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Country Pakistan
Location near Muzaffarabad
Project Number 44914-01
Approval Number 7339/2792
Type of ADB Assistance / Amount
Private Sector Loan US$97.00  million
Thematic Classification Private Sector Development
Economic growth

Sector/Subsector Energy / Large Hydropower
Responsible ADB Department Private Sector Operations Department
Responsible ADB Division Infrastructure Finance Division 1
Project Sponsor(s) Korea Water Resources Corporation
Description The Project involves construction and operation of a 147 MW run-of-the-river hydroelectric power generation facility between the Kunhar and Jhelum rivers near Muzaffarabad on a BOOT basis for a period of 30 years from the commercial operations date.
Objectives and Scope The Project addresses Pakistan's growing energy deficit by adding 147 MW power generation capacity and promote more efficient use of indigenous and renewable energy resources. The Project will also promote private sector participation in the country's hydropower sector under the Power Policy 2002. In addition, the Project stimulates local employment and economic activities.
Linkage to Country/Regional Strategy The Project is consistent with ADB's Strategy 2020 which emphasizes investment in infrastructure to achieve high sustainable economic progress, connect the poor to the markets, and increase their access to basic productive assets, as part of ADB's support for achieving inclusive growth. Strategy 2020 puts particular emphasis on expanding energy supplies and promoting energy efficiency through supply-side measures. Strategy 2020 also emphasizes private sector development and private sector participation. The Project will fit with these priorities as it will add new electric generation capacity to the country through private sector participation in developing clean energy sources.

The Project remains fully consistent with the ADB Energy Policy 2009, under which support to renewable energy generation has been identified as a key priority.

ADB's support for the Project is in line with the Country Partnership Strategy for Pakistan during 2009-13 which particularly emphasizes the importance of energy sector development (particularly clean energy), private sector participation in infrastructure development, and expansion of ADB's private sector operations in the hydroelectric sector. The Project is a logical continuation of the initiatives of ADB's operations in Pakistan's power sector development and reform that is designed to promote an adequate and well-regulated, market-oriented power sector.
Safeguard Categories Safeguard Categories explained (Launches new browser window)
Environment A
Resettlement A
Indigenous People C
Summary of Environmental and Social Aspects The potential impacts during the construction phase include soil erosion, water pollution, effect on ambient air quality caused by vehicle exhaust and dust, noise pollution, safety hazards and public health concerns for the nearby communities. These will be addressed through established sound engineering design and mitigation measures as well as environmental management practices in the construction process. Key environmental issues during the operation phase include downstream flow variations, waste disposal, safety hazards for the plant staff. Impacts on water resources and aquatic ecology from reduction of flow in the Kunhar River reach between the weir and the confluence to the Jhelum River will be addressed by allowing a minimum flow of 2 cubic meters per second from the headpond to minimize stress on aquatic flora and fauna. The Project's environmental management plan provides the mitigation as well as monitoring measures to deal with these issues and impacts.

The Project will entail (i) displacement of 28 households, (ii) permanent and temporary land acquisition of 45.6 hectares involving approximately 150 landowners, (iii) around 600 economic trees, and (iv) one small water mill of rudimentary construction. The land to be acquired will cover the headpond, powerhouse sites, weir area, construction camps and other project components. The headpond area is regularly flooded due to narrow river gorge at Patrind, making cultivation very irregular; even uncertain. The displaced people do not primarily depend upon this land as a source of income, and they are known to earn their livelihood from other economic engagements. No share croppers/tenants or agricultural laborers are involved. No one is using the river for sustenance or subsistence fishing, hence the Project will not affect anyone on this respect, either.

The population in the Project area is local people belonging to settled districts, and it is neither characterized by ethnic diversity nor does it have any indigenous people.
Stakeholder Communication, Participation and Consultation Community consultations started, as early as June 2006, during the preliminary stage of project preparation. The consultations involved the potential stakeholders such as landowners, shopkeepers, religious leaders and relevant public representatives and officials of government line departments. The overall response from the stakeholders was positive, although concerns for further clarification were raised, which included land acquisition, traffic hazards, employment, project benefits and cooperation with the community. Recent consultations were conducted during the 1st quarter of 2011 to update the data based on the status of current project design
Timetable for assistance design, processing and implementation
Concept Clearance 19 Apr 2010
Due Diligence Mission 30 Aug 2010 to 02 Sep 2010
Private Sector Credit Committee Meeting 28 Mar 2011
Board Approval 11 Oct 2011
2008 Asian Development Bank

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