A Supplementary Loan Agreement was signed today in Islamabad between the Islamic Republic of Pakistan and Kuwait Fund for Arab Economic Development whereby the Fund will extend a loan of Kuwaiti Dinars nine million five hundred thousand (KD.9,500,000/-) (i.e. equivalent of 32.3 million US$) to finance the Neelum-Jhelum Hydro-Power Project 

The Loan Agreement was signed on behalf of the Islamic Republic of Pakistan by Mr. Mohammad Saleem Sethi, secretary Economic affairs division and on behalf of the Fund by Mr. Hamad Al-Omar, Deputy General of the Kuwait Fund for Arab Economic Development, in attendance of Mr. Ayad Al-Gharabali, Assistant Regional Manager for East South Asia & Pacific Countries.

The Project aims at developing the (a) national power generation system to meet the increasing electricity demand in the country, (b) indigenous renewable energy resources namely the hydro resources.

The Project consists of the construction of a hydropower scheme, utilizing a gross head of about 420 meters by diverting the Neelum River water from Nauseri to the lower line of Jhelum River, capable of developing about 969 MW of electric power to produce about 5,150 GWh a year. It comprises a diversion dam and its related structures at Nauseri about 41 km east ofMuzaffarabad on the Neelum River, a 32.5 km tunnel system to convey the water to the power house near Chattar Kalas about 22 km south ofMuzaffarabad and a tail race to discharge the water at the lowest reach of the Jhelum River at Zaminabad. The Project implementation started in the second quarter of 2008 and is expected to be completed by the end of 2016.

The total updated cost of the Project is estimated at about US$ 3.16 billion equivalent to about KD. 928.72 million, of which the foreign currency is equivalent to about US$1.74 billion equivalent to about KD. 510 million. 

The original and supplementary Loan (the ?Combined Loan?) shall be for a period of 26 years including 6 years grace period. The Combined Loan will be amortized on 44 semi-annual installments, the first of which shall be due on 15/03/2019 and the last on 15/09/2040. The Combined Loan bears interest at 1.5 % per annum, in addition to 0.5% per annum to cover administrative and other expenses to be incurred in the implementation of the Loan Agreement.

By concluding this agreement, it will be the 17^th loan that the Fund provided to the Islamic Republic of Pakistan, where the Fund previously provided 16 loans amounting to about 120.6 million Kuwaiti Dinars equivalent to about 410 million U.S. dollars for financing projects in various sectors.