In 1994, Government of Pakistan (GOP) established a Private Power and Infrastructure Board (PPIB) under the Ministry of Water & Power to encourage private participation through foreign direct investment in the power sector in Pakistan. It aims to achieve the target through a variety of incentives to the private sector, thus side-stepping the problem of large capital expenditure by the national exchequer. PPIB is a one window facility for private sector investors in matters concerning setting up power projects and related infrastructure.
Independent Power Producers (IPPs) have largely been investing in the thermal power plants, which, due to their shorter gestation period, are more attractive to the private investor. With a view to facilitating development of cheap energy producing hydropower power projects in the private sector, PPIB identified a number of sites attractive for their hydropower potential. One particular site, located on the Kunhar River in the Khyber Pakhtunkhwa province (formally NWFP), is the Suki Kinari Hydropower Project with the potential to exploit a gross head of around 900 m.
In March, 2005, PPIB publically advertised seven (7) raw hydro power sites for implementation in the private sector pursuant to the Policy for Power Generation Projects 2002. Suki Kinari was one of these 7 potential projects.
SK Hydro Consortium, having the requisite technical and financial strength, submitted its bid for the Suki Kinari Hydropower project. The consortium was prequalified, through an open and transparent International Competitive Bidding (ICB) process, among various bidders and a Letter of Interest (LOI) for conducting feasibility study of the said project was issued to SKHPL on 15th November, 2005.
The consortium formed and registered SK Hydro (Pvt.) Limited under the Company’s Ordinance 1984 as a special purpose company to undertake Suki Kinari Hydro Power Project.