The World Bank is set to approve a $1 billion loan for the Dasu hydropower project in June. This financing will support the 2,160 megawatt initiative which aims to integrate cost-effective electricity into Pakistan’s energy grid.
The project is critical for reducing the nation’s reliance on expensive imported fuel and promoting sustainable energy sources.
Managed by the China Gezhouba Group Company, the Dasu Hydropower Project is financed through a consortium that includes the World Bank.
The funding encompasses $588.4 million allocated for preparatory works and an additional $700 million for building the transmission line to distribute the generated electricity.
Despite the World Bank’s gradual shift towards budget support loans, this project financing is part of a broader effort to address Pakistan’s unsustainable debt burden by focusing on productive, long-term investments.
Pakistan’s current electricity costs are high, driving an increased adoption of solar power among homes, factories, and public buildings.
The total projected cost for the Dasu project has now reached $4.9 billion, which marks a 13% increase from earlier estimates.
Originally slated for completion in December 2021, the World Bank now anticipates that the project will conclude by 2028, which is seven years beyond the initial deadline.
Upon completion, phase one of the project is expected to replace imported fuels, saving approximately $1.8 billion annually in hard currency and reducing carbon dioxide emissions by 5 million tonnes.
This project supports Pakistan’s goal to achieve 60% renewable energy by 2031.
However, the Water and Power Development Authority currently faces challenges in securing international commercial financing, prompting the need for continued substantial financial support from international lenders.
