Pakistan Water and Power Development Authority (Wapda) is likely to raise finance worth $500 million for the construction of Dasu hydroelectric project by floating bonds in the international capital market backed by partial credit guarantees of the World Bank.
“The foreign commercial cost component of around $500 million will be raised either through loan or bond in early 2018 by using partial credit guarantee of the World Bank,” an official is reported to have said.
In addition to this, a 10-year loan worth $350 million is expected to be acquired from the global capital market. The loan had been approved recently by the Economic Coordination Committee (ECC) of the cabinet.
A partial credit guarantee of $460 million was available for commercial financing, the official stated. Out of this amount, $250 million are reserved to serve as a guarantee for the $350-million borrowing.
The Dasu hydroelectric project is being undertaken by Wapda and is expected to be partially funded by the World Bank through International Development Assistance (IDA) through the provision of $588 million along with credit guarantee of $460 million.
The Executive Committee of National Economic Council (Ecnec) had approved PC-1 of the project at a cost of $4.38 billion.
The local funding is expected to be $2.466 billion, which will be financed through a commercial loan of $1.44 billion that will be provided by a consortium of major local banks, led by Habib Bank Limited, without any credit guarantee.
It is pertinent to mention that this stands as the largest ever loan agreement for any public sector project in the history of the country.
The Dasu power project will be implemented in two phases – each of them will bring production capacity of 2,160MW – on the Indus River in Kohistan district of Khyber-Pakhtunkhwa. Stage-I will take five years and cost an estimated $4.2 billion.
For the Dasu project, Wapda has signed two contracts, Main Works (MW)-01 worth Rs115 billion and MW-02 costing Rs64.4 billion with China Gezhouba Group Company.
MW-01, is expected to be completed in about five years, includes construction of the main dam, appurtenant structures and hydraulic steel structures whereas MW-02 entails the construction of an underground power complex, tunnels and hydraulic structures.
