Three Chinese hydel projects get ECC approval after a one year wait

Updated 26 Jun 2020

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The ECC agreed to the demand from the Chinese firms for up to seven per cent foreign exchange loss after resisting it for almost a year. — Koh Mari/File
The ECC agreed to the demand from the Chinese firms for up to seven per cent foreign exchange loss after resisting it for almost a year. — Koh Mari/File

ISLAMABAD: In fast moving developments, the Economic Coordination Committee (ECC) of the Cabinet on Thursday approved important revisions to the terms on which three hydropower projects, worth more than $5 billion in total, are being executed by Chinese companies.

The meeting, presided over by Adviser to PM on Finance and Revenue Dr Abdul Hafeez Shaikh also reduced regulatory duties on six categories of smuggling-prone items and approved technical supplementary grants to various agencies and ministries.

The ECC on April 8 agreed to the demand from the Chinese firms for up to seven per cent foreign exchange loss after resisting it for almost a year.

The Cabinet Committee on Energy, led by Planning Minister Asad Umar approved on June 20 the signing of implementation agreements on two of these three projects — Kohala and Azad Pattan — with an estimated cost of $3.758bn.

Within days, yet another summary was moved by the Power Division titled “Revised Standard Security Package Documents” for these three projects — 1,124MW Kohala Hydropower Project, 700MW Azad Pattan Hydropower Project and 640MW Mahl Hydropower project — all based on Jhelum river, Azad Kashmir. The cumulative generation capacity of three projects is estimated at 2,464MW.

In the case of the Kohala project, the documents were signed in PM’s presence shortly after the ECC approval on Thursday.

All three projects are being developed on built, own, operate and transfer basis by the Private Power & Infrastructure Board (PPIB). The 1,124MW Kohala and 700MW Azad Pattan projects are included in and processed under the China-Pakistan Economic Corridor Energy Project Cooperation agreement signed on Nov 8, 2014 by the two countries.

The Kohala project is to be located on River Jhelum in Azad Jammu & Kashmir being developed by the Kohala Hydropower Company Private Limited with China Three Gorges Corpora­tion (CTG), International Finance Corporation of the World Bank and Silk Road Fund. The project’s average 30-year tariff is estimated at 7.85 cents per unit with total project cost of $2.4bn.

Likewise, the Azad Pattan project is also to be located on Jhelum river on the dual boundary of AJK and Punjab being developed by Azad Pattan Power Pvt Limited with China Gezhouba Group Company Limited as sponsor. The 30-year tariff for this project is estimated at 7.07 cents per unit, with project cost of $1.35bn.

The third project — Mahl Hydropower – is also to be located on river Jhelum on combined boundary of AJK, Punjab and Khyber Pakhtunkhwa. The project is being developed by Mahl Power Company Ltd with CTG and Trans Tech Pakistan.

These projects are now also covered under the 2002 Power Policy incentives, concessions and protections for which revised standard security package documents are being signed. These documents include Pakistan government’s implementation agreements, GOP guarantees, power purchase agreements, water use agreement which are signed by government of AJK/Punjab/KP, National Transmission & Despatch Company, Central Power Purchasing Agency, PPIB etc.

The ECC also decided in favour of reduction in regulatory duty on the smuggling-prone items including fabric, sanitary ware, LED/TVs, padlocks, blankets, electrodes etc.

The meeting also approved Rs5.323bn technical supplementary grant for five proposals. These included Rs4.313bn grant for employee-related expenditure by the Interior Division, Rs900 million for adjusting pays and allowances of the National Commission for Human Development employees, Rs52.70m for the Revenue Division, Rs39.22m for the Pakistan Rangers and Rs18.53m for the Islamabad administration for taking measures to control and fight the Covid-19 pandemic.

Published in Dawn, June 26th, 2020