Finance

OPEC Fund loaning US$72 million loan for Mohmand Multipurpose Dam

OPEC Fund loaning US$72 million loan for Mohmand Multipurpose Dam
Signing ceremony for Mohmand Dam financing agreements (photo courtesy Islamic Development Bank)

The OPEC Fund for International Development is loaning $72 million in support of the Mohmand Multipurpose Dam Project, a major hydropower complex that will contribute to Pakistan’s energy security, increase sustainable water supply for agriculture and human consumption, and improve resilience to floods.

The Mohmand Multipurpose Dam Project aligns with the priorities of Pakistan Vision 2025 development strategy. Total project cost is $2.2 billion and will be co-financed with the Islamic Development Bank, Kuwait Fund for Arab Economic Development and Saudi Fund for Development. The government of Pakistan is contributing close to a $1 billion through its own resources and proceeds from a Green Eurobond issued last year.

Mohmand Dam hydropower plant is on the Swat River in the Khyber Pakhtunkhwa Province and is the first flagship project funded by the new administration of Pakistan. The project will offer about 6,000 jobs for Pakistan at the peak period of construction and generate an annual average of 2,862 GWh of clean power at full operation. Its annual revenue will be about €320 million ($377 million).

While boosting Pakistan’s capacity to produce clean, renewable energy, the project will also contribute to the socio-economic development of the Khyber Pakhtunkhwa province, Pakistan’s third largest region, where nearly 80% of the population lives in rural areas. The reservoir will have a storage capacity of 1,594 million m3 and provide potable water to Peshawar city, the region’s capital.

“We are proud of our strong and over 40-year cooperation with Pakistan,” said OPEC Fund Director-General Dr. Abdulhamid Alkhalifa. “The Mohmand Multipurpose Dam is a landmark project for Pakistan and is critical to a number of the country’s strategic national priorities. It will help to tap Pakistan’s huge hydropower potential, boost agricultural production and strengthen local communities’ environmental resilience.”

It has previously been reported that Pakistan’s Water & Power Development Authority will own and operate the project. The first unit at Mohmand Dam will be commissioned in 2025 and all units will be in commercial operation in 2026.

The OPEC Fund is the only globally mandated development institution that provides financing from member countries to non-member countries exclusively. The organization works in cooperation with developing country partners and the international development community to stimulate economic growth and social progress in low- and middle-income countries around the world.