ISLAMABAD: M/s China Three Gorges South Asia Investment Ltd (C-SAIL) has sought support from Private Power & Infrastructure Board (PPIB) to acquire land for 1124-MW Kohala Hydropower Project, despite the fact that payment has already been made.
The Company’s CEO, in a letter to Managing Director PPIB, Shah Jahan Mirza has appreciated PPIB for extending support in development of the project as most of the key issue were resolved and the Tripartite Agreement, Implementation Agreement (GoP) and Implementation Agreement (AJK), Power Purchase Agreement and Water Use Agreement were executed after marathon meetings.
The Company was fully geared to achieve financial closing in December 2018 with the mobilization of the EPC contractor, owner’s engineer and equipment at the site and had started some preliminary construction works. However, the work was stopped by GOAJK due to some environmental issues raised by them, which were wrongly linked with Neelum Jhelum Hydro Power Project. Thereafter, it took more than three years to resolve the issues raised by GOAJK.
CEO of the Company maintains that it requires approx. 8,600 Kanals of land for the project, for which the Company has already deposited Rs 1.53 billion in 2018 in the treasury of the GOAJ&K on account of the land acquisition and lease of approx. 52% (approx. 4,600 Kanals) under Land Acquisition Act 1894 (LAA 1894).
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The project faced considerable delays since 2018; however, in spite of the payments for the land to GOAJ&K, Land Lease Agreements have still not been executed between the company and GOAJ&K under provisions of the LAA 1894. In addition, the GOAJ&K has notified a new Land Acquisition Act in the year 2020 (LAA 2020) and new Rules in the year 2021 (Rules 2021).
The Company has reviewed the LAA 2020 and Rules 2021 and have given various presentations and communications on not applicability of the LAA 2020 and Rules 2021 on the project. In addition, the Government of Pakistan and M/s Sinosure held detailed discussions on the issues in the financial closure of a few projects including the Kohala Project but no solution has been reached up to now.
After the execution of the Agreements the Company approached the China Export & Credit Insurance Corporation (Sinosure) for issuance of the LoI; however, in spite of all the efforts by the Company and China Headquarters, the LoI has not yet been issued by Sinosure which is the requirement for arranging $ 2.5 billion finance for the project.
The company has sought support of the PPIB for the following matters which are related to the Acquisition and Lease of the Land for the project: (i) execution of the Land Lease Agreements under LAA 1894 for which the payments have already been made to the GOAJ&K in 2018 (approx. 52 % of the land required for the project); (ii) process for remaining land required for the project to be processed under provisions of the LAA 1894; (iii) NEPRA has not approved the tariff of the Sewerage Treatment Plant and Water bodies, as per the ECC decision. As this was one of the environmental concerns of the GOAJ&K; hence, the matter is to be resolved between GoP and GOAJ&K to avoid any stoppage in the smooth development and implementation of the project; and (iv) support by GoP and PPIB for issuance of the LoI by Sinosure for expediting the financing arrangements of the project.
According to CEO the company will continue to strive hard to ensure the earliest achievement of the financial closing of the project before the extended term of the Letter of Support (LoS), i.e., September 30, 2024.
Copyright Business Recorder, 2022
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