Neelum-Jhelum project’s financial closure this month

ISLAMABAD: The Nawaz government is all set to add another feather to its cap by almost managing the much-awaited financial closure of Pakistan’s most strategic and state-of-the-art 969MW Neelum-Jhelum Hydropower Project whose cost has swollen to Rs404.321 billion in over one decade.

The achievement of financial closure of the project had been the mission impossible in the past. The governments of Musharraf and Zardari miserably failed to arrange the financial closure of the project owing to which the project kept on facing delays. 

Now with the personal intervention of Prime Minister Nawaz Sharif, the financial closure will be achieved this month, as the Executive Committee of National Economic Council (Ecnec) has approved the revised PC-1 of the project, a senior official privy to the development told The News.

China’s EXIM bank and a consortium of local banks, headed by the National Bank of Pakistan (NBP), had earlier linked their credit lines for the project with the approval of the revised PC-1 of the project by the Ecnec.

Now both the China EXIM bank and the NBP are poised to provide their credit lines amounting to $1.576 billion.

The National Bank of Pakistan will be providing Rs100 billion ($1 billion) and the China Exim Bank $576 million. 

To this effect, the Economic Affairs Division (EAD) is very much in contact with the China EXIM bank.

This will ensure smooth financial supplies to the project owing to which the first turbine of the project will start generating 250MW electricity by June 2017.

Seventy-six percent of the project has so far been completed without achieving the financial closure.

The prime minister will visit the project site on January 12 where he will be examining progress on various components of the project.

Upon contacting, Wapda Chairman Zafar Mehmood confirmed that the prime minister will visit the project site on June 13 and showed personal interest in erasing several financial hiccups causing delays in the completion of the project.

He said it was due to the personal interest of the premier that Rs14 billion were released for the project on June 13 and later the Cabinet Committee on Energy decided to get a revised PC-1 of the project approved, paving the way for approval by the Ecnec. Wapda chairman also mentioned that the ECC had also approved sovereign guarantees against loans that had been arranged under the financial closure.

“Once the project comes on stream, Pakistan will be getting 5,000 billion Gegawatt hours out of this project. In terms of electricity generation, this project will be more beneficial than the Mangla Dam’s capacity to generate power,” Mehmood argued.

When asked if the per unit cost of electricity to be generated by the project will be over 20 cents per unit keeping in view the cost of the project that has increased over Rs404 billion, he said the cost of electricity generation will not be on the higher side, rather it would be competitive.

However, the relevant top official said the Neelum-Jhelum hydropower project had witnessed an overall 76 percent progress. He said Rs190 billion had been spent on the project so far. 

“And we have accomplished several milestones under which three diversions have successfully been completed on the dam site and two hydraulic gates have been installed whereas the third gate will be installed somewhere in March. However, on the dam, 72 percent construction work got accomplished. And on top of that spillways — the main component of the dam — got completed to the final level of 1,019 meters above sea.

Mentioning the rock burst incident which affected the high-tech tunnel boring machines (TBMs) being used in the project for excavation of underground tunnels, the official said TBMs were now repaired and were set to get operational within a few days. 

He also disclosed that a tunnel beneath 200 meters under Jhelum River bed had been completed and was likely to be connected to the main headrace tunnel in a few days and this was the world class experience of Neelum-Jhelum hydropower company.

Hundred percent excavation has been achieved at the site of the power house. The construction work at the power house got accomplished by 80 percent while the Electrical Mechanical Hydraulic (EHM) equipment has been installed in all the units.

The official said it was high time to get the tripartite agreement between the federal government, Wapda and AJK signed, as it was not possible to run the project without an agreement with the AJK as it was not part of Pakistan.   The official said the project needed fast financial supplies for completion.

In 2002, the official said, the cost of project was Rs84 billion but after the 2005 earthquake, the project’s design had to be modified, keeping in view the fault lines passing through the project site and the scope of the project also widened. 

Furthermore, due to the rising value of dollar the cost of the project escalated to Rs274 billion. Now it is the third time that the project cost has been revised upward to Rs404.321 billion mainly because of inclusion of duties, taxes and IDC (interests during cost) till completion of the project and the cost of the consultant. 

The cost of project has increased to 86 percent because of IDC and 7 percent in the wake of consultancy fee. So far, 76 percent construction work has been completed on the project site.