3 lots of Dasu project: EAD directs NTDC to complete construction by end-Dec 2025

ISLAMABAD: Taking serious notice of undue delays in projects funded by the World Bank, Economic Affairs Division (EAD) has directed the National Transmission and Despatch Company (NTDC) to ensure completion of construction work on Lot-1, Lot-2 and Lot-3 of Dasu hydropower project by end December, 2025, well-informed sources told Business Recorder.

These directions were issued at a recent meeting presided over by the Minister for Economic Affairs, Ahad Cheema and attended by the senior officials of EAD, Power Division, NTDC, World Bank, ADB, Planning Commission, Islamic Development Bank, AFD and KFW Pakistan.

Secretary EAD, Dr. Kazim Niaz emphasized that the performance of the foreign funded power sector projects was a matter of concern due to slow implementation of project activities by the executing agencies which were not only hindering the disbursements pace but also caused time overruns of these important projects.

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Starting discussion on National Transmission Modernization Project -1(NTMP-1) with funding of $ 425 million, Deputy Secretary (WB),Azam Khan noted that the financing agreement of the project worth US $ 425 million was signed with the WB in June,2018. Due to protracted delays, the project could only disburse $ 96.2 million so far. Out of total disbursement, US$37.9 million has been disbursed during CFY. The potential disbursement of US$ 100 million can be ensured during CFY subject to timely award of contract of Islamabad West Station (IWS) - the decision on which is pending since long at NTDC level.

On a query from the Chair regarding delay in award of contract for IWS, MD NTDC explained that a number of queries, particularly un-conditional bank commitment and claim of taxes (Rs. 1,282,445,164) had arisen after bid evaluation and are being resolved in consultation with the lowest bidder under directions of NTDC Board. He further shared that during the last BoD meeting it had been decided that if the bidder did not submit the credit line by the deadline, the next lowest bidder would be approached. The Chair took a serious note of all these delays on the part of NTDC and desired the NTDC to finalize the award process by following the prescribed procedures. The World Bank representative stated that they have already shared their No Objection to NTDC for award of contract to the lowest bidder on his fulfillment of bank commitment requirement. In contradiction of NTDC claim of non-responsiveness of lowest bidder on tax issue, World Bank considers the bidder as responsive. The WB representative also highlighted the difference of US$40 million between the bid prices of lowest and the next higher bidder. He further highlighted the urgency of timely construction of IWS as if it was not completed in 2026 it would cause delays in evacuation of power from Dasu Hydropower project which would become a stranded asset. The World Bank supported the timely award of contract to the lowest bidder.

Deputy Secretary (WB) also raised the issue of Payment Assistant Plan (RAP) payments and contractual issues with M/s Siemens Pakistan. MD NTDC noted that the contractual issue with Siemens had been resolved on March 13, 2024 whereas only 13 percent of the RAP payments were pending. In response to a query from Secretary EAD regarding approval of PC-1, MD NTDC noted that actual price of the bid would be incorporated in the revised PC-l of IWS and be submitted for approval of CDWP.

He further assured that all other components of the project (excluding IWS) would be completed by the end of this calendar year. The remaining components would account for disbursement of $ 60 million in the current FY while award of IWS would ensure the meeting of disbursement target of$ 100 million.

During discussion on $ 700 million Dasu transmission line project, Deputy Secretary (WB) EAD stated that in spite of initial implementation delays of DASU Hydropower (Transmission Line) - owing to land acquisition, delay in hiring of consultants and award of contact, the project implementation had now considerably been improved. The project could disburse a total of $ 107.4 million so far. As the procurement for the three major contracts; Lot-1 (TL Dasu to Mansehra), Lot-2 (TL Mansehra to IWS) & Lot-3 (Mansehra Substation) had already been awarded, the project implementation would further pick-up pace. The World Bank representative stated that most of the project bottlenecks had been resolved and work on the three Lots had accelerated during the last four months. For payment of compensation to the land owners who suffered losses under Lot-1& Lot-2 tower areas, NTDC/project team need to coordinate with Local Administration for timely identification of owners through their revenue staff. He also highlighted that the NTDC had to approve incentive package for the revenue staff assigned by the Commissioner Hazara Division. The PD maintained that revenue staff will identify the actual land owners to ensure compensation payment to them as per DC rates. Necessary funds in this regard had already been transferred by NTDC.

With regard to pace of disbursements, he stated that the contractors had been mobilized and advances had been paid due to which no significant disbursements could be expected in the coming 6-9 months; however, if the implementation pace remained on track the disbursement would significantly increase in the period thereafter. In this regard, MD NTDC updated that the case for provision of incentive package was presented to and approved by its procurement committee on March 13, 2024.

On query from the Chair regarding progress on the main contracts of the project, MD NTDC noted that physical progress of Lot-1 was at 14.1 %, Lol-2 12%.The Project Director stated that NTDC was committed to ensure completion of work on all three Lots by end December 2025 or latest by January 2026 as the project was required to be operationalised six months in advance of the operationalisation of Dasu Hydropower Project to ensure readiness for evacuation of power.

After discussion, the EAD directed the Power Division and the NTDC to ensure completion of construction work on Lot-1, Lot-2 and Lot-3 by end December, 2025. The NTDC was directed to ensure compensation payment to land owners within two months.

Copyright Business Recorder, 2024