Allocation deficit hits rupee cover: World Bank asks govt to enhance ‘T5HP’ budget

ISLAMABAD: The World Bank has asked the government to increase allocation for Tarbela 5th Extension Hydropower Project (T5HP) at the time of mid-year budget review as existing allocation is insufficient to meet rupee cover requirements.

In a letter to the Economic Affairs Division (EAD) Secretary, Dr Kazim Niaz, the World Bank’s Country Director, Najy Binhassine has termed the progress of T5HP satisfactory, despite the unprecedented termination of the contract by the supervision consultant, while construction is still underway on this large infrastructure project.

According to the bank, the WAPDA expediently implemented alternative supervision arrangements to ensure the project construction continued and averted safety risks to Tunnel 5 and operation of the Tarbela Dam. The Wapda has hired a new construction supervision consultant.

Tarbela 5th Extension Project: Wapda chief reviews progress

The supervision of the project as well as the sequencing and progress of the works have improved after mobilisation of T5PIC. Key experts, including an international project manager with the experience of leading Tarbela Fourth Extension Hydropower Project, are deployed at the site and effectively managing the construction works.

All stakeholders, including Wapda, T5PIC, Civil works contractor (Power Construction Corporation of China Limited-PCCCL), and Electro-mechanical contractor (Harbin Electric International Company/Harbin Electric Machinery Company-HEVHEC), are preparing a coordinated schedule for commissioning the power plant and completing the project.

“The World Bank requested Wapda to finalize the coordinated schedule, with updated inter-contract milestones, and share it with the Bank team by December 26, 2024,” said Binhassine.

On rehabilitation of tunnel 5 gates, the World Bank is of the view that WAPDA and T5PIC to finalise the technical discussion on rehabilitation of bulkhead and service gates in Tunnel 5. Rehabilitation is a parallel activity and should commence no later than March 2025, to ensure its completion before T5HP becomes operational.

Commenting on extension of AIIB loan, the bank has requested the EAD to coordinate with the Asian Infrastructure Investment Bank (AIIB) for a consideration of the extension of AIIB Loan (AIIB LN 0005-PAK) for T5HP. The current closing date of AIIB loan is June 30, 2025, while the closing date of the International Bank for Reconstruction and Development (IBRD) Loan 86460 has been extended to September 30, 2027. The raised intake of Tunnel 5 is scheduled to be completed by May 2027. It would be practical to extend the Closing Date of AIIB Loan by a few months beyond the completion of the raised intake to cover expenditures incurred during the defect notification period.

On budget allocation for T5HP (rupee cover), the bank said that WAPDA had requested budget allocation of Pakistani Rs 42 billion for FY24-25 for T5HP. However, only Rs11 billion has been allocated, which is insufficient. The support from the Ministry of Water Resources and the EAD will be needed to increase the budget allocation for T5HP during the mid-year budget review to ensure that the project’s expenditures are covered and to prevent WAPDA from incurring interest payments on unpaid invoices.

The contract for T5TL, which involves connections of T5HP switchyard with Islamabad West Substation (IWS) and T1-T4 switchyard, is currently under implementation. Foundations of approximately 120 towers out of 170 (including 10 towers in Tarbela) have been completed. NTDC has been asked to finalize the location of 12 towers in Gawari Sand Quarry, National Highway Authority’s premises, and near IWS, and instruct the contractor to accelerate the foundation works in remaining 50 towers provided all safeguards policies are in compliance.

The Bank is of the view that tower erection is behind schedule with only 40 towers erected despite the contractor having necessary materials, asking NTDC to instruct the contractor to accelerate erection of the remaining 130 towers provided all safeguards policies are in compliance. The mission also emphasised to NTDC to ensure continued compliance with the Resettlement Action Plan for T5TL as works on tower foundation and erection are progressing.

The World Bank’s Implementation Mission which visited T5HP on 18-26 November, 2024, has observed that the T5TL contract will require an extension (original completion date was November 2024) due to right-of-way issues and delays at IWS. Therefore, it was agreed that T5PIC and NTDC will carefully review the request for extension of time, when it is submitted by the contractor, and determine the revised contract completion date quickly to ensure that construction activities and payments to the contactor continue without interruption.

Copyright Business Recorder, 2024