WAPDA

Pakistan Water & Power Development Authority

Green Bond Framework

March 2021
 WAPDA
Pakistan Water & Power Development Authority

Contents
Introduction ............................................................................................................................................ 3
Health, Safety and Environmental Matters .......................................................................................... 3
Rationale for Issuance ............................................................................................................................. 4
Alignment with the Green Bond Principles............................................................................................... 4
Use of Proceeds ................................................................................................................................... 4
Exclusions ........................................................................................................................................ 5
Process for Project Evaluation & Selection ........................................................................................... 5
Management of Proceeds .................................................................................................................... 6
Reporting ............................................................................................................................................ 6
External Review ....................................................................................................................................... 7
Disclaimer ............................................................................................................................................... 8

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 WAPDA
Pakistan Water & Power Development Authority

Introduction
WAPDA was established in 1958 through the WAPDA Act, an Act of Parliament for the integrated
development of water and power resources in the Indus Basin. It is an autonomous and statutory body
under the administrative control of the Government and is wholly owned by the Government. WAPDA is
responsible for the operation, maintenance, upgrade and expansion of HPPs, large water reservoirs and
the construction of new projects for power generation and water storage in Pakistan. WAPDA currently
operates under a generation license granted in 2004 by NEPRA for the operation, maintenance and
development of hydroelectric power resources in Pakistan.

Pursuant to its Charter, which was amended in March 1959, WAPDA was assigned responsibility for
planning and executing projects in the following areas:

 generation, transmission and distribution of power;

 irrigation, water supply and drainage;
 prevention of water logging and reclamation of saline land;
 flood control; and
 inland navigation.

As of the date of this Framework, WAPDA’s total installed hydropower capacity amounted to 9,387 MW,
comprising 22 HPPs, which represented 96 per cent of Pakistan's hydroelectric power generation capacity
as at 30 June 2020. WAPDA has four major projects under construction, which will add approximately 8,870
MW of installed capacity (out of 9,359 MW of installed capacity which will be added on completion of all
of WAPDA’s outstanding construction projects) and are expected to be completed during the period from
2025 to 2029, more than doubling WAPDA’s current installed capacity.

Health, Safety and Environmental Matters

Health, safety and environmental issues are governed by a number of laws and guidelines that affect
businesses operating in Pakistan, including the Environmental Protection Act 1997 and National
Environmental Quality Standards. WAPDA is required to comply with a number of health, safety and
environmental requirements in each of the sectors in which it operates.

The realisation of environmental and social objectives is part of WAPDA’s strategy, and in addition to
complying with national laws and guidelines, WAPDA’s commitment to health, safety and environmental
issues is demonstrated through its adoption of international industry best-practice standards, health and
safety guidelines and environmental codes of practice, including the World Bank's Environmental and Social
Standards, International Finance Corporation (IFC) performance standards and the Equator Principles.

WAPDA has a long history of being at the forefront of the promotion and utilisation of health, safety and
environmental standards in the region. During the construction of Mangla Dam and Tarbela Dam in the
1960s, WAPDA incorporated environmental and social considerations during the projects’ implementation.
This was followed in the 1980s and 1990s with the adoption by WAPDA of environmental management
techniques during the project development stage of the Ghazi Barotha Hydropower Project. The Ghazi
Barotha Hydropower Project was the first of its kind in the region where environmental and social issues

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Pakistan Water & Power Development Authority

were addressed both at design level and operation and maintenance level, which resulted in a positive
environmental and social ranking from international funding agencies.

To facilitate the furtherance of its health, safety and environmental objectives, WAPDA established the
WAPDA Environment Cell (WEC) in 1987. The purpose of WEC is to incorporate environmental and social
considerations during the implementation of WAPDA projects. WEC is also responsible for ensuring project
compliance with national regulatory requirements through the use of standard environmental mitigation
measures, to ensure the awarding of 'No Objection' certificates in respect of positive environmental
mitigation and management measures, from national regulators prior to project implementation.

Rationale for Issuance

WAPDA believes its business model has an important role to play in the development of a more sustainable
and lower-carbon economy in Pakistan, both through the current investment portfolio and future
investments.

WAPDA further believes the technologies and assets it is investing in will help achieve the United Nations’
Sustainable Development Goals, and contribute to delivering the objectives of the Paris Agreement.

