Hydroelectric power: WAPDA alleges rules were flouted in award of contract

Pakistan and China are trapped in a deadlock over the construction of the 1,100 megawatts) Kohala Hydropower Project.

MUZAFFARABAD:

Pakistan and China are trapped in a deadlock over the construction of the 1,100 megawatts (MW) Kohala Hydropower Project on the Jhelum River in Azad Jammu and Kashmir (AJK) due to Wapda’s intransigence.

The contract was awarded to a Chinese construction company, China International Water and Electric Corporation (CWE).

Wapda accuses decision makers of violating Pakistan Power Regulatory Authority (PPRA) rules and neglecting to ensure transparency and circumventing international competitive bidding (ICB). However, if the Chinese company agrees to its demands, Wapda is ready to bypass these rules and play the game.

Wapda has now raised several contentious issues about the project which were not discussed earlier at any level. Wapda now wants to execute the whole project itself or alternatively, become a partner with 51 per cent share in a joint venture with the Chinese.

Wapda had signed an MoU with the CWE for the construction of the project in 2008, reveal documents made available to The Express Tribune by sources close to the federal Ministry of Water and Power. The Private Power and Infrastructure Board (PPIB) issued a Letter of Interest to CWE and waived procedural formalities.

The CWE updated the feasibility study originally commissioned by Wapda and made a commitment to pay the audited cost. CWE is a multibillion group which owns some 30,000 MW of hydropower capacity including three dams.

The federal government has offered the Chinese company to either construct the project as a contractor or on the basis of Build, Own, Operate and Transfer (Boot). Surprisingly, the CWE opted for the long-term and riskier Boot option under which the project would be handed over to the AJK government after 30 years.

International companies and donor agencies are shy of investing in Azad Kashmir as it was originally annexed to the disputed territory of Kashmir and India may raise objections. Beijing however was willing to invest $2.6 billion in AJK.

Sources privy to the Chinese company reveal that the company now wants to construct the project from its own funds as an independent power producer in accordance with the 2002 Power Policy. But Wapda and the Ministry of Water and Power have been obstructing the move for the past year.

CWE may withdraw from the project if the government does not take note of the issue at the highest level.

Published in The Express Tribune, March 31^st, 2011.