K-ELECTRIC LIMITED (FMO-60899)

Regions
  • South Asia
Geographic location where the impacts of the investment may be experienced.
Countries
  • Pakistan
Geographic location where the impacts of the investment may be experienced.
Financial Institutions
  • Netherlands Development Finance Company (FMO)
International, regional and national development finance institutions. Many of these banks have a public interest mission, such as poverty reduction.
Project Status
Approved
Stage of the project cycle. Stages vary by development bank and can include: pending, approval, implementation, and closed or completed.
Bank Risk Rating
A
Environmental and social categorization assessed by the development bank as a measure of the planned project’s environmental and social impacts. A higher risk rating may require more due diligence to limit or avoid harm to people and the environment. For example, "A" or "B" are risk categories where "A" represents the highest amount of risk. Results will include projects that specifically recorded a rating, all other projects are marked ‘U’ for "Undisclosed."
Voting Date
Apr 1, 2022
Date when project documentation and funding is reviewed by the Board for consideration and approval. Some development banks will state a "board date" or "decision date." When funding approval is obtained, the legal documents are accepted and signed, the implementation phase begins.
Borrower
K-Electric Limited
A public entity (government or state-owned) provided with funds or financial support to manage and/or implement a project.
Sectors
  • Energy
The service or industry focus of the investment. A project can have several sectors.
Investment Type(s)
Loan
The categories of the bank investment: loan, grant, guarantee, technical assistance, advisory services, equity and fund.
Investment Amount (USD)
$ 65.35 million
Value listed on project documents at time of disclosure. If necessary, this amount is converted to USD ($) on the date of disclosure. Please review updated project documents for more information.
Loan Amount (USD)
$ 65.35 million
Value listed on project documents at time of disclosure. If necessary, this amount is converted to USD ($) on the date of disclosure. Please review updated project documents for more information.
Primary Source

Original disclosure @ FMO website

Updated in EWS Sep 4, 2022

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Project Description
If provided by the financial institution, the Early Warning System Team writes a short summary describing the purported development objective of the project and project components. Review the complete project documentation for a detailed description.

According to FMO, the funds will be exclusively used towards transmission and distribution capital expenditures, with a specific view to 1) reduce (technical and non-technical) network losses, 2) improve safety, 3) increase the number of new connections, 4) allow better integration of renewable power to the grid, and 5) allow more electricity to be imported from the national grid.

Within the past decade, there had been an increase in the demand-supply gap within Pakistan. However, following the introduction of new generation plants and entrance of Independent Power Producers, sustained investment in the transmission and distribution sector is required to channel the energy to demand centers. Since its privatization, KE has been working actively to develop its generation capacity alongside its downstream network to serve the Karachi area which is growing at a rapid pace. FMO and Proparco's financing will support these efforts by allowing K-Electric to import more electricity from the national grid via development of new grids and transmission lines. Furthermore, the funding will be used to upgrade and refurbish existing transmission lines, allowing for a better integration of renewables power (wind, solar) in the K-Electric grid. In addition, a significant portion of the facility will be used to improve the distribution network. More specifically, the funds will be used to improve safety and make K-Electric's distribution infrastructure more resistant to extreme weather and monsoons; to reduce electricity losses; and to support K-Electric's investment in new connections in the face of Karachi's continuous urbanization and influx of new residents and businesses.

ENVIRONMENTAL AND SOCIAL RATIONALE

The Company has a clear commitment, supported by its top management, to perform according to Good International Industry Practices, to address key environmental, health & safety (both in terms of the workforce and the community) and social risks, and to improve the sustainability of its operations. With this financing, FMO supports KE in their wish to become a leading organization in terms of these matters, as documented in a comprehensive environmental & social action plan. We have categorized this transaction E&S category A based on the high intrinsic risk of KE's activities. IFC Performance Standards (PS) 1 - 6 are triggered. PS 7 and 8 are not triggered as KE's activities are not impacting indigenous peoples or cultural heritage.

Investment Description
Here you can find a list of individual development financial institutions that finance the project.
Private Actors Description
A Private Actor is a non-governmental body or entity that is the borrower or client of a development project, which can include corporations, private equity and banks. This describes the private actors and their roles in relation to the project, when private actor information is disclosed or has been further researched.

K-Electric is the only vertically-integrated private power utility provider serving over 3 million residential and commercial clients in Karachi, Pakistan's largest city. Active in generation, transmission, and distribution, the company generated 19,487GWh in the past financial year and a transmission and distribution network spanning across over 6600 square kilometers.


Contact Information
This section aims to support the local communities and local CSO to get to know which stakeholders are involved in a project with their roles and responsibilities. If available, there may be a complaint office for the respective bank which operates independently to receive and determine violations in policy and practice. Independent Accountability Mechanisms receive and respond to complaints. Most Independent Accountability Mechanisms offer two functions for addressing complaints: dispute resolution and compliance review.

No contact information provided at the time of disclosure.

ACCESS TO INFORMATION

As part of FMO's ex-ante disclosure (disclosure of transactions before contracting), you can send requests or questions for additional information to: disclosure@fmo.nl

ACCOUNTABILITY MECHANISM OF FMO

Communities who believe they will be negatively affected by a project funded by the Dutch Development Bank (FMO) may be able to file a complaint with the Independent Complaints Mechanism, which is the joint independent accountability mechanism of the Dutch Development Bank (FMO) and the German Investment Corporation (KfW). A complaint can be filed in writing, by email, post, or online. The complaint can be filed in English or any other language of the complainant. The Independent Complaints Mechanism is comprised of a three-member Independent Expert Panel and it can provide either problem-solving, compliance review or both, in either order. Additional information about this accountability mechanism, including a guide and template for filing a complaint, can be found at: https://www.fmo.nl/independent-complaints-mechanism

How it works

How it works