WASHINGTON, D.C., Dec. 21 -- The International Finance Corporation (IFC) today signed an investment agreement to provide up to US$79.5 million to AES Pak Gen (Private) Company (AESPG), which will build, own, and operate a cost-competitive power plant in the Punjab Province. AESPG's plant will operate on fuel oil, which is the most readily available fuel for thermal electricity generation in Pakistan. An important environmental component of the project is the inclusion of a flue gas desulfurization unit, also known as "scrubber," which will limit the levels of sulfur dioxide emissions. This is the first power project in Pakistan to be equipped with a flue gas desulfurization unit. "The government of Pakistan has made the country's power shortage one of it's highest priorities," said Assaad Jabre, Acting Director of IFC's Infrastructure Department. "IFC has assisted the government in helping to formulate a new power policy and by investing in four private power projects both as lender and shareholder." The total project cost is estimated to be US$349 million. IFC has arranged a financing package of up to US$79.5 million, consisting of an equity investment of up to 10 percent of AESPG's share capital; a loan of up to US$20 million for IFC's own account; and a syndicated loan of up to US$50 million for the account of commercial bank participants, which include Dresdner Bank, ING Bank, Natwest Markets, and Korea Merchant Banking Corporation. In addition to the financing provided by IFC, The Export-Import Bank of Japan is providing US$184 million to the project. AESPG, a subsidiary of the AES Corporation, one of the largest independent power producers in the U.S. with worldwide operations, will own, operate, and maintain the power plant. The Water and Power Development Authority, a state owned utility, will purchase the project's capacity and energy under a 30-year agreement, and the Pakistan State Oil Corporation will supply fuel oil under a 30-year agreement. Commercial operations are expected to begin by December, 1997.
The World Bank Group has worked closely with the government of Pakistan to define a greater role for the private sector in the country's power generation. The World Bank has made a total of ten loans to the Water and Power Development Authority and, through the Hub River project, laid the foundation for private sector involvement in power generation IFC, a member of the World Bank Group, is the largest multilateral source of equity and loan financing for private sector projects in developing and emerging economies.
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