The 720-MW Karot hydropower project in Pakistan will be the first project financed by China’s $40 billion Silk Road Fund, according to The New York Times.
Karot, on the Jhelum River east of Islamabad, is expected to cost $1.64 billion and will be financed on a commercial basis. The People’s Bank of China, The Silk Road Fund and the World Bank will buy shares in China Three Gorges South Asia Investment Ltd., a subsidiary of Three Gorges Corporation, which builds dams in China and outside the country. Other financiers of this project include the Export-Import Bank of China and the China Development Bank will issue loans to the Karot Power Company, a subsidiary of China Three Gorges South Asia Investment.
The US$50 billion fund was established by Chinese President Xi Jinping to finance projects in China’s Silk Road Economic Belt and Maritime Silk Road. The Silk Road is intended to connect China to Europe over land through Central Asia and Russia and by ports through a separate maritime route.
Pakistan’s daily energy demand is about 22,000 MW but the country is able to produce and maintain only 16,000 MW.
Power generated by Karot will be sold to Pakistan’s national grid. A 30-year power purchase agreement is in place with The National Transmission and Dispatch Company Ltd.
Construction of this project is expected to start at the end of 2015. The goal is to complete development by 2020.
The project is being developed under the Power Policy 2002 on a build-own-operate-transfer basis, with an expected concession period of about 35 years, which includes the construction period of five years and the operation period of 30 years.
HydroWorld.com reported in March that Pakistan’s Environmental Protection Agency awarded a US$1.4 billion contract to develop Karot to a group of Pakistani and Chinese investors.
The site started to be investigated for development in 2006, at a capacity of 240 MW.