Solar Boom Forces Pakistan to Delay 3 Big Hydropower Projects

Pakistan is expected to delay three hydropower projects with a combined capacity of 1,832 megawatts (MW) after a surge in rooftop solar adoption reduced electricity demand and the projects failed to qualify under the country’s latest least cost power expansion plan.

According to an audit of the Private Power and Infrastructure Board (PPIB) for FY2024-25, the 700.7 MW Azad Pattan, 1,124 MW Kohala, and 8 MW Kathai II hydropower projects remain unimplemented due to persistent delays in achieving financial close and changing demand projections.

The audit noted that the Azad Pattan project, which received its Letter of Support (LoS) in June 2016, failed to achieve financial close despite five deadline extensions because of financing constraints linked to Sinosure, China’s export credit insurer. Although the project sponsor sought another extension until December 2027, the PPIB Board decided to maintain the status quo pending the outcome of a joint review of the CPEC energy portfolio, particularly because the project was not selected in the draft Indicative Generation Capacity Expansion Plan (IGCEP) 2025-2035.

Similarly, the Kohala Hydropower Project, which received its LoS in December 2015, also failed to reach financial close despite multiple extensions granted until September 2027.

The Kathai II project faced delays due to the unavailability of standardized security documents and approvals from the Economic Coordination Committee (ECC) and the Cabinet Committee on Energy (CCoE). As a result, the PPIB Board approved the cancellation of its Letter of Support in August 2025 with the mutual consent of the project sponsor.

According to the audit, PPIB management said both the Azad Pattan and Kohala projects were excluded from the IGCEP 2025-2035 because electricity demand has declined sharply following the rapid growth of rooftop solar installations across the country.

Pakistan has witnessed unprecedented growth in distributed solar generation over the past two years as households and businesses increasingly installed rooftop solar systems to reduce electricity costs amid rising power tariffs. The trend has slowed growth in grid electricity demand and prompted the government to reassess future generation projects under its least cost expansion plan.