ISLAMABAD: Pakistan has decided to revive the stalled 1,124MW Kohala Hydropower Project (KHPP) after a three-year delay, following an agreement with Chinese stakeholders, as confirmed by sources within the Planning Commission.
The project had been on hold due to China Export and Credit Insurance Corporation (Sinosure) withholding insurance coverage, citing unpaid dues of over Rs550 billion owed by Pakistani power companies to Chinese independent power producers (IPPs). Additional delays were caused by changes in land acquisition laws and environmental regulations by the Azad Kashmir government. Earlier this year, the Chinese sponsor, China Three Gorges Dam Corporation (CTG), called for the revival of the $2.5 billion project.
Currently, the Private Power and Infrastructure Board (PPIB) and CTG are working on legal and procedural formalities to extend the letter of support (LoS) and push the financial closing deadline to September 30, 2027, from the original October 1, 2024. Pakistan has also agreed to waive penalties for the LoS extension, acknowledging that the delays were beyond the sponsor’s control.
The project’s revival gained momentum after Prime Minister Shehbaz Sharif’s visit to Beijing in June and continued engagements by Planning Minister Ahsan Iqbal. The 1,124MW Kohala project, along with the 700MW Azad Pattan Hydropower project, is crucial to the China-Pakistan Economic Corridor (CPEC) and Pakistan’s long-term Indicative Generation Capacity Expansion Plan (IGCEP).
CTG, after discussions with Pakistani officials, has been invited to submit fresh letters of intent (LOIs) for investment and insurance coverage. The company was reportedly ready to achieve financial closing in December 2018 when the project was halted due to environmental concerns raised by the AJK government. The issues have since been addressed, paving the way for the project’s revival.
Story by Khaleeq Kiani
