Project detail - ZEPHYR POWER (PVT) LTD.

ZEPHYR POWER (PVT) LTD.

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Who is our client

Zephyr Power (PVT) Limited is a company incorporated in Pakistan which is developing a 50 MW wind park near Karachi. Zephyr Power is owned by a consortium of local Pakistani business people and CDC Group PLC, the development finance institution of the United Kingdom.

Funding objective

FMO provides a combination of senior and subordinated long-term loans to Zephyr Power. FMO funds the development and construction of a 50 MW wind park located near Gharo, in the vicinity of Karachi, Pakistan. FMO financing allows Zephyr Power to be fully funded through its construction and initial operations phase.

Why we fund this project

FMO funds this project as it provides an additional source of clean, renewable energy to Pakistan. Pakistan currently has a demand for electricity which exceeds its reliable generation capacity by over 25%, resulting in frequent power outages. Much of Pakistan’s current power is supplied by imported heavy fuel oils. By funding Zephyr Power, FMO contributes to increasing Pakistan’s power supply, reducing blackouts and replacing expensive fossil fuel generation with cheaper, renewable wind energy.

Environmental and social rationale

While all Performance Standards are applicable to this investment, FMO’s environmental and social ("E&S") due diligence indicates that the investment has impacts which must be managed in a manner consistent with the following Performance Standards: PS1: Assessment and Management of Environmental and Social Risks and Impacts; PS2: Labor and Working Conditions; PS3: Resource Efficiency and Pollution Prevention; PS4: Community Health, Safety and Security; PS6: Biodiversity Conservation and Sustainable Management of Living Natural Resources. The E&S Category is B+. This reflects that the potential adverse E&S impacts will be largely reversible and can be mitigated through readily available mitigation measures that will be included in the environmental and social management system (“ESMS”) to be used during construction and operation. The ESMS will also be designed to continuously monitor risks such as the health and safety of construction labour and members of local communities where relevant. The project and its ESMS will be designed to avoid, minimise and where needed, offset, potential impacts beyond site boundaries, such as local community expectations for jobs and any potential impacts on migratory birds. IFC PS 5, PS 7 and PS 8 are not considered to be triggered as the project is located on unoccupied and unused land leased from a government body and will not result in physical displacement, economic loss or livelihood impacts. While there are groups in Sindh that may be considered Indigenous under some (but not all) of the definitions under IFC PS7, the ESIA and ESDD found that the project did not have real or perceived impacts on any such group; the project will not utilise any IPs customary land nor cultural property. No archaeological or cultural heritage artefacts were found to be impacted by any project component; while there is a graveyard adjacent to the site, it is not affected by the project in any way; furthermore, consultation with local authorities and local communities confirmed that it did not have any cultural significance; the project will not affect any archaeology or cultural heritage of national, local or community significance, therefore PS8 is not triggered.

Region
Asia
Country
Pakistan
Sector
Energy
Signing date
4/20/2017
Total FMO financing
USD 20.65 MLN
Fund
FMO
Risk categorization on environmental and social impacts, A = high risk, B+ = medium high risk, B = medium risk, C = low risk Environmental & Social Category
(A, B+, B or C)
B+