ISLAMABAD • China is racing to finish one of the biggest hydro-power projects in Pakistan ahead of schedule, yet its location in the long-contested region of Kashmir will draw ire from India.
Construction on the 720MW Karot power station, being built on Jhelum River, began in December last year and looks set to finish nine months ahead of its December 2021 completion date, a first for a Pakistan hydro project, said Mr Qin Guobin, chief executive of the state-owned China Three Gorges South Asia Investment.
"For us, Pakistan is a strategic market," he added. "If we manage to complete it earlier, we can save financing costs and make it more competitive."
Pakistan's energy demand is expected to grow by 6 per cent to 35,000MW by 2024, as its population of more than 200 million grows along with the economy.
For more than a decade, it has been struggling to overcome daily power shortages that have left industry and residents in the dark.
China has stepped in to meet some of those shortages, financing projects worth more than US$50 billion (S$67.4 billion) in an economic corridor that runs through Pakistan.
The route is part of Chinese President Xi Jinping's Belt and Road plan to connect Asia with Europe and Africa with a web of ports, railways and highways for trade.
The Chinese firm's focus in Pakistan is clean energy, and it has a US$6 billion portfolio in three hydro and three solar power plants.
The Karot hydro-power project is in the Pakistan-administrated part of Kashmir, which India and Pakistan both claim.
China has a neutral stance on the Kashmir dispute, but relations between China and India hit a recent low during a dispute over a three- way junction between Bhutan, China's Tibet and India's Sikkim, which was resolved with both sides standing down last month.
Pakistan considers the hydro- power site a national security priority and has created a special force of 15,000 troops to defend the Chinese projects and that number may be doubled, according to people with direct knowledge of the plans.
The stakes are high for Pakistan, with the planned power generation projects potentially adding US$13 billion to its economy in the next seven years, according to an International Monetary Fund report published in July.
Pakistan's hydro-power generation potential is an estimated 40,000MW, but the existing installed capacity was only 7,116MW in the 2015-16 fiscal year, according to the National Electric Power Regulatory Authority's latest report.
Three Gorges is now eyeing the contract for the construction of a 4,500MW Diamir-Bhasha power project in northern Gilgit-Baltistan and north-western Chillas district.
"Pakistan's total installed capacity is equal to one big city of China like Shanghai," Mr Qin said. "That's not enough."