This refers to the article, ‘Neelum-Jhelum’ (Feb 5), by Farrukh Saleem. The Ministry of Water and Power has dispelled the allegations tendered in the article. It has clarified that Ecnec approved the Neelum-Jhelum Project for Rs15 billion (not 18 billion) in 1989, for 500MW capacity (not 969 MW). The project could not be executed because of the non-availability of funds. Subsequently, a loan agreement was signed between the government of Pakistan and M/s Eksportfinans of Norway in 1994.The consultants came up with a modified proposal by increasing power potential from 500 to 969 MW. Based on this proposal, the first revised PC-1 of the project was approved by Ecnec in February 2002 at the total cost of Rs84.50 billion for 969 MW. The main reason for the revision of the cost was, therefore, the capacity increase from 500 to 969 MW. It is also to be noted that as the financing for the project could not be arranged, the award of the contract was delayed by nearly six years. The execution of the project had to be fast tracked in 2008 to acquire the first right of use of water from India’s proposed Kishenganga Hydroelectric Plant. The contract for the execution of the project was accordingly awarded to M/s CGGC through international bidding at a tender price of Rs90.94 billion in December 2007.
The Cabinet Committee on Energy, chaired by the prime minister, in its meeting held in February 2015 directed to constitute a sub-committee headed by the finance minister to work out the requirement of funds till the completion of the project. After a series of meetings at different forums, Wapda was directed to develop an all-encompassing PC-1 including duties and taxes, price escalation and IDC etc. The argument that at the moment Rs500 billion has already been spent is not correct as the total expenditure incurred so far is Rs311 billion. It is further clarified that the Board of Directors does not have the powers to approve PC-1 of the project and, therefore, reference to the directions by the finance minister to the board for approval is incorrect. The board was reconstituted to improve the overall management of the Neelum-Jhelum Hydropower Company in line with the provisions of the Companies Ordinance 1984. It has also been argued that per megawatt cost of the project is more than $5million which is very high on a comparative basis. According to the International Renewable Energy Agency (IRENA), the cost of large hydropower projects may vary from $ 1 million to 7 million per MW. From international standards, the project is economically viable. Finally, it has also been mentioned that NAB has initiated an inquiry on the alleged ‘corruption’ in the project. It is clarified that the inquiry was initiated in 2011 but was closed in 2016 as NAB could not find any gross irregularity.
Syed Muhammad Mehr Ali Shah
Joint Secretary (W)
M/O Water & Power
Islamabad