The province’s huge Hydropower potential of about 30,000 MW is due to existing rivers, gorges, river tributaries and canals with reasonable gradient; and a landscape of v-shaped valleys carved out by rivers. This landscape is ideal for the construction of dams, tunnels, and other civil works for hydel power development projects.
The abundance of the natural conveniences of this area minimizes the challenges of harnessing hydropower in Khyber Pakhtunkhwa to benefit its population, and provide a consistent supply for run off river (ROR) hydro power projects. These projects would provide cost effective and clean renewable electricity to the population of the country and the province in particular. The province has developed KP Hydro Power Policy 2016 which offers a number of incentives to the private sector.
Khyber Pakhtunkhwa Government is trying to unleash the tremendous hydropower potential and thus offers seven hydropower projects for development. The projects are; Mujigram-Shoghor, Chitral (64MW) will cost 182 US$ million. Istaru Boono, Chitral(72 MW) will cost 182 US$ million, Turen More Kari, Chitral(350 MW) will cost 753 US$ million, Jamshill Turen More, Chitral(260 MW) will cost 616 US$ million, Ghrait- Swir Lasht, Chitral(377 MW) will Cost 1811 US$ million, Torcamp-Guddubar, Chitral(409 MW) will cost 1534 US$ million while Kari-Mushkur Chitral of (446 MW) will cost 1748 US$ million. The estimated cost of these projects is US $6,919 million. These projects offer positive cash flows and attractive rates of return (17% IRR).
In case of investment under the prescribed rules, regulations & KP Hydro Power Policy 2016, attractive rates of return with free repatriation of funds along with dividends are available. Tariff will be determined by the National Electrical Power Regulatory Authority (NEPRA), offering a lucrative return on investment 17% IRR. The projects will be developed on BOOT basis for a period of 30 years with a Government of Pakistan GoP guarantee for concession period for the purchase of power. The power generation companies have permission to issue corporate registered bonds. Foreign banks have permission to underwrite the issue of shares and bonds by the private power companies to the extent allowed under Pakistani laws. Sponsors of power plants based on hydel and other renewable sources are exempt from provincial taxes. A 5% customs duty will apply to the import of plant and equipment not manufactured locally including spares. Power purchaser bears the hydrological risks.
The project provides an opportunity for the donor agencies / investors for investment and to recoup the capital investment with a healthy return.
In Khyber Pakhtunkhwa, Pakhtunkhwa Energy Development Organization (PEDO) will serve as a one-window facility for investors and ensure facilitation with relevant agencies and government organizations. Moreover, competent workforce in the sector is available in the province for utilization by investors.
The investors friendly security situation already prevails in the province in the current government.