1.35 billion) for the construction of the first phase of Dasu hydropower project, located at seven-kilometre north of Dasu town in Khyber Pakhtunkhwa.

HBL President Nauman Dar, National Bank of Pakistan (NBP) President Saeed Ahmed Khan and representatives of other banks in the consortium signed the agreement on behalf of their organisations. WAPDA Member (Finance), Member (Power) and senior officers of Wapda attended the ceremony.

Stage-I of Dasu hydropower project would be completed in five years at an estimated cost of $4.2 billion and would add 2,132MW by 2021. The World Bank has already committed one billion dollar in financing for the project. Wapda has also arranged the remaining funds through various resources, including almost a final deal of $360 million with Swiss Bank. 

The civil work is expected to start from May 2017.  “We expect that this home-grown financial model will help in addressing financing of proposed Diamer Basha dam, Mohmand dam and other such projects,” said Lt Gen (retd) Muzammil Hussain, chairman of Wapda.

Hussain said the domestic banking sector seems ready to play a proactive role in financing several hydropower projects, which may lead to reducing dependence on external resources. He said local banks for the first time made financial arrangements of Rs56 billion without the guarantee of the government of Pakistan, posing confidence on Wapda. “By forging a successful alliance with the local financial sector, we can turn around the whole power sector by improving share of clean and cheap energy significantly in the next 5-10 years.” 

Wapda chairman said the country produces only seven percent of the hydropower potential of 100,000MW. “There is long way ahead of us but keeping in view critical nature of challenges associated with the power sector, we need to strengthen this partnership (with local banks) for creating a win-win situation for all.”

Hussain said the impediments in the way to completion of under-construction Wapda projects have been removed with the concerted efforts during the last six months.  The completion of phase-1 of Kachhi canal in August to December 2017 would irrigate 72,000 areas of land in backward areas of Balochistan. Wapda will also complete the 969MW-Neelum Jhelum hydropower project, the 1,410MW-Tarbela 4th extension hydropower project and the 106MW-Golen Gol hydropower project in a phased manner from end 2017 to mid 2018. The low-cost hydro electricity to be added to the grid network through these projects will help overcome energy crisis in the country and significantly contribute to socioeconomic developments.  Dar said the breakthrough arrangements would lead to unlocking capital in future for bankable national development projects.

“We must unlock financial resources as it is our duty to step up role in the national development,” he added. “We must support national institutions that have strength to stand on their feet and Wapda is one of top such institutions.”

HBL president further said collaboration between seven banks for national development is a good step.  Ahmad said partnership among local banks for the agenda of power generation is a good step. “Leading development of national projects is a real contribution of our banking sector.”