MWH, a global provider of environmental engineering, strategic consulting and construction services, today announced that it was selected by the Pakistan Water and Power Development Authority (WAPDA) to provide engineering and construction management services for the Neelum-Jhelum Hydroelectric Project. The project is expected to add 963MW power generating capacity at a cost US $2.2 billion, according to Business Wire. MWH is a US firm based in Broomfield, Colorado.
This hydroelectric project, first formally announced by former Minister Omar Ayub on June 10, 2007, is finally starting in earnest under the PPP government of Prime Minister Yousaf Raza Gilani. Prior to this project, the new Pakistani Prime Minister signed a deal with a Chinese company, Dong Fong, for setting up 525 MW thermal power plant with an investment of $450 million at Chichoki Mallian (Sheikhupura). Both of these projects are expected help partially close the 3000 MW gap that exists today between supply and demand in Pakistan.
The Joint Venture, Neelum-Jhelum Consultants, lead by MWH and consisting of MWH, Pakistani firms NESPAK, ACE and NDC, and Norwegian firm NORPLAN, will provide design, construction drawing preparation and construction management services for the next eight years.
Located in the Muzaffarabad District in the state of Azad Jammu Kashmir, approximately 85 miles (138 kilometers) from Islamabad, Pakistan, the Neelum-Jhelum project is one of several major projects planned to increase Pakistan's hydroelectric generation capabilities to meet the growing energy needs of the country. The project is part of the Pakistani government's "Vision 2025 Program," envisaged to improve energy development in the country. In addition, Neelum-Jhelum is a priority project in Pakistan's Indus Basic Water Treaty with India. This project has been in the works for eight years but delayed due to various problems including the land acquisition costs in Azad Kashmir. Any further delays would jeopardize Pakistan's right to the water from Neelum river (Called Ganga in India) under the Treaty with India.
In the late 1960s, MWH helped to develop and implement Pakistan's Indus Basin Project. It was the result of a treaty between Pakistan and India, which ended a long and bitter dispute between the two countries over the use of water from the Indus River and its five tributaries. The first large dam built as part of the Indus Basin Project was the Mangla Dam, completed in 1968. An essential part of the project is the MWH -- designed spillway for a 1.1 million cubic feet per second discharge. The company provides water, wastewater, energy, natural resource, program management, consulting and construction services to industrial, municipal and government clients in the Americas, Europe, Middle East, India, Asia and the Pacific Rim.
Both power and water projects are crucial for Pakistan's economy in the intermediate and long term. The challenge for the Pakistani government is to make up for the neglect of several years in the power and water sector. It means that the government must ensure that the water and power projects get started and stay on schedule to begin to address the growing shortage of water and electricity in Pakistan.
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Here's a recent Daily Times report about Bhasha Dam in Pakistan:
ISLAMABAD: Deputy Chairman Planning Commission, Sardar Asef Ahmad Ali on Thursday said some changes had been made in Bhasha Dam project, particularly in its power component. In an exclusive interview with Daily Times he said the power component of Bhasha Dam would be run on Public Private Partnership basis so that burden on the government kitty might be reduced. In this regard he said that a ‘Company’ would be established, which would be converted into an international consortium. The consortium would be able to get equity as well as funds from the International Financial Institutions (IFI), Kuwait Funds and others.
Once the Company is established, he said that there would be no problems for funding, as it would be able to borrow from the market and repay the loan. “The government has assigned me to structure the Company,” the Deputy Chairman said and added that he would invite all power distribution companies including KESC to purchase its shares. The government and WAPDA might also purchase its share and later, expatriates would also be offered shares in it. In this manner, it would enjoy the status of an International Company. Its marketing plan would be carried out at world-class top companies and arrangements would be made to conduct internationals show for it. In this way, all requirements for making it an ‘Equity’ would be fulfilled, he added. All these measures have been carried out for the first time in Pakistan.
About PSDP (Public Sector Development Programme) he said that as a routine, the government releases 19 to 20 percent developmental funds in first quarter of the current fiscal year (July-September 2009). Reason for low allocation was the slow process of revenue generation through new measures adopted in the annual budget. PSDP releases for second quarter (Oct to Dec 2009) was already in progress. If the funds are released in time, he expressed hope that the government would be able to achieve its targets. At present, he said there was no indication by the ministry of finance regarding cut in PSDP 2009-10.
Currently the country’s revenue generation remained stagnant at 8.5 percent of the GDP, which he termed as lowest in the world. The government wanted to increase it to the level of 11 percent of the GDP. “Finance Minister Shaukat Tareen informed me that the government identified 2 million new taxpayers in the existing system and if it remains successful, then the PSDP will be remain as it is”, he maintained.
US funding of huge dam project in Pakistan angers India, according to Miami Herald:
ISLAMABAD -- Even as U.S.-Pakistani cooperation on anti-terrorism programs is withering, the United States is considering backing the construction of a giant, $12 billion dam in Pakistan that would be the largest civilian aid project the U.S. has undertaken here in decades.
Supporters of a U.S. role in the project say American participation would mend the United States' tattered image, going a long way toward quieting widespread anti-Americanism amid criticism that the U.S. lavishes money on Pakistan's military while doing little for the country's civilian population.
Approval of the project still faces many hurdles. India objects to the dam because it would be in Kashmir, an area that India also claims. The project also is likely to face opposition from Pakistan's critics in the U.S. Congress, who've called for all aid to be cut off after Osama bin Laden was found hiding in northern Pakistan earlier this year. Recent Pakistani actions, including allegations this week that Pakistan had allowed Chinese military experts to inspect the wreckage of an American stealth helicopter that crashed in the bin Laden compound, are likely to inflame such criticism.
Still, proponents of U.S. aid for the project recall that the United States was popular in Pakistan in the 1960s and '70s, when Washington backed the construction of two enormous dams, Tarbela and Mangla.
"Getting involved in a long-term project like this is very compelling for us," said a senior U.S. official who asked not to be identified because no final decision on the project has been made. "This would be a huge demonstration of our commitment to Pakistan and our faith in the country's future."
The Diamer Basha dam would provide enough power to overcome Pakistan's crippling electricity shortage. Proponents of the project also claim that its water storage capacity, in a 50-mile-long lake that would be created behind the dam, would be so great that it would have averted last's years devastating floods, which deluged a fifth of the country, pushed 20 million people out of their homes and caused an estimated $10 billion in damage.
The U.S.-Pakistani alliance since 2001 has been plagued by accusations in Washington that Islamabad is playing a "double game" by secretly supporting Afghan insurgents, while Pakistan thinks it's been bullied into acting against its own interests and that it's been unfairly blamed for American failures in Afghanistan. The unilateral American raid that killed bin Laden in May humiliated Pakistan's powerful military, causing anti-terrorism cooperation to be all but halted.
Read more: http://www.miamiherald.com/2011/08/16/2361801/us-considers-funding-pakistani.html#ixzz1W4Cr14es
ADB assures to consider financing for Bhasha Dam,reports Daily Times:
Asian Development Bank (ADB) is considering various options in a positive direction to finance multi-billion dollars Diamer Basha dam project.
This was stated by ADB Director General Jaun Miranda, while talking to the Federal Minister for Water and Power, Syed Naveed Qamar here today. A three-member ADB delegation called on him here on Friday.
The ADB also agreed to provide counter guarantees to the investors for investing in the wind power generation projects in Pakistan, he assured the meeting. The wind power generation projects will generate cheaper electricity in the country. Miranda said that the bank is already providing financial assistance for power distribution enhancement project and will continue its support for the project in order to improve the energy efficiency. Transmission and distribution system and energy loss reduction programme are also being funded by ADB for all distribution companies (Discos). He said that the bank is ready to expand its funding for replacement of all obsolete distribution network. The bank will provide financial assistance for free distribution of 30 million energy saver bulbs in the country. These energy savers will help reducing peak hours demand over 1000 Megawatts. He also said that the bank would fully support the energy conservation initiatives of the government.
The Minister for Water and Power appreciated the role of the ADB for improvement in energy sector and said that the support of the bank for energy efficiency programme will help save energy and reduction in the transmission and distribution losses. The Minister also thanked for providing counter guarantee facility for wind power projects. The Minister also briefed the delegation regarding new energy sector improvement initiatives like operation and maintenance contract of generation companies through private sector and conversion of existing independent power producers to cheaper fuels. He also asked the ADB to finance mega-water and power sector projects to end the crises in these sectors.
The ADB director also discussed current status of power sector reforms, energy efficiency programmes, central power purchasing agency, independence of Discos. The Minister also assured that all efforts would be made to timely complete the existing projects being funded by ADB.
http://www.dailytimes.com.pk/default.asp?page=2011\08\27\story_27-8-2011_pg5_2
Here's a Business Recorder news report on delays in Neelum-Jhelum construction project:
The pace of work on the important Neelum Jhelum hydroelectric project is very slow, as only 22 per cent work has been completed so far against the targeted 50 per cent. The detailed feasibility study of the 969 MW project was completed in 1997 and the revised Project Cost-I (PC-I) was approved by Executive Committee of the National Economic Council (Ecnec) on February 28, 2002 at a total cost of Rs 84502.26 million.
The work on the project was started in January 2008 and October 2015 was fixed as completion date. By 2011, about 50 per cent work was to be completed, however, only 22 per cent work has been completed so far, making it difficult the project would be completed on time, sources told Business Recorder.
Subsequent to the 2005 earthquake the PC-1 was revised again, which also affected the cost of the project and its completion period. They said after passage of almost half period of the project only 22 per cent work has been completed, which shows slow pace of work on the project.
Sources further revealed that till June 30, 2010, a sum of Rs 16897.243 was spent on the construction of the dam. In 2010-11's Public Sector Development Programme, Rs 14700 million were allocated and only Rs 3953.244 million have been spent so far. While a total amount of Rs 20850.487 million has been spent on the project so far.
Total required land for the project is 3400 Kanals and land awarded to Wapda is 3300 Kanals with another 100 Kanals required for which land acquisition process is underway. In addition there is an issue of transfer and possession of 26 Kanals that has not yet been handed over by the AJ&K government which is also causing delay in completion of the project.
Source maintained that if the project was not completed on time, the total cost of the project could increase as the cost of raw materials was increasing day by day. They added if the government was serious about resolving the electricity shortages then it should take appropriate measures to ensure timely completion of the project.
http://www.brecorder.com/component/news/single/595:news.html?id=1189959
Here's an Express Tribune update on Neelum-Jhelum hydroelectric project:
ISLAMABAD: As Water and Power Development Authority (Wapda) completes 28 per cent work on the 969MW Neelum-Jhelum Hydropower Project, the cost of which has gone up from Rs84 billion to Rs333 due to inordinate delay, Pakistan is pushing China to release the promised $500 million loan to bridge the shortfall of funds.
The cost of the project has increased after it was redesigned in the wake of the 2005 earthquake. Work on the project is progressing but the shortfall of funds and issues in land acquisition are still problems that need to be addressed to complete the project.
Wapda has also had to procure two Tunnel Boring Machines (TBMs) at the cost of Rs17 billion to overcome the delay of two and half years. “We will be able to reduce implementation time by two years by using TBMs that are expected to reach Karachi by January 25, 2012,” sources said.
Average completion level on the project is 28%. Some areas are progressing better, like the powerhouses, which are at 40% completion.
In the powerhouse, four turbines with a capacity of 242MW each will be set up. A separate plant of 45MW will also be set up at the diversion tunnel which was completed on October 15. A total of 60 kilometres of tunnels have to be completed including 35.6 kilometres of tunnels needed to push water to drive the turbines.
“As much as 17 kilometres have been completed,” sources said adding that work was underway on the coffer dam that is expected to be completed by February next year.
Sources said that a consortium of six banks including Exim Bank of China is providing financing for the project. “We are pushing Exim Bank of China to extend a $500 million loan to bridge the shortfall of funds,” sources said adding that other banks in the consortium were also being asked to extend additional $700 to $800 million loans.
The project cost has escalated on different accounts including Rs38 billion due as interest on loan, Rs45 billion on account of depreciation of rupee against dollar, from Rs45 to Rs86. Further cost increases were because of rate of land acquisition and procurement of two TBMs that cost Rs17 billion.
The government is to procure total 3,900 kanals of land out of which about 68 kanals is still outstanding, including the crucial portion of about 18 kanals for which payment of Rs1.2 billion has already been made to the AJK government.
“Despite payment, local people are reluctant to hand over land which may further delay the completion of the project,” sources added.
http://tribune.com.pk/story/302326/neelum-jhelum-project-pakistan-pushes-china-to-release-promised-500m/
Here's Express Tribune report on ADB financing of Bhasha dam:
Pakistan and the Asian Development Bank (ADB) have agreed to sign a memorandum of understanding (MoU) for technical and financial cooperation in the construction of multi-billion-dollar Diamer-Bhasha Dam.
The MoU will be inked next week, said the Ministry of Water and Power after a meeting between Water and Power Minister Naveed Qamar and the Manila-based lending agency’s Director of Energy Wing Rune Stroem on Friday.
Stroem is leading a delegation to assess detailed engineering design of the dam, which will store 8.5 million acre feet of water for irrigation purposes and generate 4,500 megawatts of electricity.
The delegation, the first formal mission on Diamer-Bhasha Dam, will also review the cost component and consider options to make it a bankable project, as the ADB alone cannot finance the full cost estimated at $11.2 billion.
The government and the ADB also agreed to organise roadshows in three different countries with the assistance of international lenders, equipment suppliers and others concerned for seeking co-financiers for the project, said the water and power ministry.
An official of the Economic Affairs Division said the ADB has not yet formally conveyed the exact size of the loan but there are indications that the agency may extend up to $4.5 billion that will meet 40 per cent of financing needs.
After a refusal in 2008, the World Bank also recently expressed its willingness to finance the project, said the official. The US has also committed to financing the project under the Kerry-Lugar Act, but it also has not given the exact size of its share in the financing.
Stroem said the mission was giving highest priority to Diamer-Bhasha Dam and looking for its early execution. Praising the progress made so far on the project and the efforts to resolve related matters, he said the project would help improve socio-economic life of people and bring prosperity in the country.
Naveed Qamar said the ADB’s role as lead financier of the project would help attract other donors and sponsors to fund mega projects in Pakistan. He said the project would be a milestone for the country’s economy and meet water and power needs.
The government is attaching high priority to the project and has completed all formalities for its construction, hinting at its approval at the Council of Common Interests, the highest constitutional body on inter-provincial matters.
Qamar said most of the land for the project had been acquired and the resettlement package was being implemented. The ADB mission also discussed the energy efficiency programme and matters relating to other mega water and power projects being executed by the government with the cooperation of the bank.
Stroem said the bank was also considering various other projects for financial and technical assistance in the water and power sector.
Matters relating to power sector reforms and rehabilitation of electricity generation companies were also discussed. The mission was told that rehabilitation of power companies was under way, which would be completed at the earliest.
http://tribune.com.pk/story/304366/diamer-bhasha-dam-adb-agrees-to-provide-technical-financial-support/
ADB asks Pakistan to tie all loose ends to proceed with Bhasha dam construction, according to Daily Times:
The Asian Development Bank (ADB), the lead financer of the Diamer-Bhasha Dam on Tuesday suggested Pakistan to focus on resolution of revenue sharing issue between Khyber Pakhtunkhwa (KP) and Gilgit Baltistan (GB) as well as affected population and address issues of environment degradation for smooth execution of the mega project.
ADB’s Head of Energy Division Rune Stroem while speaking to a select group of journalists along with the ADB’s Country Director to Pakistan Werner Liepach after conclusion of his visit to Pakistan aimed at ‘critically reviewing the mega project’. He said, “ADB is fully aware that there will be strong debate on revenue sharing and ADB can give advice but at the end the issue will have to be decided by the Council of Common Interests.” The KP government is disputing over the ownership of 18 kilometres long belt with GB government in a bid to get share in income from the power generation. The GB legislative assembly has passed the resolution against the provincial government claim and intends to take the matter to the Supreme Court if it is not amicably resolved.
“Pakistan has not been focusing on social aspects of the project as much as one could hope,” Stroem said and added that the success of the project hangs on local people satisfaction with resettlement activities. “The resettlement work has been done but still there are gaps where the government needs to bring in improvement as per international standards,” he added.
Explaining the gaps, Stroem said individual activities were going on at relatively small scale and lots of pilot projects have been initiated. He said the legal dispute over sharing of revenues between GB and KP has to be worked through and on environment no sufficient work has been done yet.
Stroem said there was a need to ensure minimum water flows during storage to offset negative impact on the environment. He said no water flows at the time of construction and storage will have adverse affects.
Having an estimated cost of $11.20 billion the project is planned to be completed in 12 years that will generate 4,500 megawatts (MW) electricity besides storing 8.5 million acres feet water for agriculture purposes. The project’s groundbreaking has been performed twice. The ADB official said that the agency has not yet fully assessed the price and completion period but the total cost may change due to price escalation.
Stroem said that an unwritten agreement has been reached with the government. According to that the ADB will play its role as senior lender, co-financer and will be the financial adviser to Pakistan on the project. He said next week both the parties will review the draft of the Memorandum of Understanding that clearly defines the role of the ADB in project execution.
He said the project can’t be donor-driven instead the government is the primary driver and it’s cognizant of the fact. The ADB was helping the government to structure the project and make it bankable. “It is the most complex and the most comprehensive project the ADB has ever financed.”
Liepach said that the ADB has not yet framed clear views on the dam financing requirements but the export credit will be major source of financing. Other than the export credit the international financial institutions and commercial financing would also be availed to complete the project, he added. Stroem said the Water and Power Development Authority will evaluate the bids for the project but the ADB will also review to ensure transparency. The ADB has strong anti-corruption policies and the agency’s involvement will give more credit to the project, he added.
http://www.dailytimes.com.pk/default.asp?page=2011\12\14\story_14-12-2011_pg5_9
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