WASHINGTON: K-Electric Limited and the Overseas Private Investment Corporation (“OPIC”), the U.S. government’s development finance institution, have executed a commitment letter for a US$250 million, 10-year financing project in a signing ceremony attended by the Senator Ishaq Dar, the Finance Minister of Pakistan. The ceremony was held at the US Chamber of Commerce in Washington, D.C..
K-Electric supplies electricity to the city of Karachi, Pakistan’s most populous city, as well as to nearby towns in the provinces of Baluchistan and Sindh. Electricity outages and shortfalls are recognized as a key constraint to economic growth and stability in Pakistan. The OPIC loan will be used by K-Electric to undertake a comprehensive and transformative upgrade of the K-Electric power grid. The K-Electric grid strengthening project will significantly improve the reliability, stability and efficiency of the K-Electric power network. The project will increase K-Electric’s transmission system capacity by 33% (up to 1000MVA), thereby allowing it to deliver more energy to its customers. The project will also help support K-Electric’s loss-reduction measures and will include an innovative smart grid initiative to more accurately distribute and utilize existing power.
The K-Electric project is eligible for OPIC’s support because of the participation of Citibank N.A., Pakistan (“Citi”) in the form of a US$20.8 million direct loan to the project. The OPIC and Citi loans are part of a US$450 million investment by K-Electric into its transmission and distribution systems, including the installation of new substations, transmission line equipment, grid stations and other transmission and distribution enhancements and upgrades over the next 36 months.
