ISLAMABAD: Saudi Fund for Development (SFD) on Friday signed an agreement to extend a $240 million loan to Pakistan for the construction of the $1.2 billion Mohmand Multipurpose Dam project and help transition towards green energy.

The agreement was signed by the Chief Executive Officer of SFD Sultan Abdulrahman Al-Marshad, and the Federal Secretary for the Ministry of Economic Affairs Dr Kazim Niaz. Saudi Ambassador Nawaf bin Said Al-Malki also witnessed the signing ceremony.

The Ministry of Economic Affairs said the loan agreement showed a strong partnership between Saudi Arabia and Pakistan in achieving sustainable development goals (SDGs) as Mohmand Dam was a major hydropower complex that will contribute to Pakistan’s energy security, increase sustainable water supply for agriculture and human consumption and improve resilience to floods.

The Mohmand Dam project started in 2019 is targeted for completion in November 2024. It is expected to enhance water and food security and improve the standard of living for people living in Khyber Pakhtunkhwa, where almost 80pc of the population resides in rural areas, boosting the region’s socioeconomic development by creating employment opportunities and reducing poverty levels. The project aligns with SDG-2 (food security), SDG-6 (clean water), and SDG-7 (clean energy) and embodies SDG-17 (partnerships for the goals).

The project, which is co-financed by the SFD, OPEC, Islamic Development Bank, and the Kuwait Fund for Arab Economic Development, is expected to have a significant impact on Pakistan’s energy and water sectors. By using renewable energy sources, the project will generate 800 megawatts of electricity production capacity, contributing to Pakistan’s energy security.

In addition, the storage of 1.6 million cubic meters of water will support sustainable agricultural practices, enable irrigation of 6,773 hectares of new land, and increase the total cropping area from 1,517 hectares to 9,227 hectares in the province, facilitating agricultural activities.

During the agreement signing ceremony, the CEO of SFD emphasised the strong developmental ties between Saudi Arabia and Pakistan. The CEO also highlighted the significance of cooperation between development funds, as evidenced by this project. He said this initiative was an extension of SFD’s continued support for development projects and programmes in Pakistan since its inception.

To date, SFD has financed around 41 development projects and programmes in Pakistan, amounting to approximately $1.4bn. In addition, SFD financed oil derivatives worth more than $5.4bn between

2019 and 2023 to support Pakistan’s economy, this comes as a continuation of the support provided by the Government of Saudi Arabia to build a sustainable economy.

Dr Kazim Niaz expressed his sincere appreciation and gratitude to the Kingdom of Saudi Arabia for its unwavering support towards the development sectors in Pakistan through the SFD. He said Saudi financing had been bringing about positive developmental impacts on Pakistan and its people. The use of renewable energy would enable sustainable energy as well as water sources, which would enhance water and food security.

Published in Dawn, April 8th, 2023