ISLAMABAD-The World Bank’s Board of Executive Directors has approved $450 million in financing to support Pakistan’s transition to renewable energy resources that reduce its reliance on fossil fuel imports and lower costs of electricity production. 

The Khyber Pakhtunkhwa Hydropower and Renewable Energy Development project will help shift the national energy mix to domestic clean resources by investing in renewable energy generation, including hydropower and solar, in Khyber Pakhtunkhwa province. 

It will also help strengthen energy sector institutions to better manage a growing portfolio of renewable energy projects across the province.

The World Bank had already released $531 million for Pakistan in first two months (July to August) of the current fiscal year, according to the latest data of Ministry of Economic Affairs. The government in annual budget had projected that World Bank would disburse $2.57 billion to Pakistan in entire current fiscal year (from July 2020 to June 2021). Overall, the government of Pakistan had projected to borrow $12.23 billion for the entire current fiscal year from multilateral and bilateral sources and banks. Meanwhile, Pakistan had received $2.25 billion external inflows from multiple financing sources on July to August period of the year 2020-21, which are 18 percent of annual budget estimates.

The recent approval of $450 million from the World Bank would increase the country’s foreign exchange reserves. “This project supports Pakistan’s goal to become a low-carbon, renewable energy-reliant economy by 2030 and contributes to its national target in reducing greenhouse gas emissions to combat climate change,” said Najy Benhassine, World Bank Country Director for Pakistan. “It will facilitate the expansion of renewable energy in Khyber Pakhtunkhwa by identifying and preparing solar and hydropower projects that are technically sound, environmentally and socially sustainable, and investment ready.”

The project will provide low-cost and low-carbon electricity to consumers and will support the economic development of those communities near the hydropower and solar projects by revitalizing infrastructure, creating jobs, and supporting the development of tourism activities.

“To scale up renewable energy in Khyber Pakhtunkhwa, the project includes a comprehensive skills training program to build technical capacity in identifying investment opportunities, preparing projects, and mobilizing commercial financing,” said Mohammad Saqib, Task Team Leader for the Khyber Pakhtunkhwa Hydropower and Renewable Energy Development project. “In addition, by installing solar photovoltaic systems onto hydropower assets, production capacity is expected to rise and generate greater return on investments.”

It is worth mentioning here that Pakistan has been a member of the World Bank since 1950. Since then, the World Bank has provided $40 billion in assistance. The World Bank’s program in Pakistan is governed by the Country Partnership Strategy for FY2015-2020 with four priority areas of engagement: energy, private sector development, inclusion, and service delivery. The current portfolio has 53 projects with a net commitment of $10.5 billion.