Islamabad, 10 April 2023 (TDI): Saudi Arabia has announced that it will provide a $240 million loan to co-finance Pakistan’s multi-purpose Mohmand dam project.

This major hydro-power complex is being built in the northwest of the country and is expected to contribute to Pakistan’s energy security, increase sustainable water supply for agriculture and human consumption, and improve resilience to floods.

The Mohmand dam project will be co-financed by the Saudi Fund for Development (SFD), the Organization of the Petroleum Exporting Countries, the Islamic Development Bank, and the Kuwait Fund for Arab Economic Development.

Significance of this project

Once completed, the Mohmand dam project will use renewable sources to generate 800 megawatts of electricity production capacity, contributing to Pakistan’s energy security.

The project will also address the water needs of the region, with water storage supporting sustainable agricultural practices to enable irrigation of 6,773 hectares of land.

This will increase the total cropping area from 1,517 hectares to 9,227 hectares in the northwestern region of Pakistan.

The SFD has financed around 41 development projects and programmes in Pakistan, amounting to approximately $1.4 billion, and has also financed oil derivatives worth more than $5.4 billion between 2019 and 2023 to support Pakistan’s economy.

For Pakistan, this funding will help to boost critically low foreign exchange reserves as it faces an acute balance of payment crisis.

The Mohmand dam project will also help to address the energy needs of the 220-million strong nation, which has a mix of mostly thermal and hydro power generation capacity, which is theoretically adequate.

However, the country has insufficient funds to use the capacity to the full, resulting in hours-long black-outs, especially when energy demand is high in summer.

The Mohmand dam project is expected to contribute to Pakistan’s economy by creating employment opportunities during the construction phase and by improving the availability of water and electricity to the region.

It is also expected to improve the livelihoods of the local population, particularly farmers, by increasing the availability of water for irrigation and expanding the total cropping area.

This loan agreement marks another milestone in the close and longstanding relationship between Saudi Arabia and Pakistan.

Both countries have worked together on a range of issues, including security, trade, and investment, and have consistently supported each other in times of need.

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Thus, the Mohmand dam project is a testament to the commitment of both countries to strengthening their relationship and promoting development and progress in the region.

In a nutshell, the loan agreement signed by the SFD and Pakistan’s economic affairs ministry is a significant step forward in this regard and is expected to have a transformative impact on the lives of the people in the region.