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Kuwait Fund, Pakistan ink $24.4m loan deal for Mohmand Dam development

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June 05, 2024 (MLN): Pakistan and the Kuwait Fund for Arab Economic Development (KFAED) on Monday signed a KD 7.5 million ($24.4 million) loan agreement to fund the Mohmand Hydropower Dam project.

The Loan Agreement was signed by Malik Muhammed Farooq, Ambassador of the Islamic Republic of Pakistan to the State of Kuwait on behalf of the Islamic Republic of Pakistan, whereas Waleed Al-Bahar, Acting Director-General of Kuwait Fund for Arab Economic Development signed the Loan Agreement on behalf of the Fund.

The Project aims to support economic and social development in by enhancing national energy generation from the available hydro resources to meet the increasing electricity demand, improve the region’s resilience to flooding, provide sustainable water resources for agriculture and drinking water for the region of KP.

The project is expected to contribute to the achievement of sustainable development goals, including the first (No Poverty), the second (zero hunger), the sixth (clean water and sanitation), the seventh (affordable and clean energy), the eighth (decent work and economic growth), night (industry, innovation and infrastructure), thirteenth (clean action) and the seventeenth (partnerships for the goals).

The Project consists of the construction of a hydropower scheme, on the Swat River located in the northeast of Pakistan about 200 KM west of Islamabad.

It comprises a concrete-faced rockfill dam with a height of about 213 meters and a length of about 718 meters creating a reservoir with a total length of about 56 km, an area of about 24 km2, and a volume of about 1.6 billion m3.

The scheme will include a powerhouse with 4 electricity-generating units with a total installed capacity of about 800 MW capable of producing about 2,862 GWh a year.

The project will include flood protection, irrigation infrastructure, and an intake for future drinking water facilities.

The project also includes consultancy and project management services. The project is expected to be completed by December 2025.

The total cost of the Project is estimated at Rs322.8bn, equivalent to approximately KD900.6m.

The first Kuwait fund’s loan of 7.5m Kuwaiti dinars covers about 0.83% of the project costs.

In addition to the contribution of the Islamic Development Bank in an amount equivalent to about KD56.3m, the OPEC Fund for Development in an amount equivalent to about KD22.5m, and the Saudi Fund for Development in an amount equivalent to about KD75m.

The Pakistani government will cover the remaining costs or any other increase that may occur in the project costs.

The Loan is made for a term of 25 years, including a period of grace of about 5 years, and will be amortized by 40 semi-annual installments, the first of which will be due on the first date on which or any interest or other charges on the loan shall fall due after the elapse of the grace period.

Loan will bear interest at 2% per annum in addition to a charge of 0.5% for meeting administrative costs and the expenses of implementation of the Loan Agreement.

The Fund loan represents the nineteenth loan provided by the Fund to the Islamic Republic of Pakistan, as the Fund had previously provided eighteenth loans to Pakistan, in various sectors, totaling approximately KD129.788m Kuwaiti dinars.

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Posted on: 2024-06-05T11:05:56+05:00