PPIB puts 1,832MW hydropower projects on hold as rooftop solar cuts demand

The Private Power Infrastructure Board (PPIB) has reportedly decided to put three hydropower projects with a combined capacity of 1,832MW on hold due to declining electricity demand linked to the surge in rooftop solar generation and their exclusion from IGCEP 2025-35 least-cost optimisation.

BR reported that the matter surfaced during the audit of PPIB for FY2024-25, which found that the 700.7MW Azad Pattan, 1,124MW Kohala and 8MW Kathai-II hydropower projects remained unimplemented because of persistent delays in achieving financial close.

According to the audit findings, the Letter of Support (LoS) for the Azad Pattan project was issued on June 30, 2016, but the project failed to achieve financial close by December 31, 2024 despite five extensions.

The delay was linked to Sinosure-related financing constraints.

The project sponsor sought another extension until December 2027. However, the PPIB Board, in its 148th meeting held on August 1, 2025, decided to maintain the status quo pending the outcome of the CPEC Energy Cooperation List Adjustment Joint Study.

The project was also not optimised in the draft IGCEP 2025-35.

Similarly, the LoS for the Kohala project was issued on December 31, 2015, but the project could not reach financial close despite multiple extensions granted up to September 30, 2027.

In the case of Kathai-II, the LoS was issued on November 20, 2019. The project failed to achieve financial close due to the non-availability and delayed approval of standardised security package documents, which required approval from the Economic Coordination Committee (ECC) and Cabinet Committee on Energy (CCoE).

The PPIB Board approved cancellation of the Kathai-II LoS with mutual consent in August 2025.

The case was later referred to the Ministry in December 2025, highlighting facilitation gaps in the process.

In its response, PPIB management said the Azad Pattan and Kohala hydropower projects were not optimised in IGCEP 2025-35 because of declining demand caused by the rapid increase in rooftop solar energy.

The audit observations indicate that delays in financing, approvals and demand projections have affected the implementation of the three hydropower projects.