Federal cabinet approves Neelum-Jhelum Hydropower project

Islamabad: Federal cabinet on Wednesday formally approved the strategically important Neelum-Jhelum Hydropower project at a revised cost of Rs 128.4 billion with a foreign exchange component of Rs 46.5 billion.

The formal approval was made in the federal cabinet meeting chaired by the caretaker Prime Minister Muhammadmian Soomro. The approval cleared the way for the long- awaited construction of the project. Economic Coordination Committee (ECC) of the cabinet had earlier approved the project in April during the current year.

The project envisages the diversion of Neelum waters at Nosairi in Azad Jammu and Kashmir and it will involve tunneling of 47 km for diversion of the water from Nosairi to the power station. The project, awarded to the Chinese company will be completed in eight years. The project will also be executed through a corporate company, which has since been set up and the debt ratio of the project will b e around 50;50 with equity being raised through a nominal surcharge of electricity excluding 3 million lifeline consumers.

Addressing the cabinet on the occasion, caretaker prime minister expressed satisfaction that the project, which had been delayed for many years will not only help secure Pakistan’s rights over the Neelum-Jhelum waters but also go a long way in bridging the energy gap in the country through generation of additional 969 megawatt of hydel electricity which is the cheapest form of generation.

The construction of Neelum Jhelum Hydroelectric Project would enable Pakistan to get water usage rights and any further delay in construction of the said project, technically, Pakistan would be obliged under the treaty to allow India to use these waters for power generation without storage.

Official said that government of Pakistan has already approached Kuwait Fund and French financers M/s BNP Paribas for arrangement of the foreign exchange component of the $785 million (Rs 46.5 billion).

In order to arrange foreign exchange component of $785 million the government made a presentation to Kuwait Fund management delegation on March 21, 2007 and a formal request has been sent to Economic Affairs division for further submission to Kuwait Fund. The government officials have also held discussions for availability of foreign exchange component of the project with French financers M/s BNP Paribas head office which is located at Paris on March 29, 2007, the official explained.

Water and Power Development Authority (WAPDA) has already approved award of the contract to the lowest bidder i.e. CGGC-CMEC a joint venture on March 9, 2007 at the contract price of Rs 90.885 billion including foreign exchange of $785 million. The Project Director office is established and is operational at Muzaffarabad to execute the project in the site,” the official added.

Government had made an allocation of Rs 5 billion in the Public Sector Development Programme (PSDP) and a sizeable amount is expected to be allocated for the project in the PSDP for the next fiscal year, the official added.

The installed capacity of the project is estimated at 969 MW and annual energy generation capability of 5150 kWh, design discharge at 230 and average head at 450 meters. Two tunnels would be built under the project design; the first would be 15 kilometers each 40 square meters and the second would be of 17 kilometers each 80 square meters. According to the official, the project would be connected with National Grid at Rawat with the construction of two separate transmission lines of 500 kV single circuit.

The official informed that the some 2500 kanals of land would be acquired for the project and in the first phase acquisition of 1123 Kanals of private land is underway. WAPDA has already transferred Rs 336 million to the Azad Jammu and Kashmir government as provisional cost of private land being acquired by it.