Latest news with #KohalaHydropowerProject
Business Recorder
3 days ago
- Business
- Business Recorder
Failure to achieve financial close: Two key CPEC hydropower projects excluded from IGCEP
ISLAMABAD: The government has excluded two major China-Pakistan Economic Corridor (CPEC) hydropower projects — totalling 1,824 MW and valuing $4 billion — from the Indicative Generation Capacity Expansion Plan (IGCEP) 2025–35, citing failure to achieve financial closure. 'We have excluded the 1,124 MW Kohala Hydropower Project and the 700.7 MW Azad Pattan Hydropower Project from the IGCEP till 2034, along with other private sector projects,' revealed Federal Minister for Power, Sardar Awais Khan Leghari, while briefing the Senate Standing Committee on Power, chaired by Senator Mohsin Aziz. The committee witnessed heated debate on non-inclusion of the 207 MW Madyan and 88 MW GabralKalam hydropower projects. Brig Tariq Saddozai (Retd), Special Assistant to the Chief Minister of Khyber Pakhtunkhwa (KPK) on Energy and Power, argued that both projects were included in the previous IGCEP as committed projects. He stated that despite meeting the criteria set by the Council of Common Interests (CCI) in 2021—and being protected under the National Electricity Plan 2023–27—the projects were removed from the latest IGCEP. He added that the provincial government had already invested Rs 14 billion in land and infrastructure for the projects. Saddozai claimed the federal government had 'moved the goalposts,' resulting in the exclusion of KPK's projects from the IGCEP 2025– and the Power Secretary maintained that both World Bank-funded projects had not signed binding contracts and did not qualify under the least-cost project criteria. They clarified that the IGCEP must be approved by the National Electric Power Regulatory Authority (NEPRA) following a public hearing, during which all affected projects can present their cases. CPEC hydropower project achieves hoisting of last rotor in Mansehra While the Power Division rejected KPK's arguments, it agreed to hold further discussions with the provincial government. During the discussion on the interim Net Hydel Profit (NHP) arrangement, Rehmat Akhtar, CEO of the Central Power Purchasing Agency–Guaranteed (CPPA-G), confirmed a payment of Rs 1.10/kWh to KPK, with a 5% annual indexation. He said CPPA-G is currently making payments to WAPDA for onward distribution to both KPK and Punjab. He also noted that the Rs 1.10/kWh rate, including 5% annual indexation from 2016, is being recovered from consumers. Outstanding payments of Rs 40 billion under NHP have already been accepted. Once the determinations for FY2023–24 and FY2024–25 are finalized, the NHP rate will increase to Rs 1.70/kWh. The KPK government claimed its outstanding dues total Rs 76 billion, while WAPDA maintained the amount is Rs 63 billion. The Committee Chairman recommended increasing NHP monthly payments to Rs 5 billion, up from the current Rs 3–4 billion, and proposed that payments be routed through CPPA-G instead of WAPDA. It was decided that an internal meeting at the Ministry level would be convened to finalize the proposed NHP payment mechanism. On the issue of wheeling charges (Use of System Charges – UoSC), the Power Minister informed the committee that the Cabinet Committee on Energy (CCoE) has approved wheeling charges at Rs 12.55/kWh, excluding stranded costs—one of the major factors behind previous higher rates. The Cabinet ratified the decision. Initially, an allocated capacity of 800 MW will be made available for competitive bidding. The highest bidder will be granted access to wheel electricity. The committee lauded the Power Minister and his team for addressing the wheeling charges issue and for achieving a Rs 190 billion reduction in losses incurred by the power distribution companies (Discos). Meanwhile, according to a press release issued by the Senate Secretariat, Federal Minister for Power Awais Ahmad Leghari clarified that KP authorities did not fully present the CCI-approved power policy, and citing a single clause without context was misleading. He added that if these projects were included, electricity prices could rise by Rs6 per unit by 2034. The Power Division, he said, had removed 8,000 to 10,000 MW worth of projects from the plan — including several CPEC power projects — to protect the public from expensive electricity. The minister further informed the committee that the government had terminated agreements with five IPPs and renegotiated others, resulting in an estimated saving of Rs3.4 trillion over the next four to five years. This year alone, distribution company (DISCO) losses were reduced by Rs191 billion. He acknowledged the persistent problem of electricity theft but noted that the target for establishing a competitive market had been achieved, freeing the government from mandatory power purchases. The committee also deliberated on captive power plants, costly imported coal and LNG projects, and the tariff structure for the protected category. The chairman committee called for a review of the protected category policy. Secretary Power Division confirmed that a reassessment is underway and that consumers using up to 200 units are receiving subsidies. The chairman urged the federal minister to introduce multiple slab rates to protect the consumers from a sudden high jump in tariff. Senator Mohsin Aziz urged both the federal and provincial governments to revisit the matter so that these KP projects could be completed, benefiting both the province and the country. Copyright Business Recorder, 2025
Business Recorder
20-06-2025
- Business
- Business Recorder
KHCL seeks LoS extension for $2.5bn Kohala hydropower project till Sept 2027
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
Business Recorder
28-04-2025
- Business
- Business Recorder
Kohala Hydropower Project: Chinese co urges Pakistan 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
Business Recorder
28-04-2025
- Business
- Business Recorder
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
