Khyber-Pakhtunkhwa venture: Swat hydropower project gets govt thumbs down

Central Development Working Party terms Rs21.5b cost exaggerated.

ISLAMABAD:

The federal government has refused to clear a hydroelectric power project in Khyber-Pakhtunkhwa, finding its total cost at Rs21.5 billion or generation cost at Rs6.02 per unit exaggerated.

The decision came after the provincial government sought clearance of the details, design and construction of the 84-megawatt Gorkin Matiltan Hydropower Project in Swat from the Central Development Working Party (CDWP).

Headed by Planning Commission Deputy Chairman Ahsan Iqbal, the CDWP has powers to approve up to Rs3 billion worth of projects and recommend mega schemes for approval of the Executive Committee of National Economic Council.



The power project, being partially funded by the Khyber-Pakhtunkhwa government, is estimated to cost Rs21.5 billion including Rs6.9 billion in foreign loans. Any provincial project that has a foreign grant or loan component has to be brought before the federal authorities for seeking the go-ahead.

Excluding the cost of laying transmission lines at Rs1.2 billion, the project cost has been estimated at $2.39 million per megawatt. By including other factors, the cost would rise above $3 million per megawatt, according to an official of the Ministry of Planning and Development.

Per unit generation cost was put at Rs6.02, which appeared to be too high for hydroelectric power. Terming the cost exaggerated, the newly appointed member energy of the Planning Commission stressed that any price of hydroelectric power would be cheaper when compared with diesel power generation, but it was not a good yardstick.

As opposed to the proposed generation cost of $2.4 million per megawatt and $3 million when all factors were included, the generation cost of Duber Khwar hydropower project is estimated at $2 million, according to official documents.

However, officials of the Khyber-Pakhtunkhwa government insisted that the cost had to be revised upward because of change in the design due to the earthquake in 2005, floods in 2010 and increasing security requirements. Provincial authorities have suggested that they would sell electricity at a minimum of Rs8 per unit and will post Rs3.5 billion in annual income.

Some 20% of the cost will come from the provincial development fund while the remaining will be raised from financial institutions. The CDWP also pointed out that the buyer of electricity had not been identified yet.

This is not for the first time that the CDWP has delayed approval of the project. In July this year, it put off a decision and instead constituted a committee to further refine project documents, which did not find anything wrong in them.



Social, living standards

The CDWP also approved the revised cost of Rs894 million for the Pakistan Social and Living Measurement Standards (PSLM) survey. The Pakistan Bureau of Statistics (PBS) conducts an annual survey to gauge the economic and social health of households in the country.

The project was originally approved in 2004 at a cost of Rs304 million. In 2007, the cost was increased to Rs760 million because of the widening scope.

PBS is expected to release the survey for fiscal year 2013-14 by the end of this month.

Though the CDWP endorsed the project, questions have been raised over its financing from development funds. According to officials, the survey falls in the category of recurring expenses.

The CDWP also gave the go-ahead to health projects for Afghanistan under the Afghanistan Reconstruction Package approved by General Pervez Musharraf’s government.

Published in The Express Tribune, October 4^th, 2014.

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