Washington: K-Electric Limited (“K-Electric”) 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 Honorable Senator Ishaq Dar, the Finance Minister of Pakistan. The ceremony was held at the US Chamber of Commerce in Washington, D.C. today.
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.
Tayyab Tareen, Chief Executive Officer of K-Electric executed the commitment letter on behalf of K-Electric and said, “We are extremely pleased to have OPIC involved to support this landmark project, which will enhance our transmission network and have a long-term sustainable impact on improving the power availability in Karachi. The partnership with OPIC is an important building block in our vision for the energy sector that we look forward to replicate in our future efficiency improvement projects.”
“This exciting project marks another milestone in OPIC’s continued support for Pakistan’s power sector – particularly in renewable energy. K-Electric’s forward-thinking update of power transmission in and around Karachi helps to build a reliable electricity foundation for the people of Pakistan. I commend The Abraaj Group’s very impressive revitalization work with its partner company, K-Electric, and OPIC is proud to be able to support the project,” said Elizabeth Littlefield, OPIC’s President and CEO.
Nadeem Lodhi, Managing Director & Citi Country Officer, Pakistan commented that, “We are delighted to catalyze this significant financing for K-Electric, which reiterates our commitment to the country and restates our strategy of leading innovative international financing solutions for our clients in Pakistan.”
K-Electric Limited is at present the only vertically-integrated power utility in Pakistan that manages the generation, transmission and distribution of electricity to the city. The Company covers a vast area of over 6,500 square kilometers and supplies electricity to all the industrial, commercial, agricultural and residential areas that come under its network, comprising of over 2.2 million customers in Karachi and in the nearby towns of Dhabeji and Gharo in Sindh and Hub, Uthal, Vindar and Bela in Balochistan.
OPIC is the U.S. Government’s development finance institution. It mobilizes private capital to help address critical development challenges and in doing so, advances U.S. foreign policy and national security priorities. Because OPIC works with the U.S. private sector, it helps U.S. businesses gain footholds in emerging markets, catalyzing revenues, jobs and growth opportunities both at home and abroad. OPIC achieves its mission by providing investors with financing, political risk insurance, and support for private equity investment funds, when commercial funding cannot be obtained elsewhere. Established as an agency of the U.S. Government in 1971, OPIC operates on a self-sustaining basis at no net cost to American taxpayers.
All OPIC projects adhere to high environmental and social standards and respect human rights, including worker’s rights. By mandating high standards, OPIC helps raise the industry and regional standards of the countries in which its projects operate. OPIC services are available for new and expanding business enterprises in more than 160 countries worldwide.
Citi, the leading global bank, has approximately 200 million customer accounts and does business in more than 160 countries and jurisdictions. Citi provides consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, transaction services, and wealth management.