Laraib Energy IFC is proposing an investment in Laraib Energy Limited (LEL, the Company), which will develop and operate a 84 MW greenfield, run-of-river hydroelectric power generating complex known as the New Bong Escape Hydroelectric Power Complex (the Project) on the Jhelum River in Azad Jammu and Kashmir (AJ&K), Pakistan.  The company is 75% owned by the Hub Power Company Limited (HUBCO), which owns and operates the first thermal power Independent Power Producer plant (the 1,292 MW Hub Power Station) in Pakistan, supported by the World Bank in 1990s.  The Jhelum River is classified as an International Waterway and governed by the Indus Waters Treaty of 1960.  In accordance with IFCs Policy on Social and Environmental Sustainability (April 30, 2006), IFC, on February 17, 2009 sent riparian notices to the IFC Executive Directors for both, India and Pakistan notifying them of IFCs proposed investment in the Project and its location in AJ&K, the Pakistan-administered portion of an area over which India and Pakistan have been in dispute since 1947. By supporting the project, IFC does not intend to make any judgment on the legal or other status of any disputed territories or to prejudice the final determination of the parties'' claims.  No objections have been received by either of the Executive Directors for India and Pakistan.  All project works are located in the flood plain of the Jhelum River approximately 7 km downstream of the Mangla Dam, a major multi-purpose water storage project commissioned in 1967, and adjacent to irrigation works that were completed in 1910 (the Bong and Upper Jhelum canals). The project will not involve the construction of a dam or reservoir nor will it affect existing water management regimes.  It will withdraw water released from the existing Mangla Dam and return that water to the main stem of the Jhelum River through a 7.5 km tailrace constructed in a sub-channel of the Jhelum.    Water released by the Mangla Dam is managed by the Indus River System Authority.  As a run-of-river project, the project is not expected to affect upstream or downstream hydrology of the Jhelum River and is unlikely to cause any significant, lasting environmental and social impacts.  The project includes an in-out connecting arrangement with the double circuit 132 kVA Mangla/Kharian transmission line, which passes over the project site.  No right-of-way acquisition is needed since connection facility will be built within the project site.    The project will use the water being discharged from the upstream existing hydropower plant (1,000 MW Mangla Hydroelectric Power Station) located at Mangla Dam.  The Mangla Dam is being raised by the national Water and Power Development Authority (WAPDA) to increase storage capacity (Mangla Dam Raise Project).  The Mangla Dam Raise Project will provide better regulated water to the Project, however, both projects are not mutually dependent, and therefore, the Mangla Dam Raise Project has not been considered an associated facility to the project.  The project was registered as a Clean Development Mechanism (CDM) project by CDM Executive Board under the United Nations Framework Convention on Climate Change on January 31, 2009.  The Asian Development Bank (ADB), the Islamic Development Bank and two local commercial banks (National Bank of Pakistan and Habib Bank Limited) approved financing to the Project in 2007.  At the request of the company, IFC and Proparco are planning to provide additional financing to support the project. The project is expected to have high economic and developmental impact as it will:   - Create a framework for hydro IPPs and have a strong demonstration effect (standards, procedures and document prototypes established in this project are expected to be replicated in other hydro projects in the pipeline); - Reduce the level of very costly un-served electricity and meet incremental demand for power, thereby encouraging economic growth;  - Contribute to increase the countrys much needed installed capacity using a domestic renewable resource, thereby increasing energy security of supply; - Contribute to lowering the average economic cost of power generation in Pakistan;  - Have significant environmental benefits compared to alternative thermal power options in terms of displacing greenhouse gas emissions (estimated reduction of greenhouse gas emissions is about 220,000 ton CO2 equivalent per year);  - Create jobs (around 350 to 500 skilled and unskilled jobs) during the Project construction phase and on an ongoing basis for the O&M contractor (60); and Reduce reliance on imported fuel oil, thereby not impacting the countrys trade and current account deficits.