Metro Wind Power Limited

• Direct: Additional 400MW of greenfield renewable generation capacity to avoid/reduce greenhouse emissions through the displacement of thermal generation.
• Economic enabler: Add 400MW of renewable generation capacity to increase the supply of reliable electricity to firms, thereby increasing productivity and leading to GDP growth and job creation; and to households, improving quality of life for end-consumers.

55 per cent of Pakistan’s electricity generation relies on imported fuels. This exposes the sector to fuel price volatility and has led to a build-up of receivables across the power value chain ($14bn which is equivalent to c. 4 per cent of GDP). The platform will contribute to relieving pressure on foreign exchange reserves and circular debt in the power sector. While this contribution is marginal in the context of the overall market, further increases in lower-cost generation should enhance the impact of primary outcomes by improving the creditworthiness of electricity distribution companies, attracting additional investment and enabling further investment into the network.

Global

n/a

Pakistan

Jobs will be supported in manufacturing, trade and hospitality, and construction, transport and services; whilst indirect employment will be driven by agriculture.

Urban and peri-urban households. Households on average pay $0.07-0.08/kWh depending on their consumption, with energy and lighting representing 6.7-7.8 per cent of total household expenditure.

The firm will avoid/reduce greenhouse gas emissions by 728,000 tonnes per year, equivalent to the annual per capita emissions of c. 383,000 Pakistanis. It will also support 16,700 jobs and livelihoods, and provide electricity to meet the demand of 869,000 consumers.

We expect the impact to be deep given high unemployment rates in the country. We also expect the impact to be deep for higher income consumers who utilise more electricity. Once the projects are commissioned, the impact is expected to last 25 years and will diminish over time as new capacity is added to the grid.

• Financial additionality: Provide long term US dollar capital which is not available from most commercial sources.
• Value additionality: Pursue a developmental strategy through the creation of a joint venture to build more renewable power in Pakistan.

3.99

External Risk

• Risk of sectoral issues leading to pipeline project delays and preventing the platform-level impact case from materialising in the expected timeframe. This is directly correlated with commercial risk and subject to the same mitigants. Simultaneous progress is also required to reduce technical and commercial losses, which is outside GAM's control and will need to be tolerated as part of the transaction.

Alignment Risk

• As a purely commercial entity, GAM could make a success of existing investments with good returns and no further capital deployment for new projects. We perceive this risk as low, as it is mitigated through the Joint Venture Agreement and investment policy which focus on active greenfield development and specific language for acquisitions.