History unfolding with assist from China

The Karot Hydropower Project, the star of the Belt and Road Initiative in Pakistan, is making history.

It is the first hydropower investment project of the China-Pakistan Economic Corridor, or CPEC, and includes a dam, spillway, powerhouse, diversion tunnels, head race power tunnels, and tail race tunnel.

At a time when Pakistan's energy sector is facing enormous pressure due to increased demand and reduced supply, the Karot Power Project, connected to the national grid by a 5-km, 500 kV transmission line, will breathe new life into Pakistan's energy pipeline and enable the country to meet a much larger share of its energy needs.

With a total investment of about $1.74 billion, the project is being developed on a Build-Own-Operate-Transfer, or BOOT, basis, with a construction period of five years and a concession period of 30 years.

Completion is scheduled for the end of 2021, after which the company will run and maintain the project for 30 years and then transfer it to the Punjab government for one rupee.

The project is the first hydropower station constructed by a Chinese enterprise using Chinese techniques and following its own standards.

The developer, Karot Power Co (Private) Ltd, or KPCL, is sponsored by China Three Gorges South Asia Investment Ltd, or CSAIL, a subsidiary of China Three Gorges Corp, or CTG.

"KPCL is committed to building the 720MW Karot Hydropower Project, which will yield benefits to the existing energy mix of the country and provide nearly 3,000 local jobs during the peak construction period, as well as tax revenues and water use charges," said Lu Dongsheng, the company's chief executive officer.

"Development of this project is tremendously beneficial for the livelihood of the people, particularly in light of Pakistan's current energy shortages," Lu told China Daily.

The Karot Hydropower Station represents the first investment project of the $40 billion Silk Road Fund established in Beijing on Dec 29, 2014, by the State Administration of Foreign Exchange, China Investment Corp, China Development Bank and Export-Import Bank of China.

Mandated by a philosophy of openness, inclusiveness and mutual benefit, the fund primarily provides investment and financing support for trade and economic cooperation and connectivity under the framework of the Silk Road Economic Belt and the 21st Century Maritime Silk Road Initiative.

The Karot project was announced during Chinese President Xi Jinping's state visit to Pakistan in May 2015.

Silk Road Fund Co, the management arm of the fund, has signed a financing memo with CTG and the Pakistan Private Power and Infrastructure Board, or PPIB, allowing the fund to become a major shareholder in CSAIL, a subsidiary of the group and an investment arm of CTG in South Asia.

The project also draws investment from the International Finance Corp.

As per details of the Korat Power project, a Letter of Support was issued to the company by PPIB on Aug 29, 2013. The EPC contract was signed on Feb 16, 2015 and the owner's Engineer Contract was signed on May 26, 2016.

River closure at the dam site was completed on Sept 22, 2018.

The author is a journalist with The Pakistan Observer and the story is a special contribution to China Daily.