ISLAMABAD - The government has decided to table the revised PC-I, envisaging the cost escalation of Neelum-Jhelum in Central Development Working Party (CDWP) despite the reservations expressed by the Planning Commission.
“The high ups of the Planning Commission have directed us not to raise our concern and let the PC-I go to the CDWP,” sources told The Nation here Thursday.
Earlier the project was dropped from the agenda of the last meeting CDWP as the management of the Neelum Jhelum has failed to address the concerns raised by the Energy Wing of the Ministry of Planning, Development and Reforms, the source disclosed.
A new PC1, regarding increase in the cost of the Neelum Jhelum Hydropower Project (NJHP), was moved by the NJHP management but the Planning Commission has asked for an independent assessment of their claims and demands, sources said.
The Energy Wing of the Planning Commission has asked the government to conduct third party audit of the previous developmental work on the Neelum Jhelum Hydropower Project, prior the approval of the new expenditures, the source maintained.
In its note on the PC1, the energy wing has questioned the raising cost and has demanded the evaluation of the completed work of the project and escalated cost, the source informed.
For example the Planning Commission has contested the NJHP management claim that 70 percent of the work has been completed on the project and asked, if so, then why they need additional Rs 144 billion for the remaining 30 percent work, the source questioned.
Similarly the major component of the project was making of tunnel and 80 percent work on which, according the management claim, has been completed, the source maintained. Now the management is asking additional Rs 16 billion for the completion of the remaining, 20 percent, work on the tunnel, the source added. Now it’s up to Wapda to hire an independent auditor for the audit of the work on NJHP project and if everything goes alright then the government should go ahead with the approval of the PC1, the source said.
The total cost of the Neelum Jhelum Hydropower Project jumped to Rs 418 billion from the earlier estimated cost of Rs 274 billion. The delay in the construction combined with some other factors caused the cost escalation of the project. In 2012 the total revised cost of the project was estimated to be Rs274b but due to certain factors including delay, depreciation in rupee value, imposition of tax and duties on the import of machinery, buying latest boring machine etc, have increased the total cost of the project.
For example for the early completion of the project a tunnel boring machine was purchased in 2013 which cost Rs 12 billion, similarly earlier the management of Neelum Jhelum hydropower project did not include the tax and duties on the import of the machineries and equipments in their initial estimates, the official informed . The devaluation of rupee against the US dollar is also one of the reasons for increase in cost. Moreover a big chunk of the cost will also go to Interest During Construction (IDC) to lenders.
NJH Project is located in the vicinity Muzaffarabad. It envisages the diversion of Neelum River water through a tunnel out-falling into Jhelum River. The intake Neelum-Jhelum is at Nauseri 41km east of Muzaffarabad and has installed capacity of 969MW. The project was originally estimated to cost Rs130 billion in2007, which went up to Rs275 billion in 2012, partly because of changes in specifications arising out of geographical changes following the devastating earthquake of 2005.
Soon after assuming the charge as Prime Minister in 2013, Nawaz Sharif, issued directives for its completion by December 2015. But later due to funds shortage the project was delayed and the deadline for the completion was rescheduled twice first to December 2016 and then to the first quarter of 2017. “We are not talking about a scam, may be the claim and demand of NJHP management is 100 percent right, but even then it multi billion dollar project and the government needs to re-verify the project,” the source maintained.
Now the summary of revised PC-I will be presented in the next meeting of the CDWP and it has been decided that the reservation raised by the Planning Commission will be discussed there, the source informed.
“I don’t think the government is serious about this matter and they are just fulfilling the formality,” the source claimed.