ISLAMABAD, Sept 9: The government on Monday signed an implementation agreement with a South Korean consortium to set up a 100MW power project in Azad Kashmir.

The 30-year levelised tariff for the Gulpur hydropower project in Kotli district based on its feasibility study has been approved at 5.42 cents (about Rs5.64) per unit that would be subject to minor adjustments at the time of completion of the project on the basis of actual expenditure, a government official told Dawn.

The $159 million project will be completed by December 2017.

Acting Water and Power Secretary Saifullah Chattha, who holds additional charge of the managing director of Private Power and Infrastructure Board, and Kim Jae-wang, chief executive officer of Mira Power Limited, signed the agreement. Mira Power is a consortium of South Korean investors.

The agreement will enable sponsors to achieve financial close for the project by April 28 next year to start construction work.

The letter of support has already been issued to the company to finalise the engineering, procurement and construction contract, and acquire land and execute Power Purchase Agree-ment, Land Lease Agree-ment and Water Use Agreement.

It is a run-of-the-river hydropower project on River Poonch having a capability to generate clean, reliable and affordable 465 million units of electricity per year for the national grid.

The project is being implemented on Build-Own-Operate-Transfer (Boot) basis under the Power Policy 2002.

After its commissioning, the project company will operate and maintain the plant for 30 years before transferring it to the AJK government.

During operation and maintenance of the project, the Azad Kashmir government will receive Rs70m per annum as water use charges.

Minister of State for Water and Power Abid Sher Ali said the government was encouraging foreign and domestic investment in the power sector, especially setting up of cheap power generation units on technologies like hydropower, coal, solar, wind and bio-gas.

“We have started an aggressive campaign against power thieves and made legislation to give severe punishment to them,” he said.