The first project of China's 40-billion-USD Silk Road Fund for investment in the Belt and Road initiative was unveiled Monday during Chinese President Xi Jinping's state visit to Pakistan.[Special coverage]
The fund will inject capital in China Three Gorges South Asia Investment Ltd, a subsidiary of the China Three Gorges Corporation, to develop Pakistan's Karot hydropower project and other clean-energy projects, according to a joint statement issued by the two countries.
The Silk Road Fund will actively expand financing opportunities for other projects under the framework of the China-Pakistan Economic Corridor, said the statement, adding that the fund will play a key role in supporting the implementation of China's "One Belt, One Road" initiative.
The China-Pakistan Economic Corridor is a planned network of roads, railways and energy projects linking southwest Pakistan's deepwater Gwadar Port with northwest China's Xinjiang Uygur Autonomous Region.
The investment into the 1.65-billion-dollar Karot hydropower project in Pakistan marks the first investment from the fund since its establishment last year, said an unnamed official in charge of the Silk Road Fund in a posting on China's central bank website.
According to the official, the Silk Road Fund has signed a MOU with the China Three Gorges Corporation and the Pakistan Private Power and Infrastructure Board to provide capital to construct the Karot hydropower project on the Jhelum River, northeastern Pakistan.
The Karot hydropower project is a priority project within the broader China-Pakistan Economic Corridor initiative, proposed by Chinese Premier Li Keqiang in May 2013.
The project has a designed installed capacity of 720,000 kw and generates power of 3.213 billion kw-hours each year. Construction will begin at the end of this year and the project is expected to be put into use in 2020, said the official.
The Silk Road Fund will join the Export-Import Bank of China, one of China's major policy lenders, and other financial institutions to extend loans for the project, the official said.
The fund, along with other investors including China Three Gorges Corporation, will further invest in hydropower projects in the region with a combined power generating capacity up to 3,350 megawatts to improve power supply and benefit economic growth in Pakistan.
The official said the investment decision is made in line with the fund's "professional, prudent and unified criteria" as it has reviewed the feasibility of the project, gauged its economic and social impact and ensured it meets the international standards.
Construction on the hydropower project "is to start by the end of this year and go into operation in 2020", said the official. "The station will be operated by the Chinese side for 30 years and then transferred to the government of Pakistan."
As a market-oriented investment fund targeting medium- to long-term projects, the fund has key projects along the Silk Road Economic Belt and the 21st Century Maritime Silk Road and continues to find potential targets, the official said.
The official said the fund will continue to look for opportunities involved in the Belt and Road initiatives and will steadily carry out investment projects while keeping market-oriented, internationalized and specialized.
In November, Xi announced during the Beijing Asia-Pacific Economic Cooperation meetings that China would contribute 40 billion U.S. dollars to set up the Silk Road Fund.
The fund will be used to provide investment and financing support to carry out infrastructure, resources, industrial cooperation, financial cooperation and other projects related to connectivity for countries along the "Belt and Road."
