Pakistan on Monday signed a loan agreement of $40 million with Kuwait Fund for Arab Economic Development (KFAED) that will help expedite construction of 969 MW Neelum Jhelum Hydropower project on the River Jehlum in Azad Kashmir.
The agreement was signed by Secretary Economic Affairs Division (EAD) Abdul Wajid Rana and Chief Executive Officer (CEO) of Neelum Jhelum Hydropower Project Company (NJHPC) Lt. Gen (R) Muhammad Zubair. Secretary EAD, Abdul Wajid Rana said that signing a subsequently subsidiary loan agreement between EAD on behalf of the government and NJHPC, a subsidiary of Water and Power Development Authority (WAPDA) was a legal requirement to make the loan agreement effective.
He said that with the release of $40 million from KFAED, the cash flow requirements for the project would be resolved to a great extent. He said negotiations with China were underway to seek further financing for the project.
CEO NJHPC said 30 per cent of the work on the project was complete. He said the Tunnel Boring Machine (TBM) has also reached Pakistan which would reach the project site within next 20 days. He said that the project would be completed by 2016 and after completion the TBM would be utilised for other projects.
He said the cost of the project has increased Rs330 billion due to depreciation in rupee value against dollar and increase in the cost of raw material for construction. He said the project on completion would help generate Rs45 billion per annum in terms of revenue. NJHP Project is located near Muzaffarabad upon completion will have the capacity to generate 969 MW 000 MW of electricity. The project is being built with the assistance of friendly countries. KFAED is one of the donors of this project; the other donors are Exim Bank China, UAE and Saudi Fund for Development.
Pakistan and India are both constructing separately two hydropower projects on the same Neelum River that runs through the disputed territory of Jammu and Kashmir between the two countries. The Court of Arbitration (CoA) Hague has already given a decision ordering India to stop 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.
Pakistan wants to complete this project before India to retain its chances of maintaining the river flow which could significantly decline if India managed to complete its project first. 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 has remained slow. The project was initially approved by ECNCE in 1989. The government has recently increased financing for the project to complete it before time.
NJHP is first of its kind in the country, as the power station including allied services and transmission system has been designed underground to achieve optimum hydraulic head, given topographical limitations of the area. Thus, almost 98 per cent of the project structure will be underground.
