Islamabad: Pakistan has agreed in principle to revive the 1,124MW Kohala Hydropower Project (KHPP) and extend its completion deadline by three years, according to sources in the Planning Commission. The project, which had been stalled for three years, faced delays due to China Export and Credit Insurance Corporation (Sinosure) withholding insurance cover as Pakistani power companies had not settled over Rs550 billion in dues to Chinese independent power producers (IPPs). Additionally, concerns were raised over changes in land acquisition laws and environmental regulations by the Azad Kashmir government.
Earlier this year, China Three Gorges Dam Corporation (CTG), the Chinese sponsor of the project, demanded the revival of the $2.5 billion hydropower station. Currently, legal and procedural formalities are being finalized by the Private Power and Infrastructure Board (PPIB) and CTG to extend the letter of support (LoS) and deadline for financial closing to September 30, 2027, from the original date of October 1, 2024.
Pakistan has also agreed to waive potential penalties usually associated with LoS extensions, acknowledging that the delays were beyond the sponsor’s control. The project has been a topic of discussion, particularly following Prime Minister Shehbaz Sharif’s visit to Beijing in June and subsequent ministerial visits to China.
The revival of the Kohala Hydropower Project, along with the 700MW Azad Pattan Hydropower Project, is crucial for Pakistan as part of the multi-billion dollar China-Pakistan Economic Corridor (CPEC) and Islamabad’s long-term Indicative Generation Capacity Expansion Plan (IGCEP). Following intense negotiations, Sinosure has requested the sponsors to submit new letters of intent (LOIs) for investment and insurance cover.
CTG had previously reported that the KHPP Company was fully prepared for financial closing in December 2018 when work was halted by the AJK government over environmental concerns. Despite executing key contracts and mobilizing equipment, the project experienced significant delays.
