Pakistan has agreed to revive the 1,124MW Kohala Hydropower Project (KHPP) and extend the completion deadline by three years.Â
Dawn reported, citing sources in the Planning Commission, that the project, stalled for three years, faced delays due to the reluctance of China Export and Credit Insurance Corporation (Sinosure) to provide insurance coverage. This reluctance stemmed from unpaid dues exceeding Rs550 billion owed to Chinese independent power producers (IPPs) by Pakistani power companies.
Additionally, changes in land acquisition laws and environmental regulations by the Azad Kashmir government contributed to the delays. Earlier this year, China Three Gorges Dam Corporation (CTG), the project’s Chinese sponsor, requested the revival of the $2.5 billion hydropower station.
The Private Power and Infrastructure Board (PPIB) and CTG are currently addressing legal and procedural requirements to extend the letter of support (LoS) and the deadline for financial closing. The new deadline is set for September 30, 2027, instead of October 1, 2024.
Pakistan has also agreed to waive potential penalties that would typically apply to LoS extensions, acknowledging that the delays were beyond CTG’s control.
During the Prime Minister’s June visit to China, CTG presented a series of demands to revive the 1,124MW project. Pakistan has been pushing for its revival, along with the 700MW Azad Pattan Hydropower project, both of which are key components of the China-Pakistan Economic Corridor (CPEC) and the country’s long-term Indicative Generation Capacity Expansion Plan (IGCEP).
Following these engagements, Sinosure requested the sponsors of the two projects to submit fresh letters of intent (LOIs) for investment and related insurance coverage.
CTG also sought to maintain the previous bank guarantee for the project, instead of doubling it as required under the power policy, and requested a waiver of the extension fee.
