Kohala Hydropower Project: Chinese co urges govt to extend LoS
ISLAMABAD: Chinese company M/s Kohala Hydropower Company Limited (KHCL) has requested the government to formally issue a notification extending the Letter of Support (LoS) for the $2.5 billion, 1,124 MW run-of-the-river Kohala Hydropower Project until September 30, 2027 as it has fulfilled all requisite formalities, sources within the company told Business Recorder.
The Kohala Hydropower Project is a priority initiative under the China-Pakistan Economic Corridor (CPEC) framework. The original LoS was issued by the Private Power and Infrastructure Board (PPIB) on December 31, 2015, facilitating the successful negotiation and execution of key project agreements.
Subsequently, the LoS validity was extended until September 30, 2027, as per the decision taken during the 144th meeting of the PPIB Board.
LoS extension stays pending: Chinese firm agrees to delay Kohala project
The Power Company in a letter to Power Division, has claimed that in compliance with the conditions precedent has submitted the requisite Performance / Bank Guarantee of $ 5.62 million to enable formal notification of extension in the LoS.
According to the letter the Company has legitimate expectations for, issuance of extension in the LoS, premised on the following grounds :(i) the Project is being developed under CPEC Framework Agreement of November 08, 2014 between Government of China and Government of Pakistan, GoP's Power Generation Policy, 2002 and the AJ&K Power Generation Policy, 2002, reflecting its strategic significance and multi-jurisdictional transnational character; and (ii) the Company has executed all principal project agreements, including, Implementation Agreement (IA) with the Government of Pakistan on May 6, 2021, Tripartite Power Purchase Agreement (TPPA) with CPPA-G and NTDC on June 25, 2020, AJ&K Implementation Agreement (AJ&K IA) and Water Use Agreement (WUA) with the Government of AJ&K, on April 23, 2020; and Tripartite Agreement (TPA) between the Company, Government of Pakistan and Government of AJ&K on Jun 25, 2020.
The Company has acquired approximately 4,607 Kanals of land for public purpose in connection with the Project's development, including activities related to financing, engineering, procurement, construction, operation, and maintenance on a Build-Own -Operate-Transfer (BOOT) basis. Compensation has been fully paid to the affected population in accordance with applicable laws.
The Power firm further stated that as per the assumptions of the IGCEP 2022-2031 (Section 5.2) which were duly approved by the Council of Common Interests (CCI), a project is considered as 'committed' if it has obtained LoS from PPIB as of December 2020 for private sector projects and/or power generation projects which are listed under Federal Government's international bilateral or multilateral commitments
The Project, in view of the specified criteria, is categorized as 'Committed Project' under the applicable and valid IGCEP 2022 - 2031, which stands duly approved by the NEPRA Authority through determination of February 1, 2023.
The NEPRA Authority in its findings' in the approved IGCEP noted that emphasis has been placed on utilization of indigenous resources whereby more than 77% of the installed capacity will be based on the said sources. The NEPRA Authority further 'directed' the stakeholders that in the changing global dynamic there is a need to even further increase the use of indigenous resources of energy and same are made on priority.
China Three Gorges argues that the Project has valid authorizations, approvals and consents, from the Government of China, Government of AJ&K and Government of Pakistan, to proceed under and pursuant to the Legal Framework and Contractual Framework.
After explaining the background, the Chief Executive Officer of Kohala Hydropower Company, Liu Yonggang has submitted that the Project is fully compliant with and aligned to policy perspectives, contractual terms, and regulatory framework. Accordingly, the Project has satisfied all the conditions precedent for further advancement and development.
'We earnestly seek the esteemed support from Power Division in facilitating the prompt issuance of the formal notification for the extension of the LoS by PPIB until September 30, 2027. This timely action is pivotal to ensuring the uninterrupted progress of the $ 2.5 billion investment by China Three Gorges in the Kohala Hydropower Project-one of the most strategically important initiatives under the CPEC framework,' said the CEO.
