Neelum-Jhelum hydropower project: Pakistan may get $948 million loan

ISLAMABAD: Pakistan may get a loan amounting to $948 million from China, Saudi Fund for Development and Islamic Development Bank (IDB) which would be adequate to meet 58 percent of the total cost of the 969MW Neelum-Jhelum Hydropower Project. Sources told Business Recorder that Pakistan would receive $448 million from China under Pak-China co-operation in hydel power generation agreement recently signed between the two countries during President Asif Ali Zardari visit.

The other two financiers IDB