China’s first One Belt One Road project secures $1.4b facility
Pakistan’s Karot hydroelectric power project has secured a $1.4 billion facility from a group of Chinese investors and the International Finance Corporation (IFC). It is considered the first infrastructure deal under China’s One Belt One Road initiative.
Investors include Export-Import Bank of China, China Development Bank and Silk Road Fund. IFC, an investment arm of the World Bank, confirmed that it will invest $100 million in the project, which is estimated to cost $1.7 billion in total and provide electricity to more than 11 million people.
According to a statement from law firm Mourant Ozannes, which advised on the deal, Karot will be commercially operational by 2021. It represents one of three multi-stage hydro projects under development in Pakistan by Silk Road, IFC and state-owned China Three Gorges Corporation, which is regarded as the world’s largest hydro power operator.
The investment is said to be the first project-level commitment under One Belt One Road, a trade and infrastructure development plan proposed by the Chinese government in 2013 that combines the Silk Road Economic Belt and the 21st Century Maritime Silk Road. The initiative is said to be capable of attracting as much as $8 trillion of investment by connecting China with various markets across Asia, Europe and Africa.
Karot also represents part of a World Bank energy plan for Pakistan, which aims to mobilize $10 billion in new generation investments to address the country’s acute power shortage and improve sector sustainability. Power deficits in Pakistan are responsible for six hours of blackouts per day on average.
The Silk Road Fund was launched in 2015 as a $40 billion fund with investment from Export-Import Bank of China, China Development Bank, China Investment Corporation and the State Administration of Foreign Exchange, which contributed $6.5 billion to the vehicle’s first $10 billion installment. It targets One Belt One Road projects through investments in equity, debt and other funds.
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