The priority projects under CPEC include two hydro power projects amounting to a total installed capacity of 1590 MW. One of them is the 720MW Karot hydropower project (HPP) which was covered last week (Read: "Karot Hydro Power Plant" published June 11, 2016) and the other is the 870MW Suki Kinari HPP, which this column will cover next week. The final project in the CPEC hydropower portfolio is the 1100 MW Kohala HPP which will be our focus in this issue.
The project will be mainly sponsored by the China Three Gorges South Asia Investment Limited (CSAIL). CSAIL is a special purpose vehicle owned by China Three Gorges Corporation (CTG) and the International Finance Corporation (IFC).
The salient technical aspects of the project include an installed capacity of 1100 MW with average annual net generation of 5093 GWh. The plant factor will be almost 54 percent and the reservoir storage capacity will be 8.37 million cubic meters.
The project is located on the Jhelum River in District Muzaffarabad near Siran village about 100 kilometres from Islamabad, in Azad Jammu & Kashmir (AJ&K). The site is located about 3 kilometres downstream of the Kohala Bridge. The project is being developed on a Build-Own-Operate-Transfer (BOOT) basis with an expected concession period of 36 years including 6 years of construction and 30 years of operation.
According to sources in the Planning Commission, the land acquisition for the project has been initiated and is in its preliminary stages. The Environmental Impact Assessment study is being updated to incorporate additional variables that need to be taken into account. CSAIL and IFC believe that "the cumulative impact of multiple hydro projects on the ecology and ecosystem services of the Jhelum River is one of the key environmental issues that will need to be considered in the context of the Kohala plant."
India started constructing the 300MW Kishanganga HPP in 2007, which is likely to affect the flow of water in the Neelum-Jhelum tributaries. Therefore, a design optimisation study is under way that will provide a more effective and efficient design of Kohala HPP in light of the post Kishanganga construction scenario.
The feasibility study tariff, which is the stage-1 tariff, has been announced by NEPRA. The regulator announced an advance levelised tariff of 7.09 Rs/kWh for the project with the total project cost amounting to almost $2.4 billion. However, the tariff notification by the Ministry of Water & Power (MOWP) is pending and needs to be expedited. Moreover, the reimbursement of the feasibility study cost to WAPDA also needs to be completed.
The next steps will include the formation of a special purpose vehicle (SPV) for to undertake construction and operations of the project. The commercial operations date (COD) of the project is 2023, and it is imperative that the government learn from its mistakes and complete the project in the scheduled time frame to avoid cost overruns and unnecessary interest expense.
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