Kohala Hydro seeks extension of Letter of Support for $2.5bn project to protect water rights under Indus Waters Treaty

Kohala Hydro Company Limited (KHCL) has formally requested an extension of its Letter of Support (LoS) for the $2.5 billion Kohala Hydropower Project, a 1,124 MW run-of-the-river initiative, until September 30, 2027. 

According to a report by Business Recorder, this extension is critical for ensuring Pakistan’s existing water rights under the Indus Waters Treaty (IWT), signed in 1960 between Pakistan and India with World Bank mediation.

In a letter to the Managing Director of the Private Power and Infrastructure Board (PPIB), KHCL CEO Liu Yonggang emphasized the project’s strategic importance for Pakistan’s hydroelectric power generation on the Jhelum River. The IWT guarantees Pakistan’s rights to use water from the Jhelum, Indus, and Chenab rivers. KHCL stresses that the timely development of the 1,124 MW Kohala Hydropower Project is essential for Pakistan to establish and protect its rights to Jhelum water.

The company argued that failure to proceed with the project would compromise Pakistan’s ability to assert its water rights, leaving the country vulnerable to further Indian upstream interventions. 

Drawing reference to the legal dispute between Pakistan and India over the Kishenganga Dam Project, KHCL pointed out that the Court of Arbitration (COA) ruled in favor of India, stating that only those uses of water that were established at the time of notification were protected under the IWT. KHCL noted that, similarly, any delay in the Kohala project would jeopardize Pakistan’s ability to claim protection for its planned hydroelectric use.

KHCL emphasized that timely development of the Kohala project is crucial to establish Pakistan’s water rights and protect them from potential future upstream interventions by India. 

The project, which aligns with Pakistan’s sovereign rights under the IWT, is also strategically significant for the China-Pakistan Economic Corridor (CPEC) and will bring international attention and deterrence against any unauthorized changes in the water regime by India.

The PPIB Board had earlier approved an extension of the LoS for the Kohala Hydropower Project until September 30, 2027, in its 144th meeting on September 18, 2024. Since then, KHCL has fulfilled all the PPIB-mandated conditions, including submitting a $5.62 million performance guarantee. 

However, the company now urgently requests a formal notification of the LoS extension to avoid project delays and to formally establish Pakistan’s existing hydroelectric use on the Jhelum tributary. 

This is seen as crucial for protection under the IWT and vital for safeguarding Pakistan’s water rights, especially in light of the legal precedents set by the Kishenganga case.