MoF okays credit line of Rs 3bn for 969MW NJHP
31 August, 2012
ISLAMABAD: To avert the imminent danger of stoppage of work on 969 megawatts (MW) Neelum Jehlum Hydropower Project (NJHP) due to non-payment of Rs 9 billion to Chinese contractors, Ministry of Finance (MoF) has approved a credit line of Rs 3 billion for smooth construction operations.
WAPDA to arrange Rs 3 billion amount as per credit line approved by Finance Ministry from commercial banks on the guarantee by the federal government to meet its payment obligation, sources explained.
Sources informed the chief executive officer of NJHP Company, lt gen (retd) Zubair Ahmed could not address the financial issues of Chinese contractors from federal government, which could cause the stoppage of work by Chinese contractors named China Gezhouba Group Co Ltd China and CMEC, China (CGGO-CMEC) on the certain project worth Rs 274 billion.
The CEO of the company claimed to bring the Tunnel Boring Machines (TBM) costing Rs 19.5 billion into operation till end of ongoing month of August, however because of non-provision of sufficient funds, Chinese company adopted go-slow policy and threatened stoppage of work on billion-dollar mega project.
A senior official of NJHP company informed Our Sources cut-off date declared by HJHP company has expired three-day before, while federal government yet to arrange sufficient funds to meet the demand of Chinese consortium, adding ‘Chinese contractor could stop work at any time', he maintained.
The execution body of this mega project, Water and Power Development Authority (WAPDA) also tightened its lips over the certain crucial situation, which could halt the project and cause the loosing position over controversial 330 MW Kishanganga Hydropower project in International Court of Arbitration (ICA).
The Neelum-Jhelum project in Azad Kashmir is of immense importance to Pakistan. Its early completion would neutralize Indian designs of utilising the Jhelum River water for its under-construction controversial 330 MW Kishanganga Hydropower Project being built upstream in the Indian-occupied Kashmir, In any case, project NJHP not to be completed by Pakistan till projected date 2016 earlier than Kishanganga project.
A senior official of NJHP company on condition of anonymity revealed Chinese contractors working on this project has suspended work on its various sections after the federal government failed to release funds worth Rs 7.8 billion to the firm.
“The project would suffer a big blow due to non-issuance of funds. It is sad to note that while the federal government was happily providing subsidies to the tune of Rs 209 billion annually to the oil-guzzling thermal power projects, it can't provide Rs 7.8 billion to the Chinese company for this important project”, he maintained.
The Islamic Development Bank had committed $357 million loan for the project out of which some of it has been disbursed, but linked the releases of remaining installments of the loan with the release of $448 million by Chinese EXIM Bank saying if the main donor is reluctant then how it is possible for it to fund the project, adding Chinese donor has delayed the credit line of $ 448 million owing to which the project is feared to get delayed.
Federal government released accumulated amount of Rs 44 billion for the construction of NJHP till May 2012 against total allocation of Rs 75.818 billion during four FY 2008-12.
After mutual consultation and comprehensive strict assessment, these top guns of finance division, Planning Commission and power authority approved 969 MW NJHP project with initial PC-1 cost of Rs 130 billion, however later on implementation body of this mega project WAPDA took the support of natural disaster including earth quake 2005 and flood havoc 2010 and apply for revised PC-1 cost of amounting Rs 274 billion, which was recently approved by planning commission in June 2012.