Islamabad : June 3, 2024 : A high level delegation of Korean Hydro company had a meeting with Finance minister , Mohammad Aurangzeb , on Monday to apprise him about discouraging role of PPIB and NEPRA in the case of KOEN Hydropower projects. The officials of PPIB who attended the meeting gave confusing statement on optimisation and de-optimisation terms. Sources said PPIB and NEPRA are using every tactics to create hurdle for Korean investor so that it leaves Pakistan without completing two medium size hydro projects costing roughly $ 1 billion. Korean company has already conveyed to Pakistan government that it may not be in a position to keep working on its both hydro projects if NEPRA and PPIB continued to discourage it through various tactics . The foreign company shared a document with the authorities to make them feel that its exit will be against Pakistan’s interest, but none including prime minister Shahbaz Sharif, could address concerns related to the projects Here is a background of the project.
Korea South-East Power Co. Ltd. (KOEN), a subsidiary of Korea Electric Power Corporation (KEPCO), has been significantly investing in Pakistan’s energy sector. KOEN successfully commissioned the 102 MW Gulpur Hydropower Project in March 2020. Building on this success, KOEN embarked on two additional projects: the 229.4 MW Asrit Kedam and the 238 MW Kalam Asrit Hydropower Projects under Power Generation Policy 2015.
Progress
Project Studies/Approvals: Feasibility Studies, ESIA/Resettlement with EPA NOC, IRSA Consent, integrated Grid Interconnection Studies & EPC Bidding process.
Generation License: Issued post-approval of IGCEP 2022-31 in June 2023.
Investment: 100% Debt & Equity arranged (USD 1 Billion). Approximately USD 25 million already spent on project development.
Tariff Petitions: Submitted in June 2022, admitted by NEPRA in June 2023, and public hearings held in July 2023.
Issues
Tariff petitions remain undetermined for around two years, despite NEPRA’s own rules stipulating a 4-6 month determination period. Now, KOEN projects are being unilaterally managed to be de-optimised in the draft IGCEP 2024-34.
KOEN’s projects filed petitions to NEPRA in June 2022 and projects were optimised in current IGCEP 2022-31 approved in February 2023. KOEN aggressively expedited the project development to meet the proposed COD deadline of June 2029 as per approved IGCEP. KOEN managed 100% equity, conducted EPC bidding as per NEPRA guidelines, updated ESIA, obtained NOCs/Consents from relevant authorities, and engaged IFIs and MDBs (IFC, ADB, IsDB, K-EXIM) in the projects.
The inconsistent methodology in optimising and de-optimising projects has created a climate of instability, deterring potential investors. This inconsistency in policies shall discourage the international investors, IFIs and MDBs to reconsider for any further investment in Pakistan.
Significant funds invested during the last 5 years may become null and void, undermining investor confidence. This failure of KOEN’s projects shall have consequences on the current and future FDI in Pakistan.
Call to Action
Urgently request NEPRA to determine the tariff for KOEN’s projects under Policy for Power Generation 2015 based on the currently valid IGCEP 2022-31.
Declare KOEN’s projects as committed in the draft IGCEP 2024-34 before its approval, considering the significant progress and investment already made.
Provide assurances and support to committed investors & international financial institutions to foster a stable and conducive environment for future investments
