Saudi Arabia To Finance Pakistan's Hydro Power Complex With Loan Of $240 Million

Saudi Arabia would provide a $240 million loan to co-finance Pakistan's multi-purpose Mohmand dam project, a massive hydro-power complex being developed in the country's northwest.

The project would "contribute to Pakistan's energy security, increase sustainable water supply for agriculture and human consumption, and improve flood resilience," according to a statement from Pakistan's economic affairs ministry.

The identical announcement was released in Arabic by the Saudi national news agency.

"The Saudi Fund for Development (SFD) has signed a $240 million loan agreement," the statements said.

The cash will assist Pakistan raise its critically low foreign exchange reserves as it faces an acute balance of payment problem, as well as meet the country's energy demands.

The project, co-financed by the SFD, the Organization of Petroleum Exporting Countries, the Islamic Development Bank, and the Kuwait Fund for Arab Economic Development, will use renewable energy to generate 800 megawatts of electricity capacity, contributing to Pakistan's energy security, according to the ministry.

According to the agreement, the water storage would also promote sustainable agricultural practises by allowing irrigation of 6,773 hectares of land and increasing overall cropping area in the northwestern region from 1,517 hectares to 9,227 hectares.

Based to the disclosures, the SFD has supported around 41 development projects and programmes in Pakistan totaling approximately $1.4 billion, as well as oil derivatives worth more than $5.4 billion between 2019 and 2023 to assist Pakistan's economy.

Pakistan has a combination of largely thermal and hydro power producing capacity, which is theoretically ample, but the government lacks the funding to fully use the capacity, resulting in hours-long blackouts, especially during peak summer energy demand.