1. Brief information

Karot hydropower project (HPP) is located on the Jhelum River. This is a foreign direct investment (FDI) project. The total investment amount is USD 1.74 billion. The installed capacity is 720MW (4×180MW), with average annual electricity output of 3206 GWH and annual utilization time of 4452 hours. As a single power generation hydropower complex, the project’s layout includes rock fill dam, spillway, powerhouse, diversion tunnels, head race power tunnels, tail race tunnels, etc. The project is being developed under the Power Policy 2002 on a Build-Own-Operate-Transfer (BOOT) basis, with an expected concession period of 30 years and construction period of 5 years. It has been listed as one of the prioritized/early harvest project under the China-Pakistan Economic Corridor. Karot HPP is developed by Karot Power Company (Private) Ltd. It is a joint venture of China Three Gorges South Asia Investment Ltd. (93%) and Silk Road Venture Investment Company (7%). China Three Gorges South Asia Investment Ltd. is registered in Pakistan and is financed by a consortium of China EXIM Bank and China Development Bank (70%), Silk Road Fund (15%), and International Finance Corporation (IFC) of World Bank (15%). Silk Road Venture Investment Company is registered in UAE.

2. Latest progress

CONTRACT AND FINANCIAL CLOSE:

All the power purchasing agreement (PPA), implementation agreement (IA), water usage agreement (WUA) have been signed in 2016. NEPRA announced the EPC stage review tariff for the project on 27 April, 2016.

In order to help Pakistan solve the energy crisis earlier and build the project faster, the ground-breaking of the project took place in January 2016 without financial close. The project formally commenced on December 1, 2016. In March 2017, Karot HPP achieved financial close. The rate of equity and loan is 25%:75%. The average interest rate is Libor (1.3%)+3.8%. The insurance fee is around 0.3% annually. The total financing cost is below 5.5%.

LAND ACQUISITION:

Left Dam Area: The land acquisition procedure has been almost completed;

Left Reservoir Area: The land acquisition procedure has been completed, and the land lease agreements have been signed and registered;

Right Dam Area: The land acquisition procedure has been completed, and the reconstruction, temporary works and preparation of the main construction works are in process;

Right Reservoir Area: The land acquisition procedure has been completed except the forest land in reservoir area. The letter of commitment (LOC) has been issued by Board of Revenue of Punjab government, and the land acquisition procedure of forest land in reservoir area is in process.

ENGINEERING MANAGEMENT:

1) Ancillary works and main temporary facilities have been almost completed.

2) Spillway : Excavation above EL.485m at Zone I completed.

3) Diversion Tunnel: First half of 1#-3# excavation completed 540m;

4) Inlet Slope : Support excavated to EL.438m;

5) Outlet Slope : Support excavated to EL.385m;

6) Tunnel Adit: Completed

7) Power Generation System: Excavation above EL.457m completed.

3. Corporate social responsibility

1) The local governments will get PKR 674 million of water use charge per year during 30 years operation period of the project. The federal government will get around USD 23 million of withholding tax during 5 years construction phase of the Project. Karot HPP will be transferred to Government of Punjab at the end of 30 years operation of the project.

2) After Karot HPP comes into the commercial period, the average annual energy output will reach 3.2 billion KWH.

3) During the construction and management period, Karot HPP will provide more than 2,000 job opportunities for local people.

4) Karot Power Company donated emergency equipments to Baluchistan Province, such as generators, emergency lights and electric fans. The project company provided literacy training to all migrants aged over 16 years old to help them use migration compensation better.

5) Karot Power Company will reconstruct several schools and upgrade some health facilities for those villages near the project during the 5 years construction period. It will also upgrade some towns and villages nearby. The reconstruction of Rest House is also on the Social Plan List.

(Qin Guobin, CEO, China Three Gorges South Asia Investment Limited)