Hydel power projects in KP: KOEN accuses Nepra of delaying feasibility stage tariff

ISLAMABAD: Korea South-East Power Company (KOEN) has accused National Electric Power Regulatory(Nepra), the power sector regulator, of deliberately delaying feasibility stage tariff of its two hydel power projects in Khyber Pakhtunkhwa.

M/s KOEN is a Korean state-owned company and a subsidiary of Korea Electric Power Corporation (KEPCO). The company owns and maintains 83,000-MW of generation capacity worldwide with an asset base of $ 175 billion.

Ministry of Foreign Affairs, (MoFA) has shared a letter of Korean company with the concerned authorities, in which the company has stated that after successful completion of 102-MW Gulpur Hydropower Project, it embarked on two 100% FDI-based projects. In May 2017, the investment was formalised after signing of MoU between KPK government and KOEN.

KOEN accuses Nepra, others of ‘jeopardizing’ two hydropower projects

After necessary bankable feasibility studies, KOEN obtained NOCs from various departments including KP EPA, IRSA, Forest and general license from Nepra. The company also recruited local professionals, in addition to deploying Korean manpower to Pakistan for the said projects. So far, approximately $ 25 million has reportedly been spent on both the projects.

However, citing procedural and rationalisations issues, KOEN has lamented that Nepra has been unable to determine the tariff.

According to the company, the projects have matured and are ready for full investment. The inability to determine tariff on the part of Nepra is causing unnecessary delay and financial loss to the investors. KOEN has requested SIFC’s intervention to expedite the process and resolve the case in the interest of timely commencement of the projects.

The company in a letter to Ameer Khurram Rathor, Additional Secretary (Asia Pacific), MoFA, claimed that this important foreign direct investment has in place all required approvals from Korean government while approvals of lenders and co-sponsors/ investors are awaiting determination of Nepra for feasibility stage tariff.

“Inordinate delay in the tariff determination is prejudicing the Korean government approvals, which are time bound while co-sponsors are losing their interest as the project is unable to proceed towards the stage of Letter of Support (LoS),” said CEO KA Power Limited.

The Korean firm stated that in the short- term, both projects will attract essential foreign direct investment having higher onshore costs during the development and construction phase of five to seven years. In the long- term, it will replace costly imported fuel-dependent energy during the operational phase.

Furthermore, this project aligns the generation of energy with the country’s demand and supply curve, maintaining the energy consumption pattern without negatively impacting on the country’s idle capacity charges overhead. The execution of this project will aid in meeting the stability needs of the system and in avoiding network splitting resulting from the voltage stability requirements of the national grid.

Copyright Business Recorder, 2023