Dasu hydropower project: Ministry seeks over 92 percent increase in first phase cost

Ministry of Water Resources has reportedly sought an increase of over 92 per cent from Rs 19.163 billion to Rs 36.914 billion in the cost of first phase of Dasu Hydropower Project, sources close to Minister for Water Resources told Business Recorder. On July 15, 2019, Executive Committee of National Economic Council (Ecnec) directed the Water Resources Ministry to seek an opinion from Law and Justice Division for revision of cost for land acquisition and built-up property for project.
Dasu hydropower project was designed for 4320 MW comprising two stages of 2160 MW each. The project was being constructed on Indus River in District Kohistan, KPK.
Under the current approved PC-1, the project envisages construction of stage-1(2160 MW) which also includes land acquisition resettlement of affectees, construction of offices, colonies and project access roads as well as other pre-construction activities. The construction of stage-II of the projects is planned after availability of water from the regulated release of water from Diamer Basha Dam when it would be completed. The background of the project was also explained in detail to the meeting. The sources said, Ministry of Water Resources has come up with enhanced cost of Rs 36.914 billion against approved cost of Rs 19.163 billion. The reason for increase in cost is based on the detailed deliberation during the 14th Project Steering Committee (PSC) meeting on the proposal of district management and SMBR KP who had agreed with the affectees to increase the approved negotiated rate @ 10 % per annum (total 40 per cent) along with payment of compensation on account of housed/construction/terraces/fords and development made after imposition of section-4. This was agreed in the 14th PSC for Dashu HPP held on March 5, 2019.
The following are the recommended revised rates for various categories of land based on financial negotiation by the Commissioner of Hazara Division:
(i) residential urgab, Rs 19,25,000/Kanal, semi urban, Rs 16,62,500/Kanal and rural, Rs 14,00,000; (ii) cultivated (Mazroa Barani), urgab, Rs 19,25,000, semi urban Rs 16,62,500 and rural, Rs 14,00,000/Kanal; (iii) uncultivated Rs 700,000 Kanal, semi urban, Rs 551,524/Kanal and; (iv) barran, Rs 436,800/Kanal; (iii) semi urban, Rs 306.250/Kanal and rural, Rs 175,000/Kanal.
The meeting was apprised that as per financing arrangement between the Government of Pakistan and the World Bank, 50 per cent of land acquisition cost ($ 75 million) is being financed by the Bank, wherein section IV-B (b-ii) of the financing agreement, the final rate(s) price(s) to be passed to the displaced persons on account of land acquisition and resettlement compensations should be formally endorsed by the Ministry of Water Resources and Ministry of Finance. Moreover, in accordance with the section 77 of the project appraisal document, May 2014 of the World Bank, a PSC was formed. In view of the decision taken by the PSC to satisfy the requirements of the financing agreement, MoWR submitted the case for consideration of Ecnec.
According to sources, the project's position was considered by the CDWP in its meeting held on May 6, 2019. On the request of Ministry of Water Resources it was considered by Ecnec at a revised cost of Rs 36.914 billion for land acquisition and built-up property which will increase overall cost of Dasu hydropower project (stage-1) to Rs 510.980 billion.
The sources said, Ministry of Planning, Development and Reform proposed that Ecnec should consider the request of Ministry of Water Resources for revision of cost of the project in light of CDWP decision taken in its meeting held on May 6, 2019, subject to the condition that the sponsor will seek the opinion of the Law & Justice Division regarding revision of cost of land acquisition and built up property after imposition of section 4 of Land Acquisition Act(LAA) 1894 before making payments under the revised project. Ecnec agreed to the proposal and directed Ministry of Water Resources to seek requisite opinion from Law & Justice Division and submit a report thereof to Ecnec for consideration.