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Neelum-Jhelum project also hits finance snags

Pakistan’s second most strategically important Rs274 billion Neelum-Jhelum Hydropower project of 969 MW, has also landed into deep financial trouble endangering its scheduled completion in 2016, as its financiers have raised a number of issues to continue funding the project, a senior official at Ministry of Finance told The News.

This shock has come from Middle Eastern donors after the World Bank and the Asian Bank refused to fund the Bhasha Dam unless a No Objections Certificate (NOC) was obtained from India because of what they claim is the disputed status of Gilgit Baltistan region. The Neelum-Jhelum project is also not being funded by both World Bank and ADB

Fully alive to the paramount importance of the project, the Middle Eastern donors who had earlier committed $100 million for Neelum-Jhelum hydropower project have linked the release of credit line with the solution of problems of other unrelated telecom projects issues.

Secretary Finance Abdul Wajid Rana told The News that under the privatization of PTCL deal, about titles of 3,000 properties of PTCL across the country were to be transferred to the Gulf investor and only 29 properties were left which will be transferred to the company as soon as the remaining issues gets resolved. Pakistan has also to receive the remaining installment of $800 million from the sale proceeds of PTCL.

The Islamic Development Bank (IDB), the official said, has also linked its funding for Neelum-Jhelum with the release of $ 448 million by the EXIM bank of China.

“The IDB had committed $ 357 million loan for the project out of which some of it has been disbursed, but linked the releases of remaining installments of the loan with the release of $ 448 million by Chinese EXIM bank saying if the main donor is reluctant then how it is possible for it to fund the project.”

The Chinese donor has delayed the credit line of $ 448 million owing to which the project is feared to get delayed and if it does not get completed by 2016, then India will be able to complete the Kishanganga project on the Neelum river in held Kashmir first and under this scenario India will have the water priority rights of Neelum river under 1960 Indus Waters Treaty.

The source said that top functionaries of the government had recently met the Chinese ambassador in Islamabad and sensitized him about the inordinate delay in the release of buyers credit of $ 448 million by the Chinese EXIM bank. The ambassador assured the authorities that he would use his influence to help expedite the process.

However, an EAD official said there are indications that Pakistan and China EXIM bank would sign the agreement in the next 10 days ensuring the release of the credit line soon.

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