World Bank lends $550mln for solar energy, economic corridor

KARACHI: The World Bank has approved more than $550 million of loans to support renewable energy in Sindh and expand economic activity between Pakistan and Afghanistan through the development of an economic corridor along the Khyber Pass.

The $460.6 million loan for Khyber Pass economic corridor project has 30-year maturity with five-year of grace period, the bank said in a statement late on Thursday. The project “will benefit consumers, producers, and traders in Pakistan, Afghanistan, and Central Asia by supporting private sector investment and reducing transport time and cost,” the statement said. “Better infrastructure and more efficient border crossing will help Afghan medical patients and students coming to Pakistan. The project will alleviate key constraints to the integration of private sector actors in Khyber Agency into global value chains.”

Debt maturity period of the $100 million Sindh solar energy project is also 30 years, with a grace period of five years.

The project will reduce the country’s carbon footprint through the development of solar energy. “It will support independent power producers to develop 400 MW (megawatts) of new solar power capacity (starting with an initial 50MW pilot project) and provide partial grants to private sector firms for the commercial provision of solar home systems to 200,000 households,” the statement added. “The project will also help gain knowledge and experience in developing solar photovoltaic schemes on/around public buildings.”

World Bank Country Director for Pakistan Illango Patchamuthu said the projects will address Sindh’s energy needs through the generation of solar power benefitting the entire province and support trade between Pakistan and Afghanistan through regional connectivity and private sector development along the Khyber Pass corridor.

“The construction of a 48 km (kilometers) four-lane expressway linking Pakistan and its regional trading partners and upgrading the country’s infrastructure is an important component of Pakistan’s growth policy,” Patchamuthu said in the statement.

The International Development Association, the concessional financing arm of the World Bank, is funding both the projects.