Tarbela-4 extension: Company suspends contract, may go to international court

Was upset by govt’s move to recover $25 million incentive money

ISLAMABAD: The contractor of Tarbela-4 extension project has issued a contract suspension notice to the Pakistan Water and Power Development Authority (Wapda) and has threatened to approach the international court following the government’s move to recover the incentive money paid under a work acceleration plan.

The contractor said it would reclaim in the international court the disputed amount of $130 million, which had been settled earlier with the government.



The government had committed to paying $50 million as an incentive to the contractor if it succeeded in completing the Tarbela hydroelectric power fourth extension project by June 2017.

However, the contractor appears to have failed to meet the time frame given the work done so far on the project.

The use of taxpayer money as an incentive has surprised many. Normally, a reward is given after the completion of work ahead of schedule. However, in this case, the contractor has already been paid $25 million.

Talking to The Express Tribune, a senior Wapda official revealed that the contractor had spent $23 million on stepping up activities at the Tarbela-4 extension site. As a result of the $50-million incentive, he said, a dispute with the contractor involving $130 million had been settled.



As the government has now decided to take back $25 million from the contractor, the latter has slowed down the pace of work on the project and issued the contract suspension notice.

Earlier, in a high-level meeting held on November 29, 2016 and chaired by Prime Minister Nawaz Sharif, Wapda Chairman Muzammil Hussain had called for stopping the recovery of millions of dollars from the contractor, who could not meet the commitment to making the Tarbela-4 extension project ready ahead of the set time frame.

He suggested that the decision should be reviewed as the recovery would not be easy because of various reasons beyond the control of the contractor.

The Wapda chairman also proposed that it should be allowed to undertake the acceleration programme to fast-track work on the project.

Under Tarbela-4 extension, three units of 470 megawatts each totalling 1,410MW were being installed on the T-4 tunnel, which would enhance total capacity of the Tarbela power station to 4,888MW from the existing 3,487MW.



The original deadline for completion of the project was February 2018, but under the accelerated programme, it was brought forward to June 2017. In that regard, a variation order was also signed and payment made to the contractor.

However, the contractor is unlikely to complete the project by the deadline.

Finance Minister Ishaq Dar, in a meeting of the Cabinet Committee on Energy held on August 30 last year, had also raised the issue of payment made for the acceleration plan.

Since the project would now be commissioned according to the original plan, the money already dished out needed to be recovered from the contractor, he said.

Published in The Express Tribune, January 6^th, 2017.

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