Soft loan: France provides 28.5 billion for Keyal Khwar Hydropower Project

ISLAMABAD – France has fianced 28.5 billion (€120 million) for the Keyal Khwar hydropower project, a 128-megawatt facility, located in Khyber Pakhtunkhwa (KPK), near the city of Pattan.

A financing agreement was signed between the two governments in Islamabad on Monday, said a press release issued by the French embassy.

The agreement was inked by Secretary of the Economic Affairs Division (EAD) Dr Kazim Naiz, French ambassador to Pakistan Nicolas Galey, and Philippe Steinmetz, Country Director of the French Development Agency (AFD).

The agreement was inked by Additional Secretary of Economic Affairs Division Iftikhar Ahmed Rao, French Ambassador to Pakistan Philippe Thiebaud and French Development Agency (AFD) Country Director Nicolas Fornage.

This soft loan will support the Water & Power Development Authority (WAPDA) in its mandate of hydroelectricity sector development in Pakistan. The funding will also help enhance the competitiveness of renewable power generation. Such benefits will contribute to improving affordability and scaling up the energy supply. These will be achieved while also mitigating the impacts of power generation on climate and the environment, in line with the policies of the Government of Pakistan.

 The Keyal Khwar hydropower project harnesses the energy potential of a tributary of the Indus River. The 128 MW hydroelectric plant will produce 420 GWh/year, 25% of which will be peak load. 

This funding provided by AFD will help: 1. Mitigate the flood-affected area of KPK and rehabilitation of the infrastructure while building the hydropower project.

2. Define environmental and social (E&S) management measures in line with international standards through study grants provided by AFD.

3. Replace thermal power plants and avoid the equivalent of the emission of 182,000 tons of CO2 per year, once the scheduled commissioning of the plant is completed in 2028.

4. Improve the quality of life for 600,000 inhabitants. 

 The project will contribute to the Government of Pakistan’s strategy to develop green energy, and reduce greenhouse gas emissions, in line with the French Government’s agenda of promoting climate-friendly projects and with the French pledge and commitments announced at the International Conference on Climate Resilient Pakistan which took place in Geneva on January 9, 2023. 

 Through the French Development Agency, France provides technical and financial support in several sectors such as energy, water and sanitation, urban development, rural development, health and cultural heritage. 

 Since 2009, €1 332 million has been committed to Pakistan. The clean energy sector has mobilized a total of €930 million. 

Agence Française de Développement (AFD) Group is a public financial institution that funds, supports and accelerates transitions towards a more just and sustainable world. As a French overseas aid platform for sustainable development and investment, we and our partners create shared solutions with and for the people of the global South. 

 AFD is working on over 4,000 projects in 115 countries where it strives to promote health, education and gender equality, and to protect common resources with a focus on peace, biodiversity and a stable climate.  

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