The main project sponsors are Al-Jomaih Group and National Industries Holding. The ownership of the company is as follows: 71.5% KES Power Limited (holding company owned 60% by Al-Jomaih Group and 40% by National Industries Holding), 25.9% Government of Pakistan, and the remaining amount is held by local investors. The company is listed on the Karachi Stock Exchange.

The Al Jomaih Group was founded in 1936 and has since grown to be a large conglomerate with sizable investments across a number of sectors (soft drinks, automotive, lubricants) and operations throughout the Gulf region. The National Industries Holding was established in 1960 and is listed on the Kuwait Stock Exchange. It has assets in industrial (building materials and related products), financial and real estate sectors throughout the Middle East and in Europe.

The total project cost is estimated at $935 million. The proposed total IFC investment is up to $125 million.

125.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	125.0
Equity	0.0

* These investment figures are indicative

KESC’s operations span throughout the city of Karachi and its adjoining areas in the Sindh province of Pakistan. Karachi is the capital city of the Sindh province and is located on the coast of the Arabian Sea in south-eastern Pakistan. The project includes installation of two new generation plants on existing KESC facilities at Bin Qasim and Korangi in Karachi, and upgrades and refurbishment of assets that are located throughout the 6000 km2 license area of KESC.

The project will have a significant development impact as a result of:

- eliminating load shedding and meeting incremental demand for electricity in the Karachi area from existing residential, industrial and commercial users;
- enabling new residential and business customers to be connected to the grid, thus reducing their cost of obtaining power;
- significant reduction in technical and commercial losses of electricity;
- improved quality of service to consumers;
- reducing carbon emissions through the development of more efficient and cleaner natural gas fired generation; and
- demonstrating the benefits of power sector privatization in the country and region.

The World Bank has been actively involved in the reform of the electricity sector in Pakistan and has been instrumental in the establishment of the regulatory agency and the unbundling of WAPDA, the major electricity utility in Pakistan. By supporting the largest privatization in Pakistan’s power sector, this project complements the IBRD work on sector reform.

- IFC’s Role:

- Supporting infrastructure development and additional privatizations

IFC financing for KESC’s capital expenditure program is critical for the success of privatization and sector reform. A successful outcome of KESC’s privatization could be a catalyst for other power sector privatizations in the country.

- Long term funding and “anchor’ lender

IFC will provide long term funding which will ensure a proper match of debt service with the long term nature of the underlying assets. In addition, IFC’s presence in the transaction as an “anchor” lender will facilitate the company in raising additional parallel loans from other financial institutions.

- Environmental and Social Expertise

KESC has benefited from IFC expertise in the environmental and social areas. IFC has added value in terms of the environmental review of the generation expansion facility and has worked with KESC to strengthen its environmental management practices.

The project involves:

- electricity generation capacity expansion at KESC''s existing thermal power stations (Korangi Thermal Power Station and Bin Qasim Thermal Power Station) by adding gas-fired combined cycle power generation units; and
- rehabilitation of KESC''s existing transmission and distribution (T&D) assets.

The generation capacity expansion will be conducted within the existing power stations, requiring no additional land acquisition. The gas-fired combined cycle power generation units are cleaner and more energy efficient than KESC''s existing thermal power generation plants, and are expected to improve the corporate environmental performance. Social and environmental assessment was conducted for the generation expansion components in accordance with the Pakistan Environmental Impact Assessment Regulations of 2000 and the IFC''s Performance Standards on Social and Environmental Sustainability. The rehabilitation of KESC''s T&D assets is expected to improve the energy utilization efficiency of the company''s grid system and its occupational and public health and safety performance. As part of financing by IFC, KESC has agreed to implement an Action Plan, which includes strengthening KESC''s Social and Environmental Management System, implementing the recommended actions by the Environmental Audit conducted for KESC''s generation assets, and conducting additional Environmental, Health and Safety Audit for the T&D assets. Considering that the project is expected to improve the overall social, environmental, health and safety performance of KESC, and that the potential adverse impacts can be readily addressed through mitigation measures, the project has been categorized as B by IFC. For further information, please see the Environmental and Social Review Summary (ESRS).