KHCL seeks LoS extension for $2.5bn Kohala hydropower project till Sept 2027

Business Recorder

20-06-2025

ISLAMABAD: Kohala Hydro Company Limited (KHCL) has requested an extension of its Letter of Support (LoS) for the $2.5 billion, 1,124 MW run-of-the-river Kohala Hydropower Project until September 30, 2027. The extension is aimed at ensuring the continued establishment of Pakistan's existing use of water rights under the Indus Waters Treaty (IWT).
In a letter to the Managing Director of the Private Power and Infrastructure Board (PPIB), KHCL CEO Liu Yonggang emphasized that the IWT, signed in 1960 between Pakistan and India with World Bank mediation, grants Pakistan rights to use the waters of the Western Rivers—Indus, Jhelum, and Chenab. Specifically, Article III (1) and (2) of the Treaty affirms Pakistan's right to utilize the waters of the Jhelum River for hydroelectric power generation.
The IWT outlines the rights and obligations of both countries concerning the use of these rivers. Article III (4), read in conjunction with Annexure D, stipulates that any storage works by India on Jhelum tributaries, where Pakistan has agricultural or hydroelectric use, must be designed to avoid adversely affecting Pakistan's existing uses.
Kohala Hydropower Project: Chinese co urges Pakistan govt to extend LoS
KHCL argues that timely development of the 1,124 MW Kohala Hydropower Project is strategically essential for Pakistan to establish and protect its prior rights to the use of water from the Jhelum tributary. Continuation of the LoS and the Water Use Agreement with KHCL, it asserts, will help secure Pakistan's rights under the Treaty.
According to the CEO, the project—being developed by a Chinese state-owned enterprise—is fully aligned with Pakistan's sovereign rights under the IWT.
The letter also draws reference to the legal dispute between Pakistan and India over the Kishenganga Dam Project. In that case, the Court of Arbitration (COA) under the IWT evaluated whether India's diversion of water from one tributary to another was lawful. The COA sided with India, ruling that only those Pakistani uses existing at the time of notification were protected. Pakistan's future or planned uses, such as the Neelum-Jhelum project (which was not operational at the time), were not deemed protected.
Based on this precedent, KHCL stresses that any delay in advancing the Kohala HPP could jeopardize Pakistan's ability to assert and protect its water rights, thereby opening the door for further Indian upstream interventions. The company contends that the IWT mandates Pakistan to develop infrastructure on the Western Rivers to safeguard its riparian rights, provided that existing use—whether agricultural or hydroelectric—is clearly established. International customary law, such as the 1997 UN Convention on the Law of the Non-Navigational Uses of International Watercourses, also underscores the importance of recognizing 'existing and planned uses' of water in equitable utilization.
KHCL further argues that the project's inclusion under the China-Pakistan Economic Corridor (CPEC) adds vital geopolitical and economic significance. The involvement of Chinese state-owned enterprises brings international weight and enhances deterrence against any unauthorized alteration of the water regime by India. Given recent tensions, including India's unilateral and illegal suspension of the IWT and attempts to weaponize water from the Western and Eastern rivers, KHCL emphasized the need for Pakistan to respond proactively.
The PPIB Board, in its 144thmeeting held on September 18, 2024, approved the extension of the LoS for the Kohala HPP until September 30, 2027. KHCL has since fulfilled all PPIB-mandated conditions, including the timely submission of a $5.62 million performance guarantee.
KHCL has now urgently requested the issuance of a formal notification of the LoS extension to avoid loss of project momentum and to formally establish Pakistan's existing hydroelectric use on the Jhelum tributary—critical for protection under the IWT, unlike in the Neelum-Jhelum case. In view of the legal, strategic, and economic factors, KHCL has reiterated its request to PPIB for immediate issuance of the formal LoS extension notification, to secure Pakistan's water rights and broader national interests.
Copyright Business Recorder, 2025