On October 4, 2024, Managing Director PPIB, Shah Jahan Mirza, through a letter informed the CEO of the Company that the Company's request regarding extension in the Financial Closing (FC) date of LoS of 1124 MW Kohala Hydropower Project was considered by PPIB Board in its 144th meeting held on September 18,2024. The Board decided to extend the FC date in the LoS of the project for 36 months period i.e. up to September 30, 2027 subject to extension of existing Bank Guarantee three months beyond the extended validity date of the LoS.
MD PPIB had advised the CEO Kohala Hydropower Company to extend the validity of the banks guarantee up to December 31, 2027 and submit detailed bar chart identifying major milestones and timelines of various activities to be carried out up to FC i.e. September 30, 2027.
Copyright Business Recorder, 2025
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Recorder
an hour ago
- Business Recorder
The top sources of US steel and aluminium imports
US President Donald Trump said on Friday he planned to double tariffs on steel and aluminium imports to 50% from 25%, starting from Wednesday, ratcheting up pressure on global producers and deepening his trade war. Here's a summary of the major trade partners it will affect. Steel Roughly a quarter of all steel used in the U.S. is imported, the bulk of it from neighbours Mexico and Canada or close allies in Asia and Europe such as Japan, South Korea and Germany. While China is the world's largest steel producer and exporter, it sends very little to the United States. Tariffs of 25% imposed in 2018 shut most Chinese steel out of the market. China exported 508,000 net tons of steel to the U.S. last year or 1.8% of total American steel imports. India's NALCO says profit doubles as higher aluminium, copper prices boost margins Aluminium For aluminum, the U.S. is more heavily reliant on imports. Roughly half of all aluminium used in the U.S. is imported, with the vast majority coming from Canada. At 3.2 million tons last year, Canadian imports were twice those of the next nine countries combined. The next largest sources of imports are the United Arab Emirates and China, at 347,034 and 222,872 metric tons, respectively. The U.S. aluminium smelting industry is small by global standards. Total smelter capacity in the country was just 1.73% of the global total according to the U.S. Geological Survey.
Business Recorder
an hour ago
- Business Recorder
Asia shares, dollar slip as tariff tensions darken mood
SYDNEY: Asian share markets and the dollar made a soft start on Monday as U.S.-China trade tensions continued to simmer, while investors turned defensive ahead of key U.S. jobs data and a widely expected cut in European interest rates. There was little obvious reaction to President Donald Trump's threat late Friday to double tariffs on imported steel and aluminium to 50%, beginning on June 4, a sudden twist that drew the ire of European Union negotiators. Speaking on Sunday, Treasury Secretary Scott Bessent said Trump would soon speak with Chinese President Xi Jinping to iron out a dispute over critical minerals. Beijing then forcefully rejected Trump's trade criticism, suggesting a call might be some time coming. White House officials also continued to play down a court ruling that Trump had overstepped his authority by imposing across-the-board duties on imports from U.S. trading partners. 'The court ruling will complicate the path ahead on trade policy, but there remains an ample set of provisions available to the administration to deliver its desired results,' said Bruce Kasman, chief economist at JPMorgan. 'There is a commitment to maintaining a minimum U.S. tariff rate of at least 10% and imposing further sector tariff increases,' he added. 'An increase in ASEAN to discourage transhipment looks likely, and the bias for higher tariffs on U.S.