Ecnec approves revised cost of Rs404 billion for Neelum-Jhelum project

ISLAMABAD: The Executive Committee of National Economic Council (Ecnec) under chairmanship of Finance Minister Ishaq Dar on Saturday
approved the revised cost of Rs404 billion for the Neelum-Jhelum Hydropower Project (NJHP), which had already witnessed mammoth escalation several times in the past.

For the request of tax exemption of Rs29 billion for import of machinery for construction of Multan-Sukkur Motorway, Ecnec asked the relevant authorities to present summary on this subject before the committee.

However, chairman Wapda assured the Ecnec that after getting approval of revised cost of Rs404 billion for NJHP, they would share about financial close of this project very soon and this project would be completed within limit of approved money.

“The cost was revised downward by Rs10 billion from Rs414 billion to Rs404 billion on account of two heads including reduction in contingencies from 5 percent to 3 percent and no payment for escalation cost on expenditures which were already incurred,” said one top official after the meeting.

The cost of NJHP had gone up to Rs404 billion in accordance with latest approved estimates against initial estimated cost of Rs15 billion which was approved by Ecnec on 31-12-1989, witnessing a mammoth increase of over 27 times during the last 26 years but this project had not been completed so far.

According to announcement of the Finance Ministry, Ecnec after detailed deliberations approved the revised PC-I of Neelum Jhelum project at a total cost of Rs404.321 billion. Ecnec was apprised that the financial issues of the project were discussed in the Cabinet Committee on Energy (CCOE), following which a sub-committee headed by the finance minister was constituted to resolve these issues.

The sub-committee noted that the existing PC-I of the project had no provision for certain items including interest during construction. The committee therefore directed Wapda to prepare a revised PC-I and include all the project related costs inclusive of IDC, taxes and duties etc. The revised PC-I was accordingly submitted to the CDWP which recommended it to the ECNEC for approval.

While approving the project, the committee directed that the NJHP related schemes of AJK be implemented at the earliest.

On a proposal of Ministry of Communications, Ecnec approved the revised PC-I of Sukkur-Multan section (392 KMs) of Peshawar-Karachi Motorway project at a total cost of Rs314,997.280 million. The section covers the areas of districts of Sukkur, Ghotki, Rahimyar Khan, Bahawalpur and Multan in the provinces of Sindh and Punjab. The committee was informed that the project was being implemented on EPC basis and therefore there would be no cost escalation during the implementation of the project. The meeting was informed that despite upward revision of the project cost, a saving of Rs112 billion has still been achieved through deep scrutiny.

Ecnec also discussed and approved the revised PC-I for KKH Phase-II (Havelian to Thakot 118.057km) project at a total cost of Rs136,659.60 million. The meeting was informed that increase in cost of the project owed to a number of reasons. The proposed scope of work includes high-level bridges as well as tunnels under poor soil support which requires special treatment and needs heavy spending. Further, the area is prone to seismic activities which require additional safety measures. Due to poor strata along the alignment, excessive material is required from far off places which needs haulage roads resulting in substantial increase in cost of earthwork. The road will be built on Chinese standards applicable to similar terrain.

The NHA informed the meeting that a saving of Rs58 billion has been achieved in the project cost through a reduction in the bid following technical negotiations.

The meeting also considered and approved the National Highway N-70, Rakhi Gajj-Bewata, East-West road project at a revised cost of Rs22,994.660 million. The road is an important link between Balochistan and southern region of Punjab.

The project envisages revamping of a stretch of 32. 651KM long two lane single carriageway of N-70 from Rakhi Gajj to Bewata in the districts of Dera Ghazi Khan and Loaralai. The construction work also includes building of a steel bridge which will be one of its kind once completed.