WAPDA is certain that there is an opportunity to obtain market recognition of the role played by its
businesses in facilitating a transition to a more sustainable, lower-carbon economic model, and has
therefore decided to issue a Green Bond to allow investors an opportunity to support its business model
and investment plans.

Alignment with the Green Bond Principles

WAPDA has aligned this Green Bond Framework with the Green Bond Principles, 20181.

Use of Proceeds
An amount equal to the net proceeds of any Green Bond issued will be used to finance and/or refinance,
in whole or in part, Eligible Green Projects as defined below.

WAPDA intends to make allocations to Eligible Green Projects where investment has been made in the
project within the three-year period preceding the date of Green Bond issuance.

On a best efforts basis, WAPDA intends to allocate an amount equal to the net proceeds raised by the
Green Bond issuance within two years of the date of issuance.

Eligible Green Project Eligibility Criteria Example Green Projects Example Impact Metrics Relevant SDGs2
Categories

1
https://www.icmagroup.org/green-social-and-sustainability-bonds/green-bond-principles-gbp/
2
United Nations Sustainable Development Goals

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 WAPDA
Pakistan Water & Power Development Authority

Renewable energy Hydropower or Tarbela IV extension (run of tCO2e avoided

Wind Power river)
electricity Golen Gol (run of river)
generation Dasu HPP (run of river)
projects with a
carbon intensity of
less than 100g
CO2e/KWh,
subject to
independent
environmental and
social risk
monitoring and
mitigation 3.

Climate Change Flood Control and Qualitative reporting

Adaptation Prevention
Systems projects
supported by
independent
technical
engineering,
design and
hydrological
studies 4

Exclusions
Allocations will be made to Eligible Project Categories as specified above. The following Uses of Proceeds
are specifically excluded:

 Financing of fossil-fuel power generation projects.

 Projects which are constructed without taking into account international good practices on
environmental and social risk management arrangements

Process for Project Evaluation & Selection

To ensure that allocations are made to Eligible Green Projects as specified above, WAPDA will establish a
Green Bond Committee.

The Green Bond Committee will be responsible for:

3
For allocations to planned or future projects with a power generation capacity greater than 25MW,
internationally-recognized environmental and social risk management standards will be applied to the relevant
project, (e.g. IFC Performance Standards (2012) or equivalent international financial institution standards).
4
In the case of Flood Control and Prevention Systems, development of these projects involves the completion of a
detailed study conducted by international advisory firms on vulnerability and adaptation considerations,
engineering and design. Studies typically incorporate consideration of historical hydrological data of over 100
years.

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 WAPDA
Pakistan Water & Power Development Authority

 Confirming that the proposed Eligible Green Projects are developed in accordance with relevant
environmental and social risk management regulations, and any applicable environmental and
social risk management-related requirements of financing institutions;
 Ensuring the proposed Eligible Green Projects are aligned with the categories and eligibility criteria
as specified in the Use of Proceeds section above, and approving any proposed changes to the
register of Eligible Green Projects in the event that the projects no longer meet the eligibility
criteria (e.g. following divestment, liquidation, technology switch, concerns regarding ongoing
alignment with eligibility criteria etc.); and,
 Reviewing and approving allocation and impact reports.

The Green Bond Committee will be comprised of the following representatives:

 Member Finance
 General Manager Coordination & Monitoring
 Deputy General Manager Finance (Power)
 Head Structured Finance Cell

The Committee will meet on an annual basis to review proposed allocations and ensure these are made in
line with the specified uses here above. Member Finance will have overall responsibility for the approval of
allocations.

Management of Proceeds
An amount equal to the net proceeds raised by the Green Bond will be allocated to Eligible Green Projects
as specified above. This process will be managed by the WAPDA Finance Department.

The Finance Department will establish a register of Eligible Green Projects and will track allocations to the
projects matched to the Green Bond proceeds.
Pending allocation, proceeds will held in cash deposits on a temporary basis in accordance with the relevant
WAPDA internal policies5.

Reporting
Within 1 year of issuance, and annually thereafter until the date of maturity of the Green Bond, WAPDA
will make available an External Report.

The External Report will include (i) an Allocation Report and (ii) an Impact Report, subject to the availability
of suitable information and data. Where impact data is reported, details of the methodology applied in
compiling the data will be provided.

5
With regard to cash management, un-utilised funds are temporarily held in deposit accounts of Commercial
Banks.

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Pakistan Water & Power Development Authority

These reports will be made available publicly on the WAPDA website.

