According to statements from both Pakistan and Saudi Arabia, the Saudi Fund for Development (SFD) will provide a $240 million loan to co-finance Pakistan’s Mohmand dam project, a major hydro-power complex in the northwest of the country. The project aims to improve Pakistan’s energy security, increase sustainable water supply for agriculture and human consumption, and improve resilience to floods. The funding will not only help Pakistan address its energy needs but also boost critically low foreign exchange reserves and address its acute balance of payment crisis. The Mohmand dam project is co-financed by the SFD, the Organization of the Petroleum Exporting Countries, the Islamic Development Bank, and the Kuwait Fund for Arab Economic Development. It will use renewable sources to generate 800 mega watts of electricity production capacity and support sustainable agricultural practices, enabling irrigation of 6,773 hectares of land and increasing the total cropping area from 1,517 hectares to 9,227 hectares in the northwestern region. The SFD has financed around 41 development projects and programs 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. Despite having mostly thermal and hydro power generation capacity, which is theoretically adequate, Pakistan has insufficient funds to use the capacity to the full, resulting in hours-long black-outs, especially when energy demand is high in summer.
