ISLAMABAD: The China Energy Engineering Corporation (CEEC) has sought the intervention of Prime Minister Shehbaz Sharif to include its 700.7 MW Azad Pattan Hydropower Project (HPP) in the Indicative Generation Capacity Expansion Plan (IGCEP) 2025-35, citing the need for policy consistency, investment continuity, and rationalization of the national planning process.
In a letter addressed to the Prime Minister, Wang Xiaoming, CEO of the Azad Pattan Power Private Limited (APPPL), expressed appreciation for the Prime Minister’s instructions to address the issues raised in the company’s earlier communication of June 23, 2025.
The APPPL, however, stated that the response from the Independent System and Market Operator (ISMO) dated July 29, 2025 — forwarded through the Ministry of Energy (Power Division) on September 5 — was inadequate and failed to address the key concerns raised.
Failure to achieve financial close: Two key CPEC hydropower projects excluded from IGCEP
The company reiterated that ISMO’s response only elaborated on the criteria for nominating public sector projects as “Committed” under the IGCEP 2024-34. It ignored the fact that the Azad Pattan project is a priority energy project under the China-Pakistan Economic Corridor (CPEC), being developed by Energy China, a major Chinese state-owned conglomerate, under Pakistan’s prevailing power policy framework.
According to the CEO, the project had consistently been categorized as “Committed” in all IGCEP iterations from 2018 to 2022, after fulfilling the required criteria. However, in the 2024-34 IGCEP iteration, these assumptions were retrospectively reversed, and the project was reclassified as “Candidate”—in violation of the National Electricity Plan 2023–2027, specifically Strategic Directives Para 5(C). This clause mandates that “all generation projects declared as committed in the approved IGCEP 2021, pursuant to the CCI decision of September 13, 2021, shall remain committed.”
The company emphasized the challenges of financing hydropower projects, which face high seismic, geological, and hydrological risks, as well as logistical difficulties due to their remote locations—especially in Azad Jammu & Kashmir, which is internationally recognized as a disputed territory. Under these circumstances, Chinese bank financing through the CPEC framework remains the only viable option.
However, the project’s exclusion from the IGCEP has jeopardized this financing. The letter noted that such arbitrary shifts in planning assumptions and frequent reclassification of projects between “Committed” and “Candidate” status have undermined investor confidence, damaged Pakistan’s foreign direct investment (FDI) prospects, and disrupted a nearly finalized financial closing process. The facility agreement with lenders was already executed, and the term sheet had been approved by the Private Power and Infrastructure Board (PPIB).
Hydropower projects, the CEO stressed, have the longest development cycle of all generation technologies but offer unmatched operational life—up to 100 years. Without clear timelines for implementation, such projects risk indefinite delays and failure. The Azad Pattan HPP is of strategic importance to Pakistan’s energy security, offering low-cost energy storage and stability, and should therefore be prioritized.
The letter also highlighted the broader strategic context: Pakistan’s water rights under the Indus Waters Treaty are closely tied to hydropower and irrigation infrastructure. Construction of projects like Azad Pattan and Kohala HPP is vital for securing these rights, especially as the Treaty remains under stress.
The CEO Wang has urged the Prime Minister to personally intervene and ensure that, in the interest of policy consistency, investment certainty, and strategic energy development, the Azad Pattan HPP is reinstated as a “Committed” project under IGCEP 2025-35, which is currently being finalized. This, he said, would enable the sponsors to complete financial closing and bring billions of dollars in Chinese investment into Pakistan.
Copyright Business Recorder, 2025
Comments
Comments are closed for this article.