Pakistan, China ink $2.4bn agreement for 1,124MW Kohala Hydropower Project

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By Muhammad Luqman
A tripartite agreement has been signed between a Chinese company and the governments of Pakistan and China for the construction of the 1,124-megawatt (MW) Kohala Hydropower Project over river Jhelum in Azad Kashmir at a cost of $2.4 billion.
The signing ceremony was held at the Prime Minister (PM) Office in the capital, Islamabad and was witnessed by PM Imran Khan, Azad Jammu and Kashmir Prime Minister Raja Farooq Haider, federal cabinet members, Chinese Ambassador in Pakistan Yao Jing and other senior officials.

The $2.4 billion Kohala Hydropower Project is Pakistan’s largest power sector investment in a single Independent Power Producer (IPP) sofar.
The run of the river project is being built under CPEC and has been awarded to Kohala Hydropower Company Ltd (KHCL), which is a subsidiary of China Three Gorges Corporation (CTGC).
China Three Gorges Corporation (CTGC), the state-owned hydropower developer, won the right to develop a hydroelectric dam in Pakistan on January 7, 2015. The Kohala Hydropower Project will be CTGC’s largest investment in Pakistan.
In December 2018 the people of Muzaffarabad held protests against Kohala dam design due to its planned water diversion via tunnel which will bypass the Muzaffarabad city.
China Three Gorges Cooperation, IFC and Silk Road Fund are sponsors of the project under the Policy for Power Generation Projects 2002 on a built, own, operate and transfer (BOOT) basis.
Addressing the signing ceremony, Prime Minister Imran Khan said that the Kohala Hydropower Power Project was the biggest ever investment in Pakistan on a single project.
He hoped that that the project would initiate a move towards clean energy and Pakistan’s dependence on imported fuel.
He said that the country was progressing well when it had been producing hydropower until it started banking on imported fuel which not only made the local industry uncompetitive but also put additional burden on foreign reserves.
The prime minister said that power generation through imported fuel also adversely impacted the environment as Pakistan was among the top nine countries worst hit by climate change which necessitated the promotion of clean energy.
Meanwhile, the Economic Coordination Committee (ECC) of Pakistan’s federal cabinet has approved revised standard security package documents such as implementation agreements (GOPIA), GOP guarantee, power purchase agreement (PPA), water use agreement (WUA) under Policy for Power Generation Projects 2002 for the hydropower projects in the private sector.
The ECC meeting was held in Islamabad with Adviser to the Prime Minister on Finance and Revenue Dr. Abdul Hafeez Shaikh in the chair.

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