Chinese firm seeks extension of Letter of Support for $2.5bn Kohala Hydro project

Kohala Hydropower Company Limited (KHCL), a Chinese firm overseeing the $2.5 billion Kohala Hydropower Project, has formally requested the Pakistani government to extend the project’s Letter of Support (LoS) until September 30, 2027. 

Business Recorder reported that the company’s request, submitted to the Power Division, aims to secure continued progress for the 1,124 MW run-of-the-river project, a key initiative under the China-Pakistan Economic Corridor (CPEC).

In a letter addressed to the Power Division, the company highlighted that it has met all necessary requirements, including submitting a $5.62 million Performance/Bank Guarantee, as stipulated by the terms of the original LoS. 

The extension is crucial for the smooth continuation of the project, which is seen as strategically important for both Pakistan and China. The project’s overall progress has been aligned with the government’s energy development plans, including compliance with the National Electricity Generation Capacity Expansion Plan (IGCEP) 2022-2031.

The Kohala project has already made significant advancements, including the acquisition of 4,607 Kanals of land for the project’s development, fully compensating the affected population. 

Additionally, the company has executed key agreements, including an Implementation Agreement with Pakistan’s government and a Tripartite Power Purchase Agreement (TPPA) with relevant agencies.

KHCL’s CEO, Liu Yonggang, emphasized the importance of the LoS extension, urging the Power Division to promptly issue the formal notification. This extension would ensure uninterrupted progress in the project, which is expected to contribute significantly to Pakistan’s energy needs and economic development.

The Ministry of Power and the Private Power and Infrastructure Board (PPIB) are currently reviewing the request, with the PPIB having already indicated their support for the extension. 

The PPIB had previously informed the company about the approval of the extension of the Financial Closing (FC) date until September 2027, contingent on the extension of the bank guarantee. The company’s commitment to meeting the milestones for this major energy project remains integral to Pakistan’s long-term energy security goals.