Engro Energy (Pvt) Limited

Summary of Proposed Investment

This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only.

Project number	25487
Company name	Engro Energy (Pvt) Limited
Country	Pakistan
Sector	Utilities
Environmental category	B
Department	Infrastructure
Status	Pending Disbursement

Date SPI disclosed	March 26, 2007
Projected board date	May 31, 2007
Previous Events	Signed: December 19, 2007 Approved: May 31, 2007

View Environmental & Social Review Summary (ESRS), click here

Overview

Sponsor/Cost/Location

Development Impact

Contacts

Attachments

Project description

The Engro Energy project consists of the development, construction and operation of a 217 MW combined cycle power plant to be located in Qadirpur, District Ghotki, Pakistan. The power plant is expected to be a base load plant fueled by low btu gas, which is currently being flared. The energy produced will be sold to the single buyer, National Transmission and Distribution Company, on the basis of a 25-year Power Purchase Agreement. The project cost is estimated to be $229 million.

Anticipated development impact of the project

The project will have a high development impact as it will:

- enable the productive use of a natural gas resource that would otherwise continue to be wasted through flaring;
- contribute to lowering the average economic cost of power generation in Pakistan;
- reduce the level of un-served electricity and contribute to Pakistan’s economic growth;
- reduce green-house gas emissions through avoidance of flaring; and
- create permanent jobs filled by in-country professionals during the project’s operational phase.

IFC's expected development contribution

IFC would be playing an important role in mobilizing long-term capital to a key infrastructure sector in Pakistan. In addition, this transaction will signal IFC’s support and development of a local sponsor in the sector. Also, IFC’s investment will act as a catalyst for other projects to follow. This project is one of the first under the new phase of Pakistan’s IPP development program. Given the difficulties faced by the previous IPP program, it is expected that it will be challenging to raise long-term financing for all the new power capacity additions that are required.

Environmental and social issues - Category B

Based on review of the project information, key social and environmental issues associated with the project include:

- land acquisition
- air emissions
- waste management
- noise, right of way (ROW) selection
- water supply, employee and community safety
- labor standards
- community engagement and social and environmental management systems

This investment has been provisionally categorized as B. The following Performance Standards are expected to be applicable:

- PS1: Social and Environmental Assessment and Management Systems (SEMS)
- PS2: Labor and Working Conditions
- PS3: Pollution Prevention and Abatement
- PS4: Community Health, Safety and Security
- PS5: Land Acquisition and Involuntary Resettlement

There are no known sensitive habitats or Indigenous Groups in the project area and no impacts on Cultural Property are anticipated. No physical resettlement will occur as part of the project, all land acquisition will follow a willing-seller willing-buyer principle based on market prices. The project will comply with applicable air emission standards and will generate Carbon Credits through utilizing flared gas as the primary fuel source. It will also displace existing methane emissions by burning this flared gas resulting in a greenhouse benefit and improved local air quality. The sponsor has completed an independent ESIA prepared by an experienced international firm. This document will be made available through the ESRS and at the local level. The ESIA has been provided to the Sindh Environmental Protection Agency (SEPA) and will be made available locally through the SEPA offices in Sukkur and Karachi. Availability of the document at these locations will be advertised in a local newspaper (in English and Urdu) and the Executive Summary of the ESIA will be translated into Urdu and made available to local communities and stakeholders in the project area. A copy of the ESIA is also available at the company offices in Daharki and Karachi.

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