ISLAMABAD – The Asian Development Bank (ADB) on Friday announced that it will be providing a loan of $36.8 million to Zorlu Enerji to establish Pakistan’s first privately owned and financed wind farm with a planned capacity of 56.4 megawatts of energy.
According to an announcement made by the ADB, Turkish company Zorlu Enerji Electrik Uretim, will use the loan to install wind turbines to increase power generation of its wind farm, in the Sindh province, from the current level of six megawatts to a total of 56.4 megawatts. The output from the plant will provide much needed additional power for Pakistan, while improving the country’s energy security and lower reliance on imported fossil fuels.
Zorlu Enerji, listed on the Istanbul Stock Exchange, owns and operates Turkey’s largest wind farm. The total cost of the project is $147 million with 30 percent of the financial requirement being met through equity provided by Zorlu Enerji and the rest through US dollar-denominated loans from ADB, the International Finance Corp, the ECO Trade and Development Bank and a loan from Habib Bank. ADB’s loan will be carried for 12 years with a two-year grace period.
ADB’s Private Sector Operations Department Director Michael Barrow said in the statement that acute energy shortages, worsened by low investment levels, were 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 relies heavily on imported fossil fuels for the bulk of its energy needs. However, this is costly, puts a heavy burden on Pakistan’s foreign exchange reserves, and leaves the country vulnerable to supply disruptions and global price fluctuations. Investment in new capacity has lagged while demand has surged by over 40 percent over the past five years, resulting in regular blackouts in all major urban centers and the introduction of power rationing.
This has compelled cpmmercial areas and industries to limit business hours and undermining Pakistan’s economy. The government is now engaged in a major drive to expand its energy sources, including tapping renewable energy resources such as wind, given around 50,000 megawatts of capacity are available in the south of the country alone, the statement said.
Senior Investment Specialist in ADB’s Private Sector Operations Department Siddhartha Shah said they were estimating that three to five 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 six percent renewable energy in the total power mix by 2030”.
ADB went on to say that it taken the lead in supporting the government’s efforts to attract private sector capital in the case of the power sector. Initiatives include financing the country’s first private sector run-of-river hydropower project – the New Bong Escape Power Project in 2009, as well as financing three combined cycle power plants using domestic gas; Fauji Kabirwala Power Company Limited, Foundation Power Company Daharki Limited, and Uch-II Power Private Limited.
