A combined mission of senior officials from the Asian Development Bank (ADB) and the Islamic Development Bank (IDB) met with top officials of PPIB Islamabad and NTDC/Wapda Lahore to discuss the financing of the New Bong Escape hydropower project. The two banks are processing the co-financing of the New Bong Escape Hydropower project being constructed by Laraib Energy Limited, the first Independent Power Producer (IPP) in the hydropowr sector.
The Laraib is constructing the approximately $120 million 79 mw scheme at Mangle and the electricity generated will be sold to NTDC under a long-term power purchase agreement. The rate of electricity generated from hydropower is lesser than thermal energy, especially in view of the high oil prices world-wide and shortage of domestic gas.
The Laraib has offered a rate of Rs 1.86 which is the lowest of any IPP tariff, and will contribute to a cheaper mix of energy for to end Consumer.
The two leading banking institutions are very keen to provide funding to hydropower projects and this deal will be IDB's first private sector funding in Pakistan; the mix of Islamic finance and conventional finance will also break new ground and is likely to be a precursor for financing future hydropower projects.
Reliable sources in Wapda have confirmed that there is a looming shortage of electricity on the horizon, with a shortage of approx. 1000 mw per annum expected from 2005 onwards.
They said there are few hydropower projects on the horizon, other than New Bong Escape, and it is expected that most of the shortage will once again be made up from expensive thermal generation.-PR