China has contracted to build a hydroelectric power project in Pakistan, with the first phase of investment reaching 2.5 billion US dollars.

China Gezhouba Group Co Ltd (CGGC) has agreed to invest more than 1.72 billion US dollars for the construction of the main works of the 5,400MW Dasu hydropower project in the country, cooperating with the local water and power development authority, the company said on Thursday.

According to Deng Yinqi, vice president of CGGC, a member company of the China Energy Engineering Corporation, the construction of the hydropower project is a significant milestone in Chinese construction going global.

Deng said: "CGGC has been involved with Pakistani construction works for years and the company is committed to continuously contributing to the local economy."

According to CGGC, the power project, situated in remote mountainous terrain in the Upper Indus valley in the district of Kohistan, in the Khyber Pakhtunkhwa province in northern Pakistan, is one of the most challenging hydroelectric power projects ever undertaken.

On completion it should be capable of generating 12 billion kilowatt hours annually, the company said.

The Chinese operator said the project would provide more than 8,000 jobs to local residents while helping the Pakistan government modernize and expand the energy sector of the country, shifting from thermal generated electricity to clean, low-cost high reward hydroelectricity.

The project, consisting of the main dam, affiliated facilities, a powerhouse, a residential complex and transmission lines, will also help boost the development of local industry, agriculture and tourism.

Chinese companies have branched out beyond their borders in recent years to become the biggest builders of hydropower projects worldwide, exporting its hydroelectric power know-how to developing countries.

Hydroelectric projects require huge investment involving complex issues, especially when investing in projects overseas.

On the other hand, China's investment in clean energy would help reduce pollution, said Joseph Jacobelli, a senior analyst with Asia utilities and infrastructure research at Bloomberg Intelligence.

Email: lansuying@nbd.com.cn