Two key HPPs: Sinosure agrees to implement

ISLAMABAD: China’s insurance company, M/s Sinosure has reportedly shown willingness to implement 700-MW Azad Pattan Hydropower Project and 1124-MW Kohala Hydropower Project worth billions of dollars on the guidance from Beijing, well-informed sources told Business Recorder.

Pakistan’s successive governments made efforts to commence both key hydel projects but the Chinese insurance company was reluctant to implement these projects mainly due to the payments issues of existing companies and gigantic circular debt which is now hovering around Rs 2.6 trillion.

Recently, Minister for Planning, Development and Special Initiatives, who engaged with the bosses of Chinese companies prior to leaving for an official visit to China, raised the issue of a delay in both important projects due to reluctance from Sinosure. However, he received positive response from Chinese leadership.

Commencing work on Azad Pattan HPP: APPL given one month by PPIB

The sources said, Pakistan’s Embassy followed up on the meeting between Minister for Planning, Development and Special Initiatives and President Sinosure Sheng Hetai on ways to expedite early implementation of Azad Pattan and Kohala Hydro Power Projects. Counsellor Haseeb Gohar and Guo Shuang from Sinosure held a series of consultations in this regard.

According to the embassy, the gist of outcome is as follows; (i) Sinosure has received mandatory guidance from the Government of China for the implementation of Azad Patan and Kohala HPP; (ii) at the same time, it is also important for Pakistan to urge the Chinese investors/ enterprises to submit Letter of Intent (LoI) for these projects; (iii) LoI for Azad Pattan, submitted by China Gezhouba Group Company (CGGC) in April 2023 has expired.

There is a need to submit a new LoI. Either, the CGGC or any other investor can be engaged for the submission of a new LoI; and (iv) Sinosure had not received any application either by China Three Gorges (CTG) or any other company for the Kohala HPP. CTG; therefore, is needed to be approached to submit the application/ LoI.

In addition, Sinosure shared that the Chinese investor/ enterprise(s) must resubmit an economic feasibility report while incorporating arrears in it. This report would be an independent component of the evaluation process of Sinosure and would not influence the decision making of the insurer.

In March 2024, Private Power and Infrastructure Board (PPIB) reportedly gave one month to Chinese Company M/s Azad Pattan Power (Pvt) Ltd -APPL to commence work on 700.7-MW hydropower project including approvals from M/s Sinosure or else PPIB will be compelled to explore other options.

“The delay in development of this large-scale project is creating imbalance in the power generation planning, as well,” he said, suggesting that the Sponsors of Azad Pattan should start development activities now, or alternatively, PPIB may discuss mutually some alternate mechanism for amicable exclusion of the Project from IGCEP creating space for other pipeline hydropower projects and upon issuance of Sinosure clearance, the project can be included as per the new optimised timelines in IGECP, the sources quoted MD PPIB as conveying to M/s APPL.

However, representative of APPL stated that confidence level of China side is improving. The CGGC Headquarters are making efforts for issuance of LoI from Sinosure and requested PPIB to continue support so that the core issue of Sinosure clearance is resolved at the earliest.

In October last year, Ministry of Planning, Development and Special Initiatives had stated that probability of achieving financial closure of 700-MW Azad Pattan Hydropower project and 1124-Kohala Power project was low. However, Chinese companies and Government of Pakistan continued their efforts to convince M/s Sinosure to assure insurance of both projects.

Copyright Business Recorder, 2024