-EU trade persists.' Markets will be particularly interested to see if Trump goes ahead with the 50% tariff on Wednesday, or backs off as he has done so often before. In the meantime, caution reigned and MSCI's broadest index of Asia-Pacific shares outside Japan went flat. Japan's Nikkei fell 1.4%, while Hong Kong dropped 2.5%. South Korean stocks edged up 0.2% on hopes a snap presidential election on Tuesday would deliver a clear winner. EUROSTOXX 50 futures dipped 0.2%, while FTSE futures and DAX futures were little changed. S&P 500 futures eased 0.4% and Nasdaq futures lost 0.5%. The S&P had climbed 6.2% in May, while the Nasdaq rallied 9.6% on hopes final import levies will be far lower than the initial sky-high levels. Front-running the tariffs has already caused wild swings in the economy, with a contraction in the first quarter likely turning into a jump this quarter as imports fall back. The Atlanta Fed GDPNow estimate is running at an annualised 3.8% for April-June, though analysts assume this will slow sharply in the second half of the year. Data this week on U.S. manufacturing and jobs will offer a timely reading on the pulse of activity, with payrolls seen rising 130,000 in May while unemployment stays at 4.2%. Eyeing unemplyment A rise in unemployment is one of the few developments that could get the Federal Reserve to start thinking of easing policy again, with investors having largely given up on a cut this month or next. A move in September is seen at around a 75% chance, though Fed officials have stopped well short of endorsing such pricing. There are at least 11 Fed speakers on the diary for this week, led by Fed Chair Jerome Powell later on Monday. Fed Governor Christopher Waller did say on Monday that cuts remain possible later this year as he saw downside risks to economic activity and employment and upside risks to inflation from the tariffs. A softer jobs report would be a relief for the Treasury market, where 30-year yields continue to flirt with the 5% barrier as investors demand a higher premium to offset the ever-expanding supply of debt. The Senate this week will start considering a tax-and-spending bill that will add an estimated $3.8 trillion to the federal government's $36.2 trillion in debt. Across the Atlantic, the European Central Bank is considered almost certain to cut its rates by a quarter point to 2.0% on Thursday, while markets will be sensitive to guidance on the chance of another move as early as July. The Bank of Canada meets Wednesday and markets imply a 76% chance it will hold rates at 2.75%, while sounding dovish on the future given the tariff-fuelled risk of recession there. Widening rate spreads have so far offered only limited support to the U.S. dollar. 'The greenback remains near the lower end of its post-2022 range and considerably weaker than interest rate differentials would imply,' noted Jonas Goltermann, deputy chief markets economist at Capital Economics. 'Sentiment around the greenback remains negative and it continues to look vulnerable to further bad news on the fiscal and trade policy fronts.' On Monday, the dollar slipped 0.3% on the yen to 143.55 , while the euro edged up 0.2% to $1.1370 . The greenback even fell 0.2% on the Canadian dollar to 1.3727 , getting no tailwind from Trump's threat of 50% tariffs on Canadian steel exports. In commodity markets, gold firmed 0.6% to $3,310 an ounce , having lost 1.9% last week. Oil prices bounced after OPEC+ decided to increase output in July by the same amount as it did in each of the prior two months, a relief to some who had feared an even bigger increase. Brent rose $1.60 to $64.38 a barrel, while U.S. crude gained $1.74 to $62.53 per barrel.
Business Recorder
6 hours ago
- Business Recorder
Most Gulf markets in red on US tariff uncertainty
DUBAI: Most stock markets in the Gulf ended lower on Sunday as US President Donald Trump's comments accusing China of breaking a bilateral trade deal added to uncertainty over tariffs. Trump has also announced plans to double worldwide steel and aluminium tariffs to 50%. Later said he would speak to his Chinese counterpart to 'hopefully' work out differences. A federal appeals court last week temporarily reinstated the most sweeping of Trump's tariffs, a day after a US trade court ruled that Trump had exceeded his authority in imposing the duties and ordered an immediate block on them. Saudi Arabia's benchmark index dropped 1.5%, weighed down by a 2.2% slide in Al Rajhi Bank and a 0.9% decrease in Saudi National Bank. Elsewhere, oil company Saudi Aramco eased 0.7%. Aramco has published a new prospectus for its issuance programme of Islamic bonds or sukuk, signalling the state oil group may soon tap the debt markets again after it raised $5 billion from a three-part bond sale this week. In Qatar, the index gained 0.4%, ending a five-session losing streak, helped by a 1.1% rise in the Gulf's biggest lender Qatar National Bank.
