Mahl HPP: CSAIL seeks 3-year LoI extension

ISLAMABAD: The China Three Gorges South Asia Investment Limited (CSAIL) has sought three years’ extension in letter of Interest (LoI) to slow its 640MW Mahl Hydropower Project aimed at aligning it with Pakistan’s energy requirements, well-informed sources told Business Recorder.

The government is already considering different options to slash the number of committed power projects of 10,000MW, including slowing down or scrapping of 4,500MW Diamer Bhasha Hydropower Project and Chashma-5.

The CSAIL, an investment arm of China Three Gorges Corporation (CTG) — the world’s largest clean energy enterprise with a generation capacity exceeding 125,000 MW and assets over $100 billion — takes pride in its ongoing contributions to Pakistan’s energy landscape.

CSAIL outlines its contribution to national grid under CPEC

The CSAIL is actively engaged in six renewable energy projects in Pakistan, with a total installed capacity surpassing 2,600MW and an investment exceeding $6 billion. These projects include the 720MW Karot Hydropower Project (HPP) in Punjab.

The 1,124MW Kohala HPP in AJK, the 640MW Mahl HPP in AJK, and three 50MW wind power projects in Sindh. The Karot HPB which achieved Commercial Operation Date (COD) on June 29, 2022, is Punjab’s largest private power project under the China-Pakistan Economic Corridor (CPEC), supplying clean, affordable and green energy to Pakistan’s national grid.

The CSAIL, in a letter to Minister for Power Sardar Awais Leghari stated that the Private Power and Infrastructure Board (PPIB) had previously issued a LoI to Mahl Power Company (Pvt) Ltd (MPCL) for conducting a feasibility study for the development of the 640 MW Mahl HPP on the Jhelum river. The feasibility study has been successfully completed. However, further development of the project requires an extension of the LoI validity period, which is set to expire in December 2024.

In this regard, CSAIL has formally requested a three-year extension from PPIB, in its letter of October 24, 2024. This extension will provide the necessary time to address outstanding financial and regulatory challenges and explore financial opportunities as the economic climate improves.

According to the power company, it is mindful of the challenges that Pakistan’s power sector is currently facing, including but not limited to surplus capacity, high tariff rates, and substantial capacity payments to various Independent Power Producers (IPPs). CSAIL remains committed to supporting the Government of Pakistan’s efforts to address these issues in a sustainable and mutually beneficial manner.

Given these challenges, the company is considering a measured slowdown in the development timelines for the Mahl Hydropower Project, ensuring it comes online in alignment with future demand growth.

During this period, it will also reassess the project’s design, costs, and financing structures to optimise the tariff, making it both affordable and competitive. This re-evaluation will ensure that the tariff meets the standards set by the National Electric Power Regulatory Authority (NEPRA) and aligns with Pakistan’s energy affordability goals.

“We are confident that these adjustments will lead to a more sustainable and balanced solution that benefits both the Government of Pakistan and CSAIL.”

Moreover, CTGC’s participation as a global leader in the development hydropower projects in Pakistan not only demonstrates its confidence in Pakistan’s energy sector but also holds the potential to attract additional international investment in sustainable energy projects.

The Company’s Chief Executive Officer, Zhou Qiang, has sought Power Minister’s support in securing the requested LoI extension for the Mahl HPP, adding that this critical step will allow the company to continue advancing the project in line with Pakistan’s evolving energy needs and contribute to the nation’s long-term energy sustainability.

Copyright Business Recorder, 2024