ISLAMABAD-China Export and Credit Insurance Corporation — Sinosure — is reluctant to provide insurance coverage to 1124-megawatt Kohala Hydropower Project, being built under China Pakistan Economic Corridor framework, mainly due to failure of the government of Pakistan to clear hundreds of billions of rupees overdue amount of the already commissioned power projects under CPEC.
“Yes, so far M/S Sinosure is reluctant to provide insurance cover to Kohala Hydropwer Project and which may result in delay in the financial close of the project,” official source told The Nation. The financial close of Kohala Hydropower Project is due by September 2024, however, the project is still facing several issues such as insurance by Sinosure, delay in land acquisition, conditional approval of PPA and non-approval of cost sewage treatment plants (STP).
China Export & Credit Insurance Corporation Sinosure is a state-funded and policy-oriented insurance company established and supported by the state to promote China’s foreign economic and trade development and cooperation.
One of the main services of Sinosure is overseas investment insurance provided to Chinese companies abroad. Sinosure plays an important role in supporting the construction of the Belt and Road Initiative (BRI). In Pakistan Sinosure provided insurance coverage to several power projects under CPEC portfolio. Private Power and Infrastructure Board (PPIB) is playing the role of facilitator in the implementation several CPEC portfolio power projects, including Kohala Hydropower Project.
One of the CPEC portfolio projects, the 1124 MW Kohala Hydro Power Project is the largest private investment in any IPP of the country. Kohala is run of the river project on river Jhelum, located 35km downstream from Muzafarabad, AJK. The construction period of the project is 6.5 years and the project approved cost is $2407.85 million. Deadline for the financial close for the project is 30th September, 2024, while expected completion date is March 2031.
CTG South Asia Investment Limited (CSAIL), the sponsor for Kohala Hydropower Project, is a subsidiary of China Three Gorges (CTG). China Development Bank, Silk Road Fund, and Habib Bank Limited are the lenders of the project.
The source said that M/s Sinosure is reluctant to ensure further financing for new power sector projects due to failure of the government of Pakistan to clear hundred of billion of rupees overdue amount of the already commissioned power projects under CPEC.
The provision of insurance coverage by Sinosure is mandatory requirement for the Chinese investment abroad. Non-provision of the insurance coverage by Sinosure is one of the main impediments in the financial close of Kohala Hydropower Project which is due on September 30, 2024, the source maintained.
Source: nation.com.pk
