ISLAMABAD : The Neelum-Jhelum Hydroelectric project becomes the world’s most expensive hydel scheme after the federal government on Wednesday approved an increase in its cost to a whopping Rs500.3 billion, taking its rate of power production to more than Rs13 per unit.
The project was initially approved in 1989 at a cost of Rs15.3 billion. The PML-N government had made the last revision in its cost in December 2015 – from Rs275 billion to Rs404 billion.
However, the Central Development Working Party (CDWP) recommended the project to the Executive Committee of National Economic Council (Ecnec) for a final approval with a cost of Rs500.3 billion, according to an official handout.
In total, the CDWP approved 31 projects worth Rs713 billion – including eight projects worth Rs694.8 billion that were referred to Ecnec for further action.
Despite a ban by the Election Commission of Pakistan (ECP) on approval of new schemes, the CDWP also approved schemes worth more than a billion rupees in the constituency of Capitan (retd) Mohammad Safdar, the son-in-law of former prime minister Nawaz Sharif. The project envisages construction of new roads in Safdar’s constituency.
But Planning and Development Secretary Shoaib Siddiqui insisted that the federal government had a mandate to approve new schemes. He said due to the ECP ban, the federal government could not release funds for the schemes approved after April 1.
The CDWP also approved road schemes for Karachi East and Malir District, costing Rs499.8 million.
The CDWP put a stamp on the Neelum-Jhelum project that is now estimated to cost Rs500.3 billion.
Initially, in 1989 it was estimated to cost Rs15.2 billion. At Rs500.3 billion, its per unit electricity production cost is Rs13, making it one of the most expensive hydel projects in the world.
At the revised cost, the project was expected to sustain Rs2.93 per unit loss, according to the Ministry of Planning and Development appraisal.
An inquiry report has established that the project’s design was defective and it was highly mismanaged.
However, successive governments funded the project by charging 10 paisa on every electricity unit consumed and by obtaining expensive commercial loans.
The Economic Coordination Committee (ECC) of the cabinet has already extended the closing date of collection of Neelum-Jhelum surcharge up to June 2018, according to the finance ministry.
The CDWP on Wednesday also approved consultants for third-party validation of the Neelum-Jhelum hydropower project at a cost of Rs100 million. Without the third-party validation, the CDWP’s decision to approve Rs500.3 billion cost was surprising.
The CDWP also recommended 220 KV Jauharabad Substation projects at Rs3.2 billion for Ecnec’s approval. It also approved evacuation of power from 2160MW Dasu Hydro Power project at a cost of Rs75.9 billion.
The CDWP also gave a go-ahead for changing the construction design of the Lahore-Sialkot Motorway to connect it with Narang Mandi and Narowal Eastern Bypass, which is the constituency of the federal minister for planning. The revised project cost is Rs20 billion.
A 184km Faisalabad-Khanewal Motorway (M-4) costing Rs60.8 billion was presented before the CDWP which was referred to Ecnec for further proceeding.
A special project for development of health services in Afghanistan that includes a 60-bed kidney hospital in Jalalabad, 200-bed Jinnah Hospital in Kabul and 100-bed hospital in Logar at a cost of Rs2 billion was also approved.
In food and agriculture sector, two projects worth Rs3.3 billion were approved by the CDWP.
The projects include National Pesticide Residues Monitoring System in Pakistan, costing Rs799.3 million and the National Cotton Research and Development Programme, costing Rs2.5 billion.
In the mass media section, only one project PTV Terrestrial Digital DTMB Demonstration Project at a cost of Rs2.8 billion was approved by the CDWP.