The long-delayed 969MW Neelum Jhelum Hydropower Project is likely to achieve financial close in September 2015, paving the way for its completion in early months of 2017, well informed sources told Business Recorder.
Earlier, the project was scheduled to be completed by the end of 2016 but difficulties in arrangement of finances have marred progress.
However, the government activated itself for arrangement of finances after Prime Minister Nawaz Sharif took personal interest, held several meetings with the stakeholders and emphasised the need for an early completion of the project.
"China Exim Bank has agreed to extend required finances of $ 576 million. Wapda has also arranged Rs 100 billion through Sukkuks with lead of NBP and the issue of stuck up amount of Islamic Development Bank (IDB) is also resolved," the sources maintained.
The IDB had withheld $433 million loan because Pakistan was reluctant to seek performance guarantees from the project contractor, fearing that if it asked the contractor to provide guarantees against the additional cost, the contractor may take the authorities to court.
In February 2015, Government of Pakistan and State of Kuwait signed additional loan agreement of $ 32 million for Neelum Jhelum Hydropower Project.
Initially, the completion date was October 2015, which was later revised to November 30, 2016. Earlier, the cost was estimated at $1.8 billion, but it has now gone up to $4.21 billion.
The concept of Neelum Jehlum was floated in late 80s with the objective of establishing water rights so that India could not disrupt water flows. At that time India was still planning to build a run of the river project - Kishanganga Hydroelectric Project. Initially work started on a limited project which was later on expanded. However, after the earthquake of 2005 entire classification of the project was changed. Formally, the project was initiated in 2008.
In June 2015, Prime Minister Nawaz Sharif had expressed annoyance at the delay in the project and directed the government to explore the possibility of its privatisation or execution on PPP basis. Wapda was in favour of completion of the project on PPP basis but opposed proposal of privatisation. However, funding issue was almost resolved after the Finance Minister, Senator Ishaq Dar actively intervened.
When contacted Chairman Wapda Zafar Mehmood confirmed that the project will achieve financial close very soon as funding has been arranged. Economic Affairs Division (EAD) is in negotiations with the China Exim Bank which will extend all the required funding.-MUSHTAQ GHUMMAN