The Asian Development Bank (ADB) has approved a US$300 million loan to finance the construction of a 300-megawatt hydropower plant in Pakistan. The plant will add 1,143 gigawatt-hours of clean energy annually to the country’s energy mix, enhancing the energy sector’s reliability and sustainability. The plant will be built on the Kunhar river near Balakot City in Khyber Pakhtunkhwa Province, and is expected to be commissioned by 2027.

The Balakot hydropower plant has also requested a US$280 million loan from the Asian Infrastructure Investment Bank. The Pakistan government will invest US$175 million in the project.

“Pakistan is highly vulnerable to climate change, with water resources and energy particularly at risk from floods, droughts, high temperatures, and other extreme weather events,” says ADB principal energy specialist Adnan Tareen. “In line with Pakistan’s climate change adaptation and mitigation priorities, this climate-resilient hydropower plant will boost the country’s clean energy generation while effectively utilizing its vast water resources.”

Pakistan is rich in water resources but only around 16% of its identified hydropower potential has been harnessed. The country’s power sector is highly reliant on imported fuel and is burdened with a stressed transmission and distribution network. To balance the energy mix and reduce its dependence on imported fuel, the government has committed to increase its untapped renewable energy potential in hydro, solar, and wind.

The plant will substantially increase the revenue of the state-owned Pakhtunkhwa Energy Development Organization, which is responsible for operating hydropower plants in Khyber Pakhtunkhwa. It will help reduce average daily load shedding in the province and serve the national demand.