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Neelum-Jhelum project

The work on Neelum-Jhelum Hydropower Project of 969 MW has almost come to a halt due to non-payment of Rs7.8 billions to the Chinese companies by the government of Pakistan. This mega-project was approved in 1989 and was supposed to begin in 2002 and completed in 2008. However, this time-frame experienced significant delays due to non-availability of funds. Work on the project began in 2008 after a Chinese consortium was awarded the construction contract in July 2007 and it is expected to be completed in 2016. The initial cost of the project has increased manifold – from Rs15 billion in 1989 it rose to Rs333.191 billion. The Neelum-Jhelum project’s early completion is of immense importance to Pakistan because a prolonged delay will put Pakistan at a disadvantage regarding the controversial 330 MW Indian Kishanganga project in the International Court of Arbitration. Moreover, Pakistan would suffer a permanent loss of Rs30-35 billion per annum forever if it failed to complete the project in time.

The stoppage of work has created a financial dilemma for the Chinese companies as well as the Pakistani suppliers and subcontractors who have obtained funds from banks. The induction of tunnel boring machines costing Rs19.5 billion has been delayed. This was expected to accelerate the work so that the project could be completed 18 to 22 months ahead of its revised scheduled time. However, these machines will be inoperable in the absence of funds because they operate on fuel, not water. The president, prime minister, minister of finance, minister of water and power, and the chairman of Wapda should make sure that funds are released immediately so that the billion-dollar mega project of national importance is completed.

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