Prime Minister Yousaf Raza Gilani as chairman ECNEC had decided on August 23, 2008 to fund this 1,100-MW power project to be installed at River Jhelum from the public sector development programme (PSDP).
The provision of funds from PSDP was approved by the prime minister in ECNEC for carrying out feasibility study, detailed engineering and preparation of tender documents through Wapda. Now approval to reverse this decision so as to pave the way for awarding the project to a private party is being sought from the Economic Coordination Committee (ECC) led by Finance Minister Dr Hafeez Sheikh.
Paucity of development funds has been used as the main pretext to remove the project from the PSDP.
Moreover, the Chinese firm in question is said to be ready to fund the project by extending a commercial loan.
Official documents available with The Express Tribune reveal that during a briefing on hydropower project, ECC members were informed that a memorandum of understanding was signed on October 16, 2008 in Beijing between the ministry of water and power and China International Water and Electric Corporation for further implementation of the 1,100-MW Khola Hydropower project located on River Jhelum in AJK.
Reminding the ECC of existence of this MoU the ministry of water and power has argued that in view of the financial crunch facing the country and the tight international money market situation, it would be very difficult to fund a project of this size through PSDP.
“At this juncture, the Chinese firm has committed to implement the project and was also prepared to finance it, if the government of Pakistan gives it a go-ahead,” water and power ministry official told the ECC. Upon this, the ECC members inquired about the details of the waivers required.
Consequently, they were told that two waivers were required: (i) award of multi-billion-rupee project without solicitation through advertisement and (ii) shifting of project from PSDP, as earlier approved by ECNEC to the private sector. But certain ECC members opposed to the proposal to withdraw the project from the PSDP and give it to a private firm without international bidding raised a number of very valid objections.
Their arguments were, however, not given weight and it was pointed out at the meeting that the public sector was unlikely to be able to support such a costly project in the near future.
To further justify their case for award of contract to a private party without tenders, it was argued that local private sector was reluctant to invest in long-term projects and also that a Chinese firm had committed to complete this project through their own resources.
“If we involved them in procedural formalities, they will lose interest and no other foreign company will be prepared to invest, due to the prevailing security situation in the country,” officials of the ministry warned the ECC members.
However, Finance Minister Hafeez Sheikh constituted a committee comprising Water and Power Minister Raja Pervez Ashraf, Minister for Petroleum Naveed Qamar, secretaries of finance, economic affairs division, water and power and managing director Private Power & Infrastructure Board (PPIB) to examine all the matters relating to the power project and submit a way forward for its further implementation keeping in view the commitments of the Chinese firm.
Published in The Express Tribune, October 30th, 2010.
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