ISLAMABAD: The Private Power and Infrastructure Board (PPIB) is likely to put three hydropower projects with a combined capacity of 1,832MW on hold after they failed to qualify under the Indicative Generation Capacity Expansion Plan (IGCEP) 2025-2035, largely due to declining electricity demand driven by the rapid expansion of rooftop solar installations.
According to audit observations for the PPIB’s financial year 2024-25, the 700.7MW Azad Pattan Hydropower Project, 1,124MW Kohala Hydropower Project, and 8MW Kathai-II Hydropower Project remained unimplemented because of prolonged delays in achieving financial close.
The Letter of Support (LoS) for the Azad Pattan project was issued on June 30, 2016, but despite receiving five extensions, the project failed to reach financial close by December 31, 2024, primarily due to financing constraints related to Sinosure. The project sponsor sought an extension until December 2027, but during its 148th Board meeting held on August 1, 2025, the PPIB decided to maintain the status quo pending the outcome of the China-Pakistan Economic Corridor (CPEC) Energy Cooperation List Adjustment Joint Study, noting that the project had not been selected under the draft IGCEP 2025-2035.
Similarly, the LoS for the Kohala Hydropower Project was issued on December 31, 2015, but the project also failed to achieve financial close despite multiple deadline extensions, the latest extending to September 30, 2027.
In the case of the Kathai-II Hydropower Project, the LoS was issued on November 20, 2019, but the project could not achieve financial close due to the non-availability and delayed approval of standardized project documents requiring clearance from the Economic Coordination Committee (ECC) and the Cabinet Committee on Energy (CCoE). As a result, the PPIB Board approved the cancellation of the project’s Letter of Support by mutual consent in August 2025, highlighting broader institutional and procedural challenges in project facilitation.
In its response to the audit observations, PPIB management stated that both the Azad Pattan and Kohala hydropower projects were excluded from the IGCEP 2025-2035 because of reduced electricity demand resulting from the rapid growth of rooftop solar power generation across the country.
The development reflects the evolving dynamics of Pakistan’s power sector, where increasing adoption of distributed renewable energy is reshaping long-term generation planning and delaying investment decisions for large-scale conventional and hydropower projects.
Story by Mushtaq Ghumman
