China bank approves $450 million loan

Attention: open in a new window. PDFPrintE-mail

China bank approves $450 million loan

ISLAMABAD - Chinese EXIM Bank, after a long delay, has now approved $450 million loan to finance 969MW Neelum Jhelum hydropower project, which would add about 5.15 billion units of cheap electricity to the national grid every year by 2016.Well-placed official sources informed TheNation that Chinese EXIM Bank after a long delay has now approved $450 million loan to finance the Neelum Jhelum hydropower project located near Muzaffarabad adding that the Economic Affair Division (EAD) has also gotten an approval from the Chinese bank in this regard.

They told that the Neelum-Jhelum hydropower project needed $700 million foreign funding to complete the project by 2016. The major financiers of the project include the Kuwait Fund, the Export Import Bank of China, the government of the UAE and the Saudi Fund for Development. Sources further told that project had originally been budgeted to cost Rs130 billion, but costs had witnessed skyrocketed rise by 154per cent to Rs330 billion. In the revised plan submitted by the water and power ministry, the main reason for the spike in costs was attributed to a change in design, but a detailed examination of the figures has shown that primary cause for the increase was delay in completion. Sources further told that more than 30per cent of the work on the project had been completed.

The project would earn about Rs45 billion in revenues annually and would therefore be able to recover its cost of construction within seven years.It is also learnt that as the Chinese EXIM bank found hesitant to release the worthy amount since 2009 resultantly the delay for unknown reasons had caused the cost of the project to rise to Rs330 billion ($3.7 billion). It was also feared that the pace of construction might slowdown providing an edge to India, which had been building Kishanganga project on the same Neelum River on its side of Kashmir because if Pakistan failed to complete its project before India, then it might lose the water rights to the upper riparian country.

Further, according to Indus Water Treaty (IWT), the country that first completes its project on Neelum tributary will have the priority rights on the water of Neelum River. Furthermore, the Neelum Jhelum Hydropower Project Company (NJHPC), a wholly owned subsidiary of the Water and Power Development Authority was set up to manage this very project.It is to be noted here that the top man of China had committed this loan during the visit of President Asif Ali Zardari to Beijing in 2009 but the Chinese Exim bank did not entrain Pakistan although three years have elapsed since the commitment of China to Pakistan resultantly the country was in contact with Islamic Development Bank, Saudi Development Bank, Abu Dhabi Fund, Kuwait Fund for the required finding.

Even IDB had committed $200 million, Saudi Fund $337 million, Abu Dhabi Fund $100 million and Kuwait Fund $30 million and the government was pursing the said donors to expedite the disbursement of their credit line for the timely completion of the project.Waqar Masood Secretary Economic Affairs Division while confirming the information pertaining the receiving of approval worth of $450 million loan to help finance the 969-megawatt Neelum Jhelum hydropower project. He also informed that documentation process in this regard would take one month while disbursement of such a hefty amount is likely within one-month.

It is worth mentioning here that Pakistan and India would come face to face in August in the Permanent Court of Arbitration (PCA) over controversial 330MW Kishanganga Hydro-Electric Power Project (KHEP) as Pakistan had already informed the Permanent Court of Arbitration (PCA) that the diversion of River Neelumís water by Indiaís controversial Kishanganga project can treacherously decrease the water availability in River Neelum by 14 percent, which might cause Pakistan an annual loss of $321 million.Sources in water and power ministry have also told that Pakistani authorities had almost completed its paper work required to stop India regarding the construction of much controversial 330MW Kishanganga Hydro-Electric Power Project (KHEP).

A high-level team comprising technical and legal experts would present Pakistanís stand in the International Court of Arbitration (ICA) as Pakistan and India would come face to face in August this year. Pakistani authorities believed that green and agriculture-rich area of Muzaffarabad would become barren after the diversion of River Neelam towards Wullar Lake, a branch of Indian controversial Kishanganga hydropower project. Further, the completion of the Kishanganga dam would lead to a decrease in water inflow up to 21 percent in the river. However, the Indians took the stance that reduction in flow would be limited to 10 percent only, while the water experts had rejected Indian stance by saying that Indian calculation about flow at Nauseri was based on annual average, which was absolutely wrong.

The place where the intake for Neelam-Jehlum hydropower project was designed, 60 to 70 percent of total flow that was approximately 343,100 cusecs at Nauseri, drained out during three to four months of the whole year after completion of the Indian project. Besides the worst impact on the Neelam Valley, the Jehlum Valley in Pakistan is stretched from Chakothi (entry point of River Jhelum) to Domel (Muzaffarabad) would also become victims of abnormal excessive flow of the River Jehlum and, the unnatural flow of water in the Basin of River Jehlum would cause flooding threats to road and built-up public/ private infrastructures in addition to agriculture losses.

Courtesy: The Nation

Forex open Market rates & comments Archive

Login Form