In letter to PM Shehbaz, South Korean company alleges unfair stonewalling of $1bn investment plans in Pakistan

ISLAMABAD: Korea South-East Power Co. Ltd (KOEN), a state-owned company of the Republic of Korea, has approached the prime minister over “unfair” treatment of its $1 billion investment plans in Pakistan, which were stonewalled during the regulatory approval process.

In a letter to Prime Minister Shehbaz Sharif, the Korean energy firm’s CEO Kim Min Young complained that the company — which operates thermal power stations, pumped-storage power plants, and combined cycle power plants — had been working on two hydropower projects for 10 years but had been blocked at the last stage.

He said KOEN, a subsidiary of Korea Electric Power Corporation (Kepco), had been developing two run-of-the-river hydropower projects on the Swat River in Khyber Pakhtunkhwa since 2016, for a total generation of 467 megawatts. The 229MW Asrit Kedam project and the 238MW Kalam Asrit project totalled a combined investment of approximately $1bn, and the firm had already spent about $25m on the ground.

“We write to you today with the greatest respect, and with candour, because we no longer know where else to turn,” Kim said.

He said the company met every requirement of the government’s own framework — signing a Memorandum of Understanding (MoU) with the Government of Khyber Pakhtunkhwa in 2017, obtaining letters of intent from the Pakhtunkhwa Energy Development Board (PEDO), and keeping performance guarantees alive year after year, which were most recently extended to June 2027.

“We completed the feasibility studies, saw both projects included in the approved Indicative Generation Capacity Expansion Plan (IGCEP) 2022-31, and … obtained our generation licence from National Electric Power Regulatory Authority (Nepra) in June 2023,” he noted, adding that at no stage had the company defaulted on any obligation.

However, he said the determination of the proposed projects’ tariff had failed to arrive. Nepra had admitted the tariff petition in June 2023 and held the public hearing on July 17 of the same year. Under Rule 16 of the Nepra Tariff (Standards and Procedure) Rules 1998, the determination was due within four to six months.

“Three years have now passed since that hearing, and the tariff has still not been determined,” the energy firm lamented.

Kim said the company had approached every forum for fair treatment during these delays, before reaching out to the country’s highest office of the government.

He recalled that they pursued the matter with Nepra itself, through repeated written and personal follow-up.

In June 2024, the company said it appealed to the Nepra Appellate Tribunal, which on July 23 of that year directed Nepra to decide the tariff matter. “That direction remains unimplemented after nearly two years,” it pointed out.

When the draft IGCEP 2025-35 removed these projects from the plan, the company said it placed its objections on record at Nepra’s public hearing, both orally and in writing, and filed detailed post-hearing comments in May.

When contacted, a Nepra spokesperson said that the project was not “optimised” in the IGCEP, and was therefore “pending for consideration”.

Kim also noted that South Korea’s minister for trade had also raised the firm’s projects with the commerce minister in April, who received a delegation of the firm on June 30. He added that the firm had also kept the foreign ministry informed throughout, and it had “supported us with generosity”.

“Every one of these doors received us with courtesy. Not one has produced the decision,” he regretted.

KOEN added its position was now urgent, as the draft IGCEP 2025-35 — which excludes both projects — is expected to be approved shortly, even though both projects were inside the IGCEP 2022-31. If the draft IGCEP 2025-35 is approved without these two projects, the proposed $1bn investment will be stranded for an indefinite period.

“After nearly 10 years of effort, we feel helpless, and we believe the investment is now in real danger,” the letter said.

The company said it was also mindful of the country’s present surplus capacity, and did not wish to add to it. Therefore, it was willing to align the commercial operation of both the projects with the time the country needed the power.

“We ask only for certainty that our tariff be determined, and that our projects continue to be treated under the Power Generation Policy 2015, the policy under which we invested in good faith,” it said, seeking the prime minister’s intervention.

Pakistan and South Korea agreed in May to advance negotiations on a Comprehensive Economic Partnership Agreement (CEPA) and to enhance investment cooperation. The understanding was reached during a virtual meeting between Commerce Minister Jam Kamal Khan and his South Korean counterpart, Yeo Han-koo.

The talks regarding this economic partnership began in January of 2025, with the signing of a joint declaration by Jam Kamal and South Korean Trade Minister Inkyo Cheong to commence formal negotiations for reaching an agreement.