ECC green-lights two projects for Power Division

Hydroelectric power projects will help attract $3.7b investment under CPEC

Dr Hafeez Shaikh chairing an ECC meeting. PHOTO: INFO MINISTRY

The Economic Coordination Committee (ECC) of the cabinet on Thursday allowed the Power Division to proceed with the development of Kohala and Azad Pattan hydroelectric power projects in a bid to pave the way for attracting $3.7 billion in investment under the China-Pakistan Economic Corridor (CPEC).

Work on these two power projects had come to a halt because of a row over different issues.

The Kohala hydroelectric power project will be developed on Jhelum River in Azad Jammu and Kashmir (AJK) and is being implemented by Kohala Hydropower Company Private Limited (KHCL) with China Three Gorges Corporation, International Finance Corporation (IFC) and Silk Road Fund as sponsors.

The Azad Pattan hydroelectric power project will be built on the dual boundary between Rawalpindi district (Punjab) and Sudhnoti district (AJK). It is being developed by Azad Pattan Power Private Limited (APPL) with China Gezhouba Group Company (CGGC) as the sponsor.

Work on Kohala project came to a halt following a row between Pakistan government and KHCL over e-flow from Jhelum River and it resulted in demobilisation of the contractor. The other issue was related to the loss/gain at a rate of 7% to be absorbed by KHCL, which the government of Pakistan had not agreed earlier.

Pakistan’s government had given its consent for 5% but it was later revised upward to 7% following demand from the project company. The ECC had earlier approved the minimum water flow and 7% foreign exchange loss and gain.

The ECC also approved the revised standard security package documents such as implementation agreements, government guarantee, power purchase agreement (PPA) and water use agreement under the Power Generation Projects Policy 2002 for the hydroelectric power projects in the private sector.

The ECC meeting was chaired by Adviser to Prime Minister on Finance and Revenue Dr Abdul Hafeez Shaikh. Sources told The Express Tribune that these projects were being implemented under the 2002 policy framework and under the current National Electric Power Regulatory Authority (Nepra) tariff.

Any modifications agreed under the CPEC framework with the government of China will also be applicable to the 1,124-megawatt Kohala and 700MW Azad Pattan projects. Water use charges will also reflect in relevant agreements.

Total investment in the Kohala hydroelectric power project is estimated at $2.4 billion and investment of $1.35 billion is projected for the Azad Pattan project.

Levelised tariff for the Kohala project is 7.85 cents per unit and for the Azad Pattan project it is 7.07 cents per unit.

The Tripartite Power Purchase Agreement (TPPA) for the Kohala project was finalised on Thursday. Accordingly, the implementation agreement and water use agreement required corresponding minor changes to make them consistent with the TPPA.

After negotiations with KHCL and APPL, all the agreements were almost planned to be executed before June 30, 2020 in view of the timeline in the Nepra Commercial Code and Competitive Trading Bilateral Contract Market (CTBCM).

The economic decision-making body also decided in favour of removal/reduction of regulatory duty on smuggling-prone items, including fabrics, sanitary ware, LED/TVs, padlocks, blankets, electrodes, etc.

The ECC took up five proposals for technical supplementary grants and approved all of them, including Rs4.313 billion for employees-related expenditure by the Interior Division, Rs900 million for adjusting pay and allowances of employees of the National Commission for Human Development, Rs52.70 million for necessary expenditures by the Revenue Division, Rs39.22 million for necessary expenditures by Pakistan Rangers and Rs18.53 million for the Islamabad administration for taking measures to control and fight the Covid-19 pandemic. 

Published in The Express Tribune, June 26th, 2020.

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