ISLAMABAD: Kohala Hydropower Company Limited (KHCL), a Chinese firm leading the $2.5 billion Kohala Hydropower Project, has officially requested the Pakistani government to extend the project’s Letter of Support (LoS) until September 30, 2027. The company claims that it has fulfilled all necessary formalities for the extension, and the new deadline is crucial for ensuring the continued progress of the 1,124 MW run-of-the-river hydroelectric project.
The Kohala Hydropower Project, a key component under the China-Pakistan Economic Corridor (CPEC), has seen significant progress since the original LoS was issued by the Private Power and Infrastructure Board (PPIB) in December 2015. The project is considered a high priority under CPEC, with a focus on improving Pakistan’s energy infrastructure and reducing the reliance on fossil fuels. The extension request for the LoS follows a series of agreements and approvals that the company has successfully secured.
KHCL, which is backed by China Three Gorges, a major state-owned Chinese energy company, has provided substantial documentation to demonstrate its compliance with Pakistan's regulatory framework. This includes obtaining all requisite agreements such as the Implementation Agreement (IA) with the Government of Pakistan, a Tripartite Power Purchase Agreement (TPPA) with the Central Power Purchasing Agency (CPPA-G) and National Transmission & Despatch Company (NTDC), and a Water Use Agreement (WUA) with the Government of Azad Jammu and Kashmir (AJ&K).
The company has also acquired around 4,607 Kanals of land for the project’s development, and full compensation has been paid to the displaced population in accordance with the applicable laws. Moreover, the company has already met the necessary performance and bank guarantees, which are crucial for the formalization of the LoS extension.
Kohala Hydropower is categorized as a ‘committed project’ under the National Electricity Plan (IGCEP 2022-2031), a strategic framework approved by the Council of Common Interests (CCI) and the National Electric Power Regulatory Authority (NEPRA). This designation solidifies the project’s status as a critical part of Pakistan’s future energy landscape, particularly as it is aligned with the country’s long-term goal of increasing reliance on indigenous and renewable energy sources.
CEO Liu Yonggang of Kohala Hydropower emphasized that the project is fully compliant with the applicable policies, contractual agreements, and regulatory requirements. He expressed the company’s eagerness to proceed with the project, noting that the successful extension of the LoS would be vital to ensuring uninterrupted progress. Liu further highlighted that the $2.5 billion investment by China Three Gorges is one of the most strategically important initiatives under CPEC, which aims to provide Pakistan with much-needed clean energy and boost bilateral relations between Pakistan and China.
In response to the company’s request, the Managing Director of PPIB, Shah Jahan Mirza, informed the CEO of KHCL that the PPIB Board had reviewed the extension request in its 144th meeting held on September 18, 2024. The Board agreed to extend the financial closing (FC) date of the LoS by 36 months, until September 30, 2027, contingent on the extension of the bank guarantee for three additional months. The PPIB also advised the company to submit a detailed bar chart outlining the project’s milestones and timelines leading up to the financial closing date.
The Kohala Hydropower Project is poised to be a transformative development for Pakistan’s energy sector, contributing significantly to the country’s renewable energy capacity and enhancing its energy security. As the project moves forward, the LoS extension remains a crucial step for ensuring its timely completion and continued investment in Pakistan’s energy infrastructure.