It is anticipated that the Allocation Report will include:

- Total amount of proceeds allocated to Eligible Green Projects per category, noting any instances
where allocations could not be made as originally planned, due to e.g. divestments, project
terminations or suspensions etc.;
- The proportion of the proceeds allocated to refinancing of existing Eligible Green Projects; and,
- Unallocated proceeds.

WAPDA will also report on selected environmental impacts of its Eligible Green Projects subject to the
availability of suitable information and data (refer to indicative metrics in Use of Proceeds table above).

Reports may also include qualitative information highlighting the environmental and social aspects of the
Projects.

External Review
Sustainalytics have provided a Second Party Opinion on the WAPDA Green Bond Framework. The Second
Party Opinion is available at www.sustainalytics.com.

WAPDA also intends to commission a Compliance Review within 1 year of Green Bond issuance and
annually thereafter, until full allocation of any Green Bond proceeds, with the intention of confirming that
the Green Bond proceeds have been allocated in accordance with the Use of Proceeds specified in this
framework document.

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 WAPDA
Pakistan Water & Power Development Authority

Disclaimer
The information and opinions contained in this Framework are provided as at the date of this document
and are subject to change without notice.

WAPDA does not assume any responsibility or obligation to update or revise such statements, regardless
of whether those statements are affected by the results of new information, future events or otherwise.

This Framework represents current WAPDA policy and intent, is subject to change and is not intended nor
can be relied on, to create legal relations, rights or obligations.

This Framework is provided for information purposes only and does not constitute or form part of, and
should not be construed as, an offer or invitation to sell WAPDA Bonds, or the solicitation of an offer to
underwrite, subscribe for or otherwise acquire any debt or bonds of WAPDA, and nothing contained herein
shall form the basis of or be relied on in connection with any contract or commitment whatsoever.

Any decision to purchase any WAPDA Bonds should be made solely on the basis of the information to be
contained in any offering document produced in connection with the offering of such bonds.

Prospective investors are required to make their own independent investment decisions. No
representation is made as to the suitability of any WAPDA Bonds to fulfil environmental and sustainability
criteria required by prospective investors. Each potential purchaser of WAPDA Bonds should determine for
itself the relevance of the information contained or referred to in this Framework or the relevant bond
documentation for such WAPDA Bonds regarding the use of proceeds and its purchase WAPDA Bonds
should be based upon such investigation as it deems necessary.

WAPDA has set out its intended policy and actions in this Framework in respect of use of proceeds, project
evaluation and selection, management of proceeds and investor reporting, in connection with G WAPDA
Bonds. However, it will not be an event of default or breach of contractual obligations under the terms and
conditions of any WAPDA Bonds if the WAPDA fails to adhere to this Framework, whether by failing to fund
or complete Eligible Green Projects or to ensure that proceeds do not contribute directly or indirectly to
the financing of the excluded activities as specified in this Framework, or by failing (due to a lack of reliable
information and/or data or otherwise) to provide investors with reports on uses of proceeds and
environmental impacts as anticipated by this Framework, or otherwise.

In addition, it should be noted that all of the expected benefits of the Projects as described in this
Framework may not be achieved. Factors including (but not limited to) market, political and economic
conditions, changes in Government policy (whether with a continuity of the Government or on a change in
the composition of the Government), changes in laws, rules or regulations, the lack of available suitable
projects being initiated, failure to complete or implement projects and other challenges, could limit the
ability to achieve some or all of the expected benefits of these initiatives.
In addition, each environmentally focused potential purchaser of WAPDA Bonds should be aware that
Eligible Green Assets may not deliver the environmental or sustainability benefits anticipated, and may
result in adverse impacts. On this basis, all and any liability, whether arising in tort, contract or otherwise
which any purchaser of WAPDA Bonds or any other person might otherwise have in respect of this

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 WAPDA
Pakistan Water & Power Development Authority

Framework or any WAPDA Bonds as a result of any failure to adhere to or comply with this Framework is
hereby disclaimed.

This material is not intended for distribution to, or use by, any person or entity in any jurisdiction or country
where such distribution or use would be contrary to law or regulation. Persons into whose possession such
documents may come must inform themselves about, and observe, any applicable restrictions on
distribution. This Framework contains certain statements which may constitute “forward-looking
statements”. These statements are not guarantees or predictions of future performance, and are subject
to risks and uncertainties. As a result, actual results or developments may differ from those expressed in
the statements contained in this Framework.