World Bank rates progress on KP hydropower, renewable energy project 'moderately unsatisfactory'

ISLAMABAD: The World Bank on Wednesday dubbed the progress on the Khyber Pakhtunkhwa Hydropower and Renewable Energy Development project “moderately unsatisfactory”, with “substantial risk” of its $727 million loan meant for strengthening provincial institutions and increasing renewable energy generation.

In its public disclosure, the Washington-based lending agency rated the progress towards the achievement of project development objectives as “moderately unsatisfactory”. Various segments of the loan were approved in 2020 with a targeted completion date of Nov 30, 2027.

However, the World Bank rated the overall implementation progress as “moderately satisfactory” and described the overall risk rating as “substantial”.

The rating was based on “moderate” risk in the political and governance and technical design categories, but “substantial” risks emanated from macroeconomic, institutional capacity, fiduciary issues and environmental and social parameters.

The bank said it processed restructuring of the project to align its scope and financing with implementation priorities at the request of the government.

The report stated: “Overall, implementation has gained momentum, with key milestones achieved under the Gabral-Kalam Hydropower Project, including commencement of civil works, progress on land acquisition and advancement of the electro-mechanical works procurement.

“The project will continue to focus on timely implementation, effective contract management, and compliance with applicable environmental and social requirements.”

The original loan package, approved on Sept 24, 2020, involved a $594m million investment in hydropower development and renewable energy, $59m in environmental and social management, $55m for institutional strengthening and project implementation support, besides about $15m in financial charges on the bank loan itself.

The market-based bank loan worth $200m became effective in Sept 2020, but only $3.95m has been disbursed so far, accounting for less than two per cent.

The concessional development loan of $240m became effective around the same time and its disbursements amounted to $34m to date, about 14pc of the size.

The KP Hydropower and Renewable Energy Development project was conceived as a transformational programme to help build capacity and institutions for harvesting the vast renewable energy potential in the province.

To achieve the objectives, the project was designed to be implemented through four components: one of them being the development of public sector investments in hydropower and renewable energy projects, including the Gabral-Kalam Hydropower Plant (GKH), an 88-megawatt (MW) run-of-river hydropower project capable of generating 339 gigawatt hours (GWh) annually.

Another component covered cascade development of river basins and financing the construction of 157MW Madyan and other hydropower facilities on the Swat and other river basins.

The total hydropower potential of the Swat River Basin was estimated to be more than 2,000MW for which several projects had been identified and new potential sites were required to be examined.

Additionally, floating or land-based solar photovoltaic systems (a type of solar panel) on hydropower assets were envisioned.

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