ISLAMABAD: The Neelum-Jhelum hydropower project is facing immense financial difficulties, which have been aggravated by the depreciation of the rupee against the US dollar and delay in disbursement of $280 million by the Exim Bank of China.
The Neelum-Jhelum Hydropower Company expects the project cost to be restricted to approximately Rs470 billion as against the initial approved cost of Rs506.8 billion as per fourth revised PC-I. However, there is a shortfall of Rs108 billion, of which Rs70 billion is the local cost component and Rs38 billion is the foreign cost component.
It has been revealed that China has refused to lend the agreed amount due to certain conditions imposed outside of the contract. The requirement of foreign cost component can be met by persuading the Exim Bank of China at the government level to release the loan whose expiry date is August 2019.
Due to the financial crisis, the Ministry of Water Resources has allowed contractors to raise Rs55 billion immediately for the payment of bills and meeting other necessary expenses through a government-guaranteed Sukuk. It has also asked for exemption from taxes and has prepared and sent a summary to the Economic Coordination Committee for approval.
According to documents available with The Express Tribune, it has been said in the summary sent to the ECC that all four units of Neelum-Jhelum hydropower project are operational and generating electricity depending on availability of water in Neelum River.
The summary also stated that since funds would be raised under the Islamic mode through Sukuk, it should be declared SLR-eligible security under Sections 13 and 29 of the Banking Companies Ordinance 1962, so that the cost burden was minimised.
Published in The Express Tribune, April 21st, 2019.