Pakistan Private Power and Infrastructure Board has signed a memorandum of understanding (MoU) with the Chinese Silk Road Fund and China Three Gorges to develop the $1.65bn Karot hydropower project in Pakistan.

The investment declaration is the first one for the $40bn Silk Road Fund under the Belt and Road initiative. The deal was revealed during the Chinese President Xi Jinping’s visit to Pakistan, reports China’s news agency Xinhua.

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Construction for the project is expected to start this year and is scheduled to be commissioned by 2020.

"Construction for the project is expected to start this year and is scheduled to be commissioned by 2020."

The hydropower construction is a priority project under the broader China-Pakistan Economic Corridor initiative which was proposed in May 2013.

While the installed capacity for the project is 720,000kW, it is expected to generate 3.213 billion kilowatt-hours of renewable power annually.

The Silk Road Fund will invest in the project through China Three Gorges South Asia Investment.

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As well as the Chinese fund, other financial institutions including the Export-Import Bank of China are also likely to support the project with loans.

According to an official who commented on China’s central bank website, China will operate the project for the initial 30 years, and it will then be transferred to the Government of Pakistan.