Beijing relaunches a hydroelectric project in Pakistani Kashmir

It is the 2.5 billion Kohala dam, which is to be built on the Jhelum river. In the coming days, Prime Minister Shehbaz Sharif will be in China to try to give new impetus to other Chinese investment plans that have slowed down in recent years, partly due to continuous attacks.

Islamabad (AsiaNews/Agencies) - A few days before Pakistan's Prime Minister Shehbaz Sharif is due to pay an official visit to China, a Chinese company has called for the revival of a hydroelectric project that has been at a standstill for about three years, submitting a series of requests to the Pakistani government to push ahead with investment plans. This is the 2.5 billion Kohala hydroelectric project, which is to be built on the Jhelum river in Pakistan's Kashmir region.

Renewable energy projects are a key part of the China-Pakistan Economic Corridor (CPEC), but the China Export and Credit Insurance Corporation (Sinosure) was reluctant to provide insurance cover for the project due to quotas of over 550 billion rupees that Pakistani power companies would have to pay to independent Chinese power producers.

However, at a meeting of the CPEC Joint Coordination Committee, Pakistan got a positive response from the Chinese leadership, although the commitments are likely to be extended to 2027 and not 2024 as originally planned.

Liu Yonggangma, managing director of the Kohala Hydro Company (in turn a subsidiary of the China Three Gorges Corporation) wrote to the director in charge of the Private Power Infrastructure Board - which reports to the Pakistani Ministry of Energy - explaining the situation and addressing several issues. 

Chinese and local workers and engineers were on site and preliminary construction activities had begun when the project was ‘unexpectedly halted by the Kashmiri government due to environmental concerns erroneously associated with the Neelum-Jhelum hydropower project,’ the letter states.

Subsequently, it took more than three years to address the issues raised by the Kashmir government, resulting in delays. Several investors have withdrawn from the project, and some issues remain unresolved, but, Liu Yonggangma continued, China Three Gorges Corporation intends to secure USD 2.5 billion in financing and obtain insurance cover from Sinosure, hence the need for a three-year extension, adding that despite the adverse macroeconomic conditions, the company remained ‘firmly committed to the project’.

Chinese projects in Pakistan do not have an easy life: a few days ago, Pakistani authorities arrested eleven militants accused of being involved in a suicide attack against Chinese engineers. After the arrests, Beijing urged Islamabad to continue the investigation. Chinese Foreign Ministry spokesman Mao Ning said on Monday that China attaches great importance to the progress made by Pakistan, which in turn announced that it will pay USD 2.58 million to the victims of the attack.

The attack had been carried out on 26 March against a group of workers on their way to the Dasu Dam in Khyber Pakhtunkhwa province. Growing security threats have prompted Pakistani officials to introduce additional security protocols, asking Chinese citizens for their residential addresses and information about their mobility in the country. 

With PM Sharif's visit to China, cash-strapped Pakistan hopes to revive other CPEC projects that have slowed down in recent years.