China's Silk Road Fund, the China Three Gorges Corporation and the Private Power and Infrastructure Board of Pakistan signed an Memorandum of Understanding (MoU) on Monday for jointly developing hydropower in Pakistan, a Chinese official said.
The investment into the $1.65-billion Karot hydropower project in Pakistan would mark the first investment from the $40-billion fund since its establishment last year, the official said in a post on China's central bank website, according to a Xinhua report.
The Karot hydropower 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 in use in 2020, according to the official.
The Silk Road Fund will provide capital for the project through investment in a subsidiary of the China Three Gorges Corporation that focuses on developing clean energy projects in South Asian countries.
The fund will also join the Export-Import Bank of China, one of China's major policy lenders, and other financial institutions to extend loans for the project, according to the official.
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The fund, along with other investors, including the China Three Gorges Corporation, will invest in hydropower projects in the region with a combined power generating capacity of up to 3,350 megawatts to improve power supply and economic growth in Pakistan.
The official added that the investment decision was made in line with the fund's "professional, prudent and unified criteria".
The Silk Road Fund will actively expand financing opportunities for other projects under the framework of the China-Pakistan Economic Corridor, according to a joint statement issued by the two countries on Monday.
It added that the fund would play a key role in supporting the implementation of China's Belt and Road Initiative.
Pakistan and China on Monday signed 51 agreements and MoUs for cooperation in diverse fields with visiting Chinese President Xi Jinping scheduled to unveil a $45-billion investment plan that can help Pakistan end its chronic energy crisis and transform it into a regional economic hub.