ISLAMABAD, July 6: France has agreed to finance the Jaggran-II hydropower project which will produce 48MW of electricity.

An agreement to this effect was signed here on Friday by Country Director of the Agence Française de Développement (AFD) Nicolas Fornage and Additional Secretary of the Economic Affairs Division Iftikhar Ahmed Rao in the presence of French Ambassador to Pakistan Philippe Thiébaud.

The project will be built in the upper reaches of Jaggran Nullah, a right bank tributary of Neelum river, about 90km from Muzaffarabad in Azad Kashmir. It will be located downstream of the existing 30.4MW Jaggran-I hydropower project, also funded by France and being operated by the Hydro-Electric Board (HEB) since 2000.

The funding will be in terms of soft loan of 68 million euros to be provided to the government of Pakistan. The AFD will also provide a grant for capacity-building of the HEB.

The Jaggran-II will be a run-of-the-river scheme and will not entail any major environmental or social constraints. It will be connected to the national grid.

Upon its commissioning in 2015, the project will provide a reliable source of renewable energy and a permanent power supply to Muzaffarabad.

France, through the AFD, has been providing funds to help Pakistan overcome its energy crisis. The agency is co-financing with the Asian Development Bank a multi-tranche programme on energy efficiency in domestic and industrial sectors.

The AFD is also supporting the development of renewable energies and currently engaged with Jabban, a 22MW project in Malakand district, and the Jaggran-II hydropower project.

Proparco, a subsidiary of the AFD for the private sector development, has also invested 40 million euros over the past three years in the energy sector, including the New Bong Escape hydropower project. It is looking forward to supporting independent power producers, energy efficiency, agro-industries and microfinance.

The AFD recently approved a soft loan of 11 million euros to fund detailed design studies for the Munda hydropower project located in Mohmand Agency.

France had pledged 300 million euros at the Tokyo ministerial conference in 2009, as a member of the Friends of Pakistan group. With the funding agreement for Jaggran-II, France has now a portfolio of projects amounting to 213 million euros in Pakistan’s water and energy sectors.