Lavy hydropower project: Unpaid Chinese contractor threatens to stop work

ISLAMABAD: The Chinese contractor building the 69MW Lavy hydropower project in Khyber Pakhtunkhwa has served the provincial government 14 days’ notice that it would halt work if not paid the money it is owed by the Pakhtunkhuwa Energy Development Organization (PEDO).

In an October 5 letter to the Lavy project director Naimat Khan, the Sichuan-Sarwar-Silian-Chongqing Luyang Joint Venture complained that the PEDO had failed to pay for work duly certified as complete by its engineers within the time period stipulated by their contract. Due to the delayed cash flow, the contractor said it would be unable to meet further construction deadlines for the project. The News has obtained a copy of the letter.

In its letter, the Chinese contractor said it would resume work – which would continue until October 19 - once it is paid. But it did not restrict itself to the issue of outstanding payments. It also claimed compensation for lost profits caused by the delay, as provided for in the contract.

The PEDO chief executive Syed Zain Ullah Shah described the development as a “routine matter” prevalent in all major engineering projects. He said the backlogged payments would be cleared as soon as the Khyber Pakhtunkhwa assembly approved the provincial budget for the financial year 2018-19.

The Lavy hydropower project, located in district Chitral, is being built at cost of more than Rs20 billion. It is scheduled to be commissioned in November 2021. So far, about 11 percent of the project has been built, Shah said.