Pakistan's $2B Suki Kinari Hydropower Project Faces Evacuation Delays

The Suki Kinari Hydropower projec is a joint venture by M/s China Energy Intl Group and M/s China Gezhouba Engineering Group Company.

Pakistan's $2B Suki Kinari Hydropower Project Faces Evacuation Delays

The Ministry of Planning, Development, and Special Initiatives (MoPD&SI) has issued a warning to the government, emphasizing that any delay in the evacuation of power from the $2 billion 884-MW Suki Kinari hydropower project, a major initiative under the China-Pakistan Economic Corridor (CPEC), could result in Liquidity Damages (LDs). Reliable sources have informed media about this communication from Secretary Planning, Development, and Special Initiatives, Awais Manzur Sumra, to Secretary Power Division.

The Suki Kinari Hydropower project, a colossal investment at a cost of $2 billion, is a joint venture by M/s China Energy Intl Group and M/s China Gezhouba Engineering Group Company.

The project has achieved an impressive 92% completion of construction, positioning it as one of the significant power projects under the CPEC umbrella. The power plant is slated to be operational by or ahead of the Required Commercial Operation Date (RCOD) of November 24, 2024, as stipulated in the Power Purchase Agreement (PPA).

Expressing concern, Secretary Sumra highlighted that the company involved in the project appears to have reservations regarding the timely completion and availability of the power evacuation line essential for testing and commercial operations of electricity supply.

The Power Purchase Agreement mandates that the evacuation line must be ready 240 days before the Scheduled RCOD of the plant, setting the deadline at or before April 4, 2024.

Secretary Sumra cautioned that any delay in meeting this deadline could lead to the payment of Liquidity Damages (LDs) as outlined in the signed PPA. Additionally, deviations from the Concessional Commercial Operation Date (SCOD) guaranteed by the Government of Pakistan under the PPA, power generation policies, and Implementation Agreements (IAs) may result in disputes among stakeholders.

In response to these concerns, Secretary Sumra has urged the Power Division to issue appropriate instructions to relevant authorities to ensure adherence to the timeline specified in the signed PPA.

Meanwhile, sources reveal that the Central Power Purchasing Agency-Guaranteed (CPPA-G) has sent a fifth letter to the National Transmission and Despatch Company (NTDC), urging expedited work on power purchaser interconnection facilities to meet the deadline prescribed in the Power Purchase Agreement. This deadline, set 240 days prior to the Scheduled Commercial Operation Date, falls on April 4, 2024.

The Suki Kinari Hydropower Project achieved financial close for the hydro Independent Power Producer (IPP) in January 2017, operating within the framework of CPEC. The project, situated on the River Kunhar in the eastern part of Khyber Pakhtunkhwa between Naran and Paras towns, holds historical significance as the first hydro power project in the province developed by the private sector. Notably, it is also the largest hydro IPP in Pakistan.

Sponsors of the project include M/s Al-Jomaih Holding Company (LLC) from Saudi Arabia, China Gezhouba Group Company, and Haseeb Khan (Pvt) Ltd from Pakistan.

This development underscores the critical nature of timely completion in mega energy projects, particularly under strategic collaborations such as CPEC, emphasizing the need for seamless coordination among stakeholders to avoid potential financial and operational challenges.

The success of the Suki Kinari Hydropower Project is pivotal not only for the energy landscape in Pakistan but also for sustaining the momentum of projects under the ambitious CPEC initiative.