Water and Power Development Authority (Wapda) has revised actual cost of 969MW Neelum Jhelum Hydroelectric Project to Rs 414.034 billion instead of the initial estimated cost of Rs 274.882 billion calculated in June 2012, showing an increase of 50 percent. Ministry of Water and Power has submitted second revised PC-I to the Central Development Working Party (CDWP) headed b y Minister for Planning, Development and Reforms, Ahsan Iqbal, which is likely to be approved shortly.
Official sources told Business Recorder that the second revised PC-I reflect the actual financial impact of incidental charges, Interest During Construction (IDC), rupee depreciation and year to year impact of inflation.
M/s CGGC-CMEC, consortium of two Chinese firms, is constructing the project under the supervision of Neelum Jhelum Consultants (NJC), a Joint Venture comprising MWH International Inc. USA( lead firm), Norplan, Norway and Nespak, ACE and NDC of Pakistan.
According to official documents, feasibility study and detailed engineering design was completed by M/s Nor-Consult and Norplan of Norway in 1997. The PC-I cost approved by Executive Committee of National Economic Council (ECNEC) on February 28, 2002 was Rs 84.502 billion which is above 750 per cent as compared to the most recently calculated revised cost. NJHP began without financial close.
The feasibility study and detailed engineering design was completed by M/s Nor-Consult in 1997 as per seismic parameters established before the devastating earthquake of October 8, 2005; subsequent to the earthquake revision of the detailed engineering design was carried out requiring changes in already applied OBE/DBE (operating/ designed basis earthquake) parameters. Due to the present law and order situation in the country and provision of security for Chinese and expatriate staff of consultants and incorporation of resettlement package, second revised PC-I amounting to Rs 274.882 billion was submitted by the Ministry of Water and Power which was cleared by the CDWP on June 18, 2012 (during the tenure of the PPP led coalition government) and approved by Ecnec on July 4, 2013 (during the tenure of the incumbent government.
As per the directives of federal government, 3rd revised PC-I amounting to Rs 414.034 billion was prepared in March 2015 and submitted to the Secretary Water and Power for seeking approval from GoP. Later on Ministry of Water and Power raised certain observations on the PC-I which were duly addressed by the Neelum Jhelum Hydroelectric Project Company (NJHPC).
A meeting was convened between NJHPC and a team of Energy Wing, Planning Commission on June 30, 2015 to further deliberate on the 3rd revised PC-I (2015). Afterwards, a series of meetings were held and back-up information/calculations exchanges further refined the 3rd revised PC-I.
Planning Commission, in collaboration with NJHPC, worked on the PC-I and finally a pre-CDWP was held in the office of Energy Wing, Planning Commission on August 17, 2015. Representatives of Ministry of Water and Power, Economic Affairs Division, Planning Commission, NJHPC and Government of AJ&K participated in the meeting. Ministry of Water and Power and Planning Commission made certain observations in the pre-CDWP meeting which will be addressed by the NJHPC.
The documents further reveal that about 83 per cent concreting of power house and 98 per cent concreting of transformer hall has been completed so far. Installation of coupler, eye bolts and hangers for power house ceiling have also been completed. About 34 per cent concrete work of tailrace outlet structure has been completed so far. Work on Wapda O&M colony and switchyard at Chattar Kalas is in progress.
When contacted Chairman Wapda, Zafar Mehmood confirmed that 3rd revised PC-I of NJHP has been submitted to the CDWP at a cost of Rs 414.034 billion which reflects the entire cost of the project. "I always say to Wapda officials that "don''t under-reflect the cost and whatever is the actual cost should be shown in the PC-I to avert criticism and embarrassment for the government," he added.
Chairman Wapda maintained that the contractor has to demand the actual cost including the inflation impact on the project. Recent media reports reveal that Chief Executive Officer (CEO) of NJHPC, Major General Muhammad Zubair (retired) tendered his resignation after the government advertised for a new CEO. However, when this question was put before the Chairman Wapda, he showed his ignorance of this development.
Wapda is facing financing gap of $475 million to complete the project. Government is in talks with Chinese banks through Economic Affairs Division (EAD) to raise the amount.