Karachi 22 March, 2007
- Lars Thunell, head of IFC, the private sector arm of the World Bank Group, has signed an agreement to provide financing to the Karachi Electric Supply Corporation that will increase the company’s electricity generation capacity and improve its transmission and distribution networks. IFC’s $125 million loan will support the company’s $809 million capital investment program.
Thunell signed the agreement during his first visit to Pakistan since joining IFC in January 2006. He said, “IFC is pleased to be supporting KESC’s investment program, which will be key to improving the quality of service of Karachi’s power supply and making it reliable. The city of Karachi accounts for a significant share of Pakistan’s industrial and economic activity, and this investment is a good example of IFC’s support for private investment in strategic sectors to promote sustainable economic development.”
The visit highlights IFC’s continuing commitment to its well-established partnership with Pakistan as well as to private sector development, poverty reduction, and employment creation throughout the Middle East and North Africa. Thunell met with government officials and representatives from the private sector. He was accompanied by Michael Essex, IFC Director for the Middle East and North Africa.
Karachi has long suffered from widespread electricity shortages, particularly during the summer of 2006. Following KESC’s landmark privatization over a year ago, it became clear that many of its facilities needed to be refurbished or upgraded. KESC’s investment program, the largest in Pakistan’s power sector since the mid-1990s, will add 220 megawatts to its existing facility at Korangi and up to 575 megawatts to its existing facility at Bin Qasim. In addition, the investment will help restore its existing generation by 220 MW. Refurbishing KESC’s existing assets will reduce both technical and commercial losses. The use of a combined cycle plant will reduce fuel costs through greater efficiency.
IFC has played a leading role in facilitating the long-term financing package for KESC with a lender group that is expected to include the Asian Development Bank, National Bank of Pakistan, Habib Bank Limited, United Bank Limited, and Muslim Commercial Bank. IFC has also shared with KESC its global experience in investing in recently privatized power utilities, and is helping the company upgrade its environmental and social practices.
KESC’s Chairman, Abdulaziz Hamad Aljomaih, said, “We appreciate IFC’s commitment and its support to the KESC capital investment program. This will greatly expedite the turnaround strategy, which comprises organizational restructuring and development; balancing, modernizing, and replacing networks; and enhancing generation capacity. The Al-Jomaih Group and the National Industries Group are committed to long-term investment in Pakistan. The sponsors greatly appreciate the Pakistani government for its support to KESC.”
"IFC is supporting local and regional players and enhancing their capacity to invest in key industries that are traditionally considered to be in the public sector. Our investment in KESC contributes to such South-South economic growth, as it supports the investment program of a Pakistani power utility that is backed by strong Saudi and Kuwaiti investors,” said Michael Essex, IFC’s Director for Middle East and North Africa.
IFC’s strategy focuses on supporting local and regional players and enhancing their capacity to invest in key sectors, including those traditionally considered to be in the public sector. IFC’s investment in KESC contributes to South-South economic growth, as it supports the investment program of a Pakistani power utility that is backed by strong Saudi and Kuwaiti investors. IFC is committed to assist in KESC’s successful turnaround, which would improve the quality of service to consumers and demonstrate the benefits of power sector privatization. Infrastructure is vital to growth in developing economies, and IFC sees this loan as a direct investment in Pakistan’s future, especially as it will improve services for an estimated 12-14 million consumers in Karachi, Pakistan’s industrial and commercial capital.
About IFC
IFC, the private sector arm of the World Bank Group, promotes open and competitive markets in developing countries. IFC supports sustainable private sector companies and other partners in generating productive jobs and delivering basic services, so that people have opportunities to escape poverty and improve their lives. Through FY06, IFC Financial Products has committed more than $56 billion in funding for private sector investments and mobilized an additional $25 billion in syndications for 3,531 companies in 140 developing countries. IFC Advisory Services and donor partners have provided more than $1 billion in program support to build small enterprises, to accelerate private participation in infrastructure, to improve the business enabling environment, to increase access to
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About KESC
Incorporated in 1913, the Karachi Electric Supply Corporation has exclusive franchise rights for Karachi and its adjoining areas, where it is the only fully integrated power utility operator. KESC is an integrated electrical utility company engaged in generation, transmission, distribution, and retail supply of electricity to industrial, commercial, agricultural and residential consumers within its franchised area of 6,000 square kilometers.
