Asian Development Bank has provided a loan of $36.8 million to Pakistan’s first privately owned wind farm by the Turkish company, Zorlu Enerji Electrik Uretim, that is utilising it to raise the power output from the current 6 megawatts (MW) to 56.4 megawatts.
A statement issued by the International Finance Corporation (IFC) said the total cost of the project is $159 million, out of which 30% is being financed through equity provided by Zorlu Enerji and the rest through loans from Asian Development Bank (ADB), and ECO Trade and Development Bank, as well as a Pak Rupee loan from Habib Bank.
The International Finance Corporation, a member of the World Bank Group, is also investing $38.1 million in Zorlu Enerji Pakistan Limited to support the construction of the only wind power project in the Sindh Province.
South-Asia’s first wind turbine
The 56.4 megawatt Zorlu Pakistan wind project is the first internationally financed wind-power development in Pakistan, which will increase the country’s much needed capacity to provide renewable-energy. When constructed, it will be one of the first two commercial wind-power projects in Pakistan.
Zorlu Enerji is a key IFC eco-client in the renewable energy sector, dating back to 2009, when IFC financed the firm’s 135MW wind-power project in Turkey.
Gulrez Hoda, IFC Director for Infrastructure and Natural Resources in Eastern Europe and the Middle East and North Africa, said,
“IFC’s partnership with Zorlu Enerji, one of our key clients, enables us to extend additional support to the renewable energy sector in Pakistan. We hope this project will stimulate the interest of other investors in harnessing the country’s favorable wind resource,”
The project will help to alleviate Pakistan’s power deficit by developing an indigenous, renewable resource for generating power.
It will also contribute to reducing the country’s reliance on imported fuel for power generation. IFC says it is “the largest global development institution focused exclusively on the private sector. We help developing countries achieve sustainable growth by financing investment, providing advisory services to businesses and governments, and mobilizing capital in the international financial markets”.
Environmental benefits to wind turbines in Pakistan
Senior Investment Specialist at ADB Siddhartha Shah said, “We estimate that five to seven projects will come on line following ADB’s support for Zorlu Enerji’s wind farm.”
“The project will have multiple benefits including helping realise the government’s target of 6 per cent renewable energy by 2030, while contributing to employment opportunities and economic growth in one of the poorest regions of the country.”
Pakistan’s government is undertaking a major drive to expand its energy sources, including tapping renewable energy resources. There is around 50,000 MW of wind power capacity available in the south of Pakistan alone.
Pakistan’s environmental-track record
Zorlu Enerji, listed on the Istanbul Stock Exchange, owns and operates Turkey’s largest wind farm.
Asian Development Bank has taken the lead in supporting the Pakistani government’s efforts to attract private sector capital into the power sector. Initiatives include,
- Financing Pakistan’s first run-of-river hydropower project, the New Bong Escape Project in 2009, and
- The funding of three combined cycle power plants using domestic gas ― Fauji Kabirwala Power Company Limited, Foundation Power Company Daharki Limited and Uch-II Power Private Limited.
In fiscal year 2011, amid uncertainty for environmental performance, IFC invested over $500 million in renewable-energy projects, representing over 60% of IFC’s financial commitments in the power sector.
“Pakistan’s first wind-power plant project to be built with international finance was made possible by the support we received from IFC,” said Zorlu Energy General Manager Arif Özozan. “By demonstrating the viability of Pakistan’s local and renewable resources, this project is expected to have a considerable impact on the economy.”
How will Pakistan gets its wind power?
The existing power generated by the wind farm is currently being dispatched to the Hyderabad Electric Supply Company.
Once the second construction phase is complete – expected in 2013 – the farm will supply power to the national grid through a conditional 20 year purchase agreement with the National Transmission and Dispatch Company.
Potential for economic growth
Director in ADB’s Private Sector Operations Department Michael Barrow said in a statement, “Acute energy shortages, caused by low investment, are cutting into Pakistan’s economic growth. This deal should provide a bankable template for future privately funded wind projects and send a signal that Pakistan’s wind sector is attractive for private sector investment and financing.”
Pakistan’s stretched fossil fuels reserves
Currently, Pakistan relies heavily on imported fossil fuels for the bulk of its energy needs. However, this is costly, puts a heavy burden on its foreign exchange reserves, and leaves the country vulnerable to supply disruptions and global price fluctuations.
Investment in new potential capacity has lagged the demand which has surged by over 40% over the past five years, resulting in regular brownouts – a drop in electrical power supply – in all major urban centers and the introduction of power rationing.
This has forced shops and industries to close early, undermining Pakistan’s economy. The extra 50.4MW output will provide much-needed electricity, improve security of energy provision, and lower reliance on fossil fuels.
News source :: Associated Press of Pakistan
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