A costly project

The cost of the controversial Neelum-Jhelum Hydropower project is set to increase for a fourth time – steeply – from Rs404 billion to Rs464 billion, despite around 85 percent of the project reported to have been completed. New reports suggest that the cost of electricity for the hydro power project could be as high as Rs20 per unit, which would be above the average cost of diesel-fuelled electricity generation. The Neelum-Jhelum project was hastily approved in 2002 in response to Indian plans to start the Kishenganga Project at the cost of Rs84.5 billion. How 84.5 billion has become Rs464 billion is anyone’s guess. The CEO of the Neelum-Jhelum project himself admitted earlier this month that the original design of the project was faulty but claimed that the revised plans were ‘100 percent perfect’. New tunnel boring machinery was approved midway into the project, which is another decision that has remained controversial for adding cost and time to the project. The Neelum-Jhelum project has repeatedly been mismanaged, with the cost hikes only the tip of the iceberg for why the project has cost so much and taken so long. Even now, there is no specific timeline available for when the project will become functional.

The project may be an engineering marvel if it is completed successfully but one must surely wonder whether it is worth spending around Rs500 billion to add around 950MW to Pakistan’s electricity grid. Even if the project is completed, the ongoing dispute with India over the Neelum River is nowhere near being concluded after India refused to accept the World Bank as a neutral party. If the Kishanganga project gets international approval or India decides to ignore international arbitration, the Neelum-Jhelum project could very well become a very expensive disaster. In terms of the treaty, the first country to get to the finish line on either project will be the one to have priority rights on the river. The last international arbitration on the Neelum River did not go well for Pakistan. The current Wapda chairman called the project an ill-conceived scheme from the start in a cabinet committee meeting in September.   The revelations about the potential cost of tariff and another huge hike in cost are the latest in a long list of issues that make one wonder if the project was feasible to start with.     It is clear that a lot of mistakes have been made while designing and building the Neelum-Jhelum project. While it makes little sense to stop the project right now, there is a need for a thorough inquiry into what went wrong.