Welcome

Welcome to official website of PRES

Power ministry seeks Rs13.25bn tax exemption

The Ministry of Water and Power has decided to seek Rs13.25 billion worth of tax exemption on import of two tunnel boring machines, construction machines, and diesel generators for the Neelum-Jehlum hydropower project.

The Neelum-Jhelum hydropower project is facing huge deficit in financing to maintain the existing construction pace. The said tax exemption would provide some financial solace to the project.

“We are moving a summary to the Cabinet’s Economic Coordination Committee seeking exemption of the taxes as earlier extended for the machinery for Pat Feeder Canal in 1992 and on import of UAE gifted power plants in 2010,” an official said.

The government has imported the tunnel boring machines worth $93 million, which will start their work in July to help complete the project in 2016, he said.

If India completes its Kishanganga project on the same Neelum River on its side of Kashmir first, Pakistan will lose the water rights to the upper riparian country. Moreover, if Kishenganga project gets completed earlier, the Neelum-Jehlum Hydropower Project capacity to generate electricity will tumble by about 31 percent because of the reduction in water flow.

According to the Indus Water Treaty the country that first completes its project on Neelum tributary will have the priority rights on the water of Neelum River. China has already delayed the credit line of $ 448 million. We are also facing the too much delay of $ 100 million from Abu Dhabi Fund.

However, the ministry is in touch with Islamic Development Bank, Saudi Development Bank, Abu Dhabi Fund, Kuwait Fund for the required finding,” the official said.

He said that IDB has committed $200 million, Saudi Fund $337 million, Abu Dhabi Fund $100 million and Kuwait Fund $30 million and the government is pursing the said donors to expedite the disbursement of their credit line for the timely completion of the project.

The official said that in the current financial year Rs31 billion were allocated, but 20 billion are spent with shortfall of Rs11 billion. The project however, needs around Rs15-16 billion next year. The financial situation of the project got worse when Pakistan did not get the expected credit line of $448 million from China. “There is an impression that Chinese were delaying the credit line either on pressure from India or to exert pressure on Pakistani authorities to revise the financing rates of the project,” the official said.

He said that IDB has committed $200 million, Saudi Fund $337 million, Abu Dhabi Fund $100 million and Kuwait Fund $30 million and the government is pursing the said donors to expedite the disbursement of their credit line for the timely completion of the project.

Comments are closed.