Costly venture: Neelum-Jhelum hydropower project trudges along

India will have tactical advantage if it finishes Kishanganga project first.


Shahbaz Rana November 25, 2010

ISLAMABAD: Pakistan has completed only 16 per cent of the work on the Neelum-Jhelum hydropower project as compared to the relatively faster pace of construction of the Kishanganga project by India. This may deprive Islamabad of priority water rights under the 1960 treaty on water.

An official of the Water and Power Development Authority (Wapda) said on Thursday that with the current pace of work Pakistan will be able to complete the 969-megawatt (MW) project by 2016, a year after India finishes the Kishanganga power project on the Neelum River.

Under the 1960 Indus Waters Basin Treaty, any country that constructs and commissions a power project on Neelum River will have priority rights on the use of its water.

“The Indians are using advanced technology that will help them complete the project by 2015,” said Tahir Mahmood, the chief financial officer of the Neelum-Jhelum Hydropower Company. He said that Pakistan has also decided to use this technology, which will cost $150 million.

“Pakistan is negotiating a loan for the purchase of technology and if successful, this will enable it to complete the project two years ahead of schedule,” he added.

He was speaking at a $40 million loan signing ceremony between Pakistan and the Kuwait Fund for Arab Economic Development. The fund extended the soft loan for the construction of the project.

The government also imposed a 10 paisa per unit surcharge in electricity bills to raise money for the project and Tahir said that last year Rs5 billion was collected from this surcharge.

“The Neelum-Jhelum project is very important to overcome the energy shortage in Pakistan,” said Hesham Al Waqayan, the deputy director general of the fund.

Pakistan is facing an acute energy shortage that has been negatively affecting economic growth. According to the Economic Survey of Pakistan, power outages reduced gross domestic product by two per cent last year.

Mahmood said that so far only 16 per cent of the project has been completed, adding that work was progressing simultaneously on three sites and Rs17 billion has been spent on the project. The government awarded the construction contract of the project to a consortium led by a Chinese company.

“In case the Indians succeed [in finishing their project before Pakistan does] it will have a partial negative impact on the Neelum-Jhelum project,” said Lieutenant General (retired) Muhammad Zubair, the newly appointed chief executive officer of the power company.

“The total cost of the project is $2 billion (Rs172 billion) including a $775 million foreign component,” said Sibtain Fazal Halim, the secretary for the Economic Affairs Division.

He said that negotiations for obtaining over $550 million in loans from China and the Islamic Development Bank (IDB) were at final stages. Pakistan is negotiating a $448 million loan with China. Talks for the IDB loan were also under way but the amount has yet to be finalised.

Neelum River enters Azad Kashmir from the occupied Kashmir at a distance of about 200 kilometres east of Muzaffarabad.

According to various studies, the Kishanganga dam could reduce Pakistan’s total water availability from the current estimated 154 million acre feet per year and may affect a significant portion of Mangla Dam’s storage capacity besides resulting in a decrease in the pressure required to generate electricity in Neelum-Jhelum power project.

Published in The Express Tribune, November 26th, 2010.

COMMENTS (5)

Kamal | 13 years ago | Reply yaar Tauseef..do you really think that even if you complete the project before India ,India will not claim water from Neelum/Jhelum...forget it..
Rehan | 13 years ago | Reply Why does Pakistan always has to depend on loans from the Chinese or the Arab World.....?! Govt. doesnt even have $150 Million in its treasury...sadness!
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