ISLAMABAD: Prime Minister Nawaz Sharif is scheduled to inaugurate Pakistan’s first private hydel power project near Mangla Dam in Azad Kashmir on Monday.

The 84MW run-of-the river New Bong Escape Hydropower Project is expected to provide electricity to Wapda at about Rs8.7 per kwh, compared to average thermal generation cost in excess of Rs18 per unit.

The commercial production at the project is estimated to save about 135,000 tons of imported oil costing over $100 million per annum.

It will provide 540 GWh of green energy per year to the national grid under a 25-year power purchase agreement with the National Transmission and Dispatch Company.

Laraib Energy Ltd, a private company taken over by the Hub Power Company (Hubco) a couple of years ago, commissioned the plant two months ahead of its schedule of 42 months.

Interestingly, Hubco was the first to establish a 1,292MW private thermal power plant in Balochistan and the company is now planning to convert it to coal under an agreement with the government to provide cheaper energy to reduce dependence on imported oil.

One of the biggest issues of the power sector is expensive power generation, and the inauguration of private sector hydel project by Laraib has paved the way for private investment in the sector.

It is also Pakistan’s first hydropower plant to be registered with the United Nations’ Framework Convention on Climate Change as a clean mechanism development project, and has made solid contribution in offsetting greenhouse emission globally.

The Asian Development Bank and other lending agencies, multilateral IDB, IFC and Proparco France and two domestic commercial banks, NBP and HBL, played a constructive role in structuring the project and finance documents.

The successful completion of the county’s first independent hydropower project by a private investor, in record time, has given hope for harnessing the vast potential of the water sector.

As per official estimates, Pakistan has a potential to generate 100,000MW of hydel power. But only about 6,500MW of the potential has been harnessed so far.