South Korea’s $1 Billion Power Project Stuck in Pakistan Regulator Limbo
Korea South-East Power Co. Ltd (KOEN), a state-owned energy firm from the Republic of Korea, has appealed directly to Prime Minister Shehbaz Sharif regarding what it calls unfair regulatory stonewalling of its $1 billion investment portfolio in Pakistan, according to a formal letter filed by the company’s CEO Kim Min Young.
A Decade of Development Stalled by Regulatory Gridlock
Totaling 467 megawatts of planned generation capacity, the 229MW Asrit Kedam project and the 238MW Kalam Asrit project represent an aggregate financial commitment of approximately $1 billion. Corporate disclosures indicate the firm has already disbursed roughly $25 million directly into on-the-ground developmental outlays.
According to CEO Kim Min Young’s correspondence with the prime minister’s office, the enterprise satisfied every procedural benchmark established by regional authorities. The developer signed an initial Memorandum of Understanding with the Government of Khyber Pakhtunkhwa in 2017, secured letters of intent from the Pakhtunkhwa Energy Development Board (PEDO), and maintained continuous performance guarantees that run through June 2027. Furthermore, the company completed rigorous feasibility studies, secured placement for both assets within the approved Indicative Generation Capacity Expansion Plan (IGCEP) 2022-31, and formally obtained its generation licence from the National Electric Power Regulatory Authority (Nepra) in June 2023.
The Tariff Determination Bottleneck and Tribunal Stalemate
Despite meeting statutory compliance markers, the structural hurdle centers on missing tariff determinations. Nepra admitted the enterprise’s tariff petition in June 2023 and executed a public hearing on July 17 of that same year. Under Rule 16 of the Nepra Tariff Standards and Procedure Rules 1998, regulators are mandated to finalize determinations within a four-to-six-month window. Three years have elapsed since that initial public hearing without a finalized tariff decision.
When legal avenues stalled, corporate leadership escalated the dispute. In June 2024, the developer brought an appeal before the Nepra Appellate Tribunal. On July 23, 2024, the tribunal instructed Nepra to issue a definitive ruling on the tariff matter. That legal direction remains unimplemented nearly two years later.
Macroeconomic Surpluses and the Threat of the IGCEP 2025-35
The immediate catalyst for the prime ministerial appeal is the drafting of the IGCEP 2025-35. The updated draft removes both Swat River assets entirely, despite their inclusion in the previous 2022-31 framework. A Nepra spokesperson stated when contacted that the projects were not optimized within the updated capacity plan and therefore remain pending for consideration. If the draft plan gains formal approval without the Korean assets, the $1 billion allocation faces indefinite shelving, stranding capital in a regulatory vacuum.
Corporate leadership remains cognizant of Pakistan’s current surplus power capacity and stated in the communication that it harbors no desire to exacerbate existing supply gluts. The company signaled willingness to align the commercial operation dates of both hydropower facilities with the nation’s actual future demand timeline. The firm is asking the prime minister’s office solely for tariff certainty and equitable treatment under the Power Generation Policy 2015, the original framework under which the foreign capital was committed in good faith.
Bilateral Trade Context and Market Implications
The high-level appeal arrives as Islamabad and Seoul attempt to deepen bilateral economic ties. In May, Commerce Minister Jam Kamal Khan and South Korean counterpart Yeo Han-koo advanced negotiations regarding a Comprehensive Economic Partnership Agreement (CEPA), following the signing of a joint declaration in January 2025 by Minister Khan and South Korean Trade Minister Inkyo Cheong. South Korea’s trade minister also raised the stalled power portfolio with Pakistani trade officials during bilateral meetings in April and June.