Korean utility says Pakistan stalled $1bn hydropower investment plan

A South Korean state-owned energy company says its long-planned $1 billion hydropower investment in Pakistan has been blocked late in the approval process, raising fresh questions about how the country handles large foreign projects. In a letter to Prime Minister Shehbaz Sharif, Korea South-East Power Co. Ltd (KOEN) said it had spent about a decade pursuing two run-of-the-river projects on the Swat River in Khyber Pakhtunkhwa, only to face what it described as unfair stonewalling. The company said it had tried to follow every step required under Pakistan’s investment and power-sector framework. According to KOEN’s account, the projects include the 229MW Asrit Kedam scheme and the 238MW Kalam Asrit project, together expected to generate 467MW. The firm said the combined investment would be about $1 billion and that it had already spent roughly $25 million on preparatory work. The complaint matters because Pakistan has repeatedly said it wants more foreign capital, especially in energy and infrastructure. Hydropower projects can be attractive to investors because they promise long-term power generation with lower fuel import exposure than thermal plants. But they also depend on multiple approvals, provincial coordination, regulatory clearances and bankable contracts — areas where projects often slow down or stall. KOEN said it signed a memorandum of understanding with the Khyber Pakhtunkhwa government in 2017, received letters of intent from the Pakhtunkhwa Energy Development Board, kept performance guarantees alive and completed feasibility studies. The company also said both projects were included in Pakistan’s approved Indicative Generation Capacity Expansion Plan for 2022-31 and that it received a generation licence from the National Electric Power Regulatory Authority in June 2023. The company’s CEO, Kim Min Young, said in the letter that KOEN no longer knew where else to turn after years of engagement. The language suggests the firm believes it complied with the process and continued to meet obligations even as final approval did not arrive. What remains unclear, from the information available in the letter summary, is which specific authority or step has become the sticking point. It is also not clear whether the delay is linked to technical, commercial, policy or administrative concerns, or whether the government has formally responded to KOEN’s complaint. For Pakistan, the episode could be read as another test of its ability to reassure overseas investors that major projects will not be trapped in the system after years of work. For investors, the case may reinforce a familiar caution: securing early-stage support is one thing, but converting it into a bankable project in Pakistan can still be uncertain. The complaint also lands at a time when the government is under pressure to improve confidence in the broader investment climate. If KOEN’s account is accurate, the dispute could become a reference point for other foreign developers weighing energy projects in the country, particularly in provinces where land, licensing and power-sector approvals often intersect. As of the details available in the feed, the company says it has kept its guarantees active and continued to pursue the projects in good faith. The key unanswered question is whether the prime minister’s office or the relevant power authorities will intervene to revive the process, clarify the reasons for delay, or open a path to settlement.

Source: Dawn Pakistan - https://www.dawn.com/news/2017816/koe23jl26