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Rs24 bn diverted to Neelum-Jhelum project

Prime Minister Raja Pervaiz Ashraf has declared the 969 MW Neelum-Jhelum Hydropower Project as a top strategic priority of the country and diverted Rs24 billion to it from other water projects.

The prime minister took notice of the issue after he was told that the project was facing a $1.5 billion deficit and the ongoing construction work on the project could come to a halt.

Analysts say if that happens India could get an edge to complete its Kishenganga Project on the same river before it enters Pakistan and could claim priority water rights.

Sources say Pakistan is constructing the Neelum-Jhelum project at a cost of Rs270 billion.

The prime minister had convened a high level meeting attended by Finance Minister Dr Hafeez Shaikh, Deputy Chairman Planning Dr Nadeemul Haq and Water and Power Development Authority (Wapda) Chairman Syed Raghib Abbas besides other top officials. A committee was constituted to finalise an emergency financing plan.

The project had received a big jolt when the Chinese Exim Bank refused to release $448 million loan linking it to the restoration of the Safe City Project in Islamabad which has been stopped by the Supreme Court of Pakistan.

Likewise the Abu Dhabi Fund linked its loan with the resolution of the issues pertaining to the Pakistan Telecommunication Company Limited (PTCL) properties, which are not being handed over to Etisalat, the UAE company currently running PTCL after its privatisation.

The committee formed by the PM has forwarded its proposals to the prime minister containing the plan to immediately fund the project. The Planning Commission has cut allocations earmarked for various other water projects and diverted the funds towards Neelum-Jhelum so that its completion could be ensured by December 2016.

To a question an official said around Rs24 billion earmarked for other water projects had been diverted to Neelum-Jhelum. Of this about Rs14 billion will be diverted from Bhasha Dam and Rs10 billion from other water projects. “When we get loans for Neelum-Jhelum project we would give the money to the other water projects,” the official said.

To raise funds for Neelum-Jhelum, Wapda will issue Sukuk bonds worth Rs20 billion in two stages and the government would provide Rs4 billion from Wapda’s Rs130 billion receivables that Pakistan Electric Power Company (Pepco) owes it.

The ministry of finance, meanwhile, has rejected the proposal of a credit line of $500 million from the Standard Chartered Bank as it was decided that the top leadership would continue to pursue the Chinese Exim Bank for a $448 million loan once the new Chinese leadership takes charge in March.

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