The International Finance Corp., a member of the World Bank Group, is committing $66 million and mobilizing a further $172 million in a landmark transaction to help build Pakistan’s largest wind power farm. The transaction was made to help address severe energy shortages and boost the development of renewable energy.
The financing to Tricon Boston Consulting Corporation will help construct and operate three new 50 megawatt wind farms in Sindh province. Tricon Boston is majority owned by the Sapphire Group, a leading Pakistani industrial group, with significant interests in textile and power.
The project is part of IFC’s broader efforts to foster private participation in Pakistan’s power sector to increase investments, help diversify energy sources, cut the cost of electricity, and reduce the use of polluting and expensive fossil fuels. Pakistan suffers from frequent power cuts that hamper social and economic development, and cost the country an estimated 2 percent of gross domestic product every year.
“The new wind farm will generate reliable, clean energy at lower prices and help reduce pressure on the country’s power grid, while mitigating climate change,” says Nadeem Abdullah, CEO at Tricon Boston. The firm commissioned its first 52.8-megawatt wind farm in 2015, according to Abdullah.
This is the first time a portfolio of three separate plants will be internationally financed by a single consortium in Pakistan, bringing further innovation to Pakistan’s project finance market. Other financiers include the Asian Development Bank, the Islamic Development Bank, and DEG – Deutsche Investitions-und Entwicklungsgesellschaft.
The plant is expected to be fully commissioned by the end of 2018 and will make its greatest contributions during the high-demand summer months, providing clean power to about 600,000 residential customers.
“This is our fifth investment in wind power in the last three years in Pakistan,” says Mouayed Makhlouf, director for the Middle East and North Africa region for IFC.
The development of wind power contributes to the diversification of Pakistan’s energy generation mix by increasing capacity with shorter lead times and also helping to reduce electricity prices.
The work is part of the World Bank Group’s Pakistan Transformational Energy Initiative and Joint Implementation Plan, which aims to mobilize $10 billion in new generation investments to address the country’s acute power shortage and improve sector sustainability.
Pakistan represents IFC’s second-largest engagement in the Middle East and North Africa region, with over $5.6 billion in cumulative investments committed to date.