Pakistan Today

Pakistan approaches donors for Neelum project

Pakistan has approached China, Saudi Arabia and Kuwait to double their pledged financial assistance to expedite construction of 969 MW Neelum Jehlum Hydropower Project (NJHP).
Talking to reporters after the meeting of the National Assembly Special Committee on power crisis, Chairman Water and Power Development Authority (WAPDA), Shakil Durrani said the cost of the NJHP is estimated to increase more than 70 per cent and they have approached friendly countries and their donor agencies to double their assistance for the project.
Initial cost of the project was $2.1 billion with a foreign exchange component of $775 million, but due to the escalation in cost, the government decided to seek more financing from the friendly countries. The project cost is expected to rise to $3.7 billion.
Durrani said they have changed the financing plan for the project as half of the project cost will be made available from the surcharge on electricity bills, imposed in 2008 which generates Rs5.2 billion per annum while the other half will be managed from the donors.
He said the progress on the project was expedited from last one year and monthly contractors were paid Rs600 million as compared to monthly payment of Rs100 million, a year back. He said two Tunnel Boring Machines (TBM) have been purchased at a cost of $93 million each. He also said TBMs were manufactured in Germany and will reach China in December for assembly and will start working on the project site from February.
Durrani said a loan amount of $450 million with the Exim Bank of China is near finalisation, while an additional assistance of $220 million was under negotiation with Islamic Development Bank (IDB) and $40 million with Saudi Fund. “As the cost has increased we have asked all the donors to double their assistance”. The project cost has increased during the last few years due to the changes in design after earthquake and Rupee Dollar parity. The Kuwait Fund for Arab Economic Development has already provided $40 million for the project. Islamic Development Bank (IDB) and Saudi Fund have provided $138 million and $40 million respectively for the project.
The government had imposed a surcharge at the rate of 10 paisa on electricity bills to provide financing for the project which generates about Rs5 billion every year. The government had generated more than Rs18 billion during the last few years, but due to financial constraints the pace of the project was quite slow. Prime Minister, Syed Yusuf Raza Gilani has also expressed serious concerns over the delay in the project and had recently directed the Ministry of Water and Power and WAPDA to work out financial plan in consultation with the Ministry of Finance. The project was initially approved by ECNCE in 1989 at the cost of Rs15 billion which was delayed due to which its cost has gone upto Rs333.1 billion.
Pakistan wants to complete construction of NJHP in Azad Kashmir before the completion of 330 MW Kishanganga Hydro Electric Project by India, in the Indian occupied Kashmir. Pakistan and India are separately constructing two hydropower projects on the same Neelum River. The Court of Arbitration, Hague has already stopped India from carrying out construction of any permanent works on or above the Kishanganga River bed at the Gurez site that may inhibit the restoration of the flow of the river to its natural channel.

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