Pakistan is likely to be deprived of its water access rights to Neelum River (known as Kishanganga River in the Indian-held Jammu and Kashmir),
On the other side, in India, the construction of Kishanganga Hydel project is far ahead of Neelum-Jhelum project. Kishanganga project was due for completion in 2016 and has been advanced for commercial operations by October 2015. According to the Indus Water Treaty interpretation, the country that completes its project first will secure priority rights to the river. Kishanganga project would reduce power generation at Neelum-Jhelum powerhouse by 100MW, besides having adverse impacts on water flows and environment in Jhelum valley due to resultant 27 percent water deficit. prefix = o ns = "urn:schemas-microsoft-com:office:office" />
The two run-of-the-river projects, located on the tributaries to the Neelum River, follow similar principles of design and construction, that is, diverting portion of water to the power station before it is discharged back into the river. Conceptually, both the projects have complex design involving underground powerhouse. Excavation of tunneling network at both projects is through combination of using conventional drill and blast method and tunnel boring machine. Geological and technical problems associated with the two projects are also identical; though Kishanganga project being located in the Himalayan terrain faced critical logistic issues too, particularly transporting huge tunnel boring machines at site. Both projects commenced construction in 2007.
In comparison, however, Kishanganga project of 330MW capacity (3x110 MW) constructed at a cost of $773 million is characterised distinctively being the first entirely Indian-funded project without seeking any foreign financial help and that it never suffered financial constraints in its implementation. Furthermore, the project is being constructed solely by an Indian company Hindustan Construction Co in joint venture with a British engineering group. Construction on dam was halted in October 2011 by the Hague-based International Court of Arbitration as a result of Pakistan’s protest to its impact on the flow of Kishanganga River. In February 2013, however, the Court ruled that India could divert a minimum amount of water for power generation. Since then improved progress on the project was achieved, having completed the 14.75 km tunnel by June 2014 in record time.
On the other hand, significant delays, cost overruns and funding issues have surrounded the Neelum-Jhelum project of 969MW (4x242.25 MW) installed capacity from beginning. In May last year Prime Minister Nawaz Sharif had directed completion of the strategic project on fast tracks, ensuring timely release of funds. Budget 2014-15 has an allocation of Rs30.44 billion for the project, but, ironically, no funds have been released so far, even after a lapse of over eight months of the current financial year, in spite of the recognition that availability of sustained cash flow was a pre-requisite to achieve enhanced physical progress. In fact, the government has misplaced priorities, if not lack of political will and vision. Massive funds, of the size of over Rs227 billion, have been released so far to various infrastructure and development projects during the 2014-15 fiscal year, but not to the critical Neelum-Jhelum project. As an example, Rs65.5 billion has recently been released for the proposed Karachi-Lahore Motorway Project.
Neelum-Jhelum multi-purpose project, undertaken under WAPDA’s Vision 2025 programme launched in 2001 has a chequered history. The project, initially to be of 500MW capacity, was to be constructed at a total cost of Rs15.01 billion, as per original PC-1 approved by the ECNEC on December 31, 1989. The detailed engineering design, which changed the concept and size of the project, however, was completed in 1997. This necessitated updating the PC-1 in May 2001, which was approved in February 2002 at total cost Rs84.502 billion with foreign component Rs46.668 billion. The project was to be completed in eight years, from July 2002 to June 2010.
Construction contract was awarded in July 2007 to the CCGC-CMEC consortium of China at a total cost of Rs90.90 billion with foreign currency element Rs46.499 billion. The project was to achieve COD (commercial operations date) within 106 months ie by October 2016. Meanwhile, there were supplementary changes in engineering and design on seismic concerns and creating added storage capacity, and the on-going construction work was stopped. On resuming the work, which anticipated project completion in 2018, it was decided to employ tunnel boring machines for the remaining tunnel network instead of continuing to use conventional drill & blast method so as not only to make up the lost time but also to advance the overall project commissioning period.
The machines started demining operations in January 2013 but so far, tunnelling work, the critical activity of the project, has not been completed. Ironically, Wapda, instead of the contractor who is contractually always responsible to mobilise all necessary machinery, equipment and tools for construction, had to procure two tunnel boring machines at $92.2 million for the purpose. This, and other factors, increased the project cost to Rs274.88 billion, more than three times the PC-1 cost, or almost double in dollar terms. Up to January this year overall physical progress achieved was 69 percent while $2.68 billion were spent on the project.
Since long there is financial gap of $475 million in foreign currency component due to increased project cost, which is now being filled with additional funding by the donors. China Exim Bank has recently agreed to provide additional $200 million loan, whereas Kuwait Fund for Arab Economic Development signed an agreement in February 2015 for additional $32 million for the project. It may be recalled that China had committed $448 million in May 2013, whereas Saudi Arabia gave $100 million in September 2012 and OPEC $50 million in October 2013. in addition, Wapda raised $150 million by issuing term finance certificates in October 2012, whereas Rs57.40 billion have been arranged through collection of project surcharge from power consumers, already having received Rs33 billion by June 30, 2014. Yet, the project continues to suffer severe financial crisis!
The writer is Chairman, Institution of Engineers, Pakistan