Stuttered progress: Cash crunch slows down Neelum-Jhelum project

Only Rs4b has been released so far; PC officials expect China loans to build hydropower momentum in 2014.

ISLAMABAD:

A lack of finances is impeding progress on the Neelum-Jhelum hydropower project, according to a document submitted by the Planning Commission (PC) to the National Assembly Standing Committee on Planning and Development on Tuesday.

PC officials informed the committee that only Rs4 billion of the allocated sum of Rs24 billion, which was due to be provided by June 2013, has been released. At present, Rs14 billion is due to be paid to the contractor against certified Interim Payment Certificates (ICIFs). Payments for the current month amount to Rs2 billion, set to increase to Rs3 billion due to the operation of tunnel boring machines. PC officials said a loan of $448 million from the Export-Import Bank (Exim) of China will be available by the first quarter of 2014 and will hopefully accelerate the execution of the project.

According to the ministry of water and power, Exim Bank will start payments from this month.

Officials said there is a delay in the release of an additional loan of $400 million from another source and suggested that the government should come up with solutions or arrange for the required amount from within its own resources. The project’s total expenditure to date is Rs98 billion, including Rs30.4 billion in the Neelum Surcharge.

The PC said that a compliance report by the water and power ministry on the Executive Committee of the National Economic Council (ECNEC) directives is still awaited despite repeated reminders by the planning, development and reform ministry. ECNEC had asked the water and power ministry to probe causes of the delay in the execution of the project.

NA Committee chairman Abdul Majeed Khan Khanankhail summoned officials from the Finance Division, Economic Affairs Division and water and power ministry in the next meeting to discuss reasons for the delay in financing the project.

Work on the project commenced almost six years ago on January 30, 2008. The contract of construction was awarded to a joint venture of China Gezhouba Group of Company and China Machinery Engineering Corporation at a cost of Rs 90.90 billion. The approved PC-1 cost of the project was Rs 84.50 billion.

The scope of work has broadened to include a number of design and technical changes. The PC-1 of the project has been revised. ECNEC has already given its approval to the second Revised PC-1 at a total cost of Rs 274.88 billion.

Published in The Express Tribune, January 1^st, 2014.