The federal government has refused to award the contract of 969 MW Neelum-Jhelum hydropower project to a US-based firm, just saying the sponsors had no track record and failed to inspire confidence, official sources told Business Recorder.
The sources said that former Minister of State for Privatisation and Investment, Umar Ahmad Ghumman was backing the firm M/s YRM for this project but the proposal was rejected a few weeks before his reportedly forced resignation.
Chairman, Wapda, Tariq Hamid had informed the Cabinet Committee on Energy (CCE) in its first ever meeting on February 2 that due diligence had been carried out regarding the interest expressed in the project by a private company. "The sponsors had no track record and did not inspire confidence," the sources quoted Tariq Hamid as informing the committee.
The sources said that Prime Minister Shaukat Aziz, who was chairing the meeting, desired that decision may be conveyed to the sponsors and the issue be treated as closed. According to sources a committee was constituted under the chairmanship of Prime Minister''s Advisor on Finance, Dr Salman Shah comprising Deputy Chairman Planning Commission Dr Akram Sheikh, former Chairman BoI, Umar Ahmad Ghumman and Secretary Water and Power. They were to examine the BoI''s proposal regarding financing of the lowest bidder for the Neelum- Jhelum hydropower project to be undertaken by M/s YRM on Built-Operate and Transfer (BOT) basis.
The sources said that the BoI was reluctant to forward the committee''s assessment report on the firm track record even to the chairman of the committee for information. The sources claimed that differences surfaced between Umar Ghumman and some of the top government managers on the issue of YRM and ultimately the State Minister was asked to resign.
The $1.6 billion Neelum-Jhelum hydropower project is very important and any further delay in starting work on this project will deprive Pakistan of the prior right to the Neelum river. This is because India is also planning to construct the Kishanganga hydropower project on the same river but now with modified design after the World Bank''s expert gave its verdict on the controversial Baglihar hydroelectric project.
The sources further said that the Water and Power Development Authority (Wapda) had also pressed the government to award the project to any internationally reputed firm so that it could be completed as early as possible. The project was initially approved by Ecnec on December 31, 1989 at a cost of Rs 15.012 billion, which was revised at a total cost of Rs 84.5 billion with FEC of Rs 46,667.70 million.
Local component of cost was to be met from Wapda''s own resources while FEC through foreign aid. The gross head of the project is 420 feet and will generate 969 MW of electricity. The sources said that the project is expected to be awarded to a Chinese consortium as Wapda has finalised the evaluation of tender for the project on priority basis.