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Thursday, September 24, 2020

Azad Pattan: What is the PoK hydel project deal signed by Pakistan, China?

The $ 1.5-billion project is the second power project under the China Pakistan Economic Corridor (CPEC), for which an agreement has been signed in the last two months.

Written by Nirupama Subramanian , Edited by Explained Desk | New Delhi | Updated: July 16, 2020 7:00:19 am
Azad Pattan hydel pproject, china Pakistan hydel project, china Pakistan project PoK, China Pakistan Economic Corridor, CPEC, express explained, Indian express The 700-MW hydel power project is being built on the Jhelum river in Sudhoti district of Pakistan Occupied Kashmir. (Photo: Wikimedia Commons)

Last week, Pakistan and China signed an agreement for the 700 MW Azad Pattan hydel power project on the Jhelum river in Sudhoti district of Pakistan Occupied Kashmir (PoK).

The $ 1.5-billion project is the second power project under the China Pakistan Economic Corridor (CPEC), for which an agreement has been signed in the last two months. The first agreement, for the 1,100 MW Kohala project, was signed on June 23. That project, worth $ 2.3 billion, too will come up on the Jhelum near Muzaffarabad.

Azad Pattan hydel project

The agreement, signed on July 7, is not yet in the public domain. According to the EPC (Engineer, Procurement and Contract) agreement, the project is a run-of-the-river scheme with a reservoir located near Muslimabad village, 7 km upstream from the Azad Pattan bridge, in district Sudhnoti, one of the eight districts of PoK.

According to the details in the 2017 agreement, the construction of the project, which was first proposed in 2002, will take 69 months, and the project will be commissioned by 2024. The project will comprise a 90-metre-high dam, with a 3.8 sq km reservoir.

The project was cleared in June 2016 by the government of PoK through Private Power Infrastructure Board – a single-window facilitator created by Pakistan’s government in 1994 to promote private investment in power projects – which nominated Power Universal Co. Ltd., which is wholly owned and controlled by the China Gezhouba group, a Chinese state-owned multinational corporation, as the main sponsor and initial shareholder.

Gezhouba set up a special purpose joint venture with the Laraib Group, a Pakistani renewable energy developer. The JV is called Azad Pattan Power Private Ltd Corporation, and it will develop the project on the ‘build, own, operate, transfer’ (BOOT) model. The project will be transferred to the government of Pakistan after 30 years.

The Azad Pattan project is one of five hydropower schemes on the Jhelum. Upstream from Azad Pattan are the Mahl, Kohala, and Chakothi Hattian projects; Karot is downstream. Like Kohala and Azad Pattan, Karot too, is being developed under the CPEC framework.

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Kohala project

This is a 1,124 MW hydel project that will come up on the Jhelum at Muzaffarabad near the Siran and Barsala villages. According to the CPEC online site, a “tripartite” agreement for implementing the project as part of the CPEC was signed on June 25 between China Three Gorges (CTG) Corporation, the government of PoK and Private Power and Infrastructure Board.

This project is one of the biggest investments by China in PoK. Construction is expected to be complete by 2026. A special purpose vehicle called Kohala Hydro Company Pvt Ltd was incorporated in 2015 by China Three Gorges South Asia Investment Limited, held by the state-owned China Three Gorges Corporation, the majority stakeholder, along with the Silk Road Fund and International Finance Corporation.

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Pakistan’s agreement with CTG dates back to 2008, and it was made part of CPEC in 2014. The project is to be developed on a BOOT basis, and will be transferred to the Pakistan government 30 years after its expected commissioning in six years.

According to a video presentation on the Kohala Hydro online site, the dam will be 69 m high, and will have a 8-km-long reservoir.

Residents of Muzaffarabad had protested against the dam in 2018 due to concerns that it would reduce the flow of the Jhelum

China Development Bank is expected to advance an 85 per cent loan for the project, while Habib Bank is to arrange the remainder. Thirty per cent of the financing of the project is through equity.

Other projects

The Karot Hydropower station, the third project being executed by China on the Jhelum is on the boundaries of Kotli district in PoK and Rawalpindi district in Pakistan’s Punjab province. According to the CPEC site, construction is under progress, and the project is expected to be commissioned by the end of 2021.

Two hydel projects are planned in Gilgit Baltistan – Phandar Hydro Power, and Gilgit KIU. On the CPEC site, both are listed as “under review”.

India has protested the construction of dams and other infrastructure in PoK and Gilgit Baltistan, which are territories claimed by it as part of Jammu & Kashmir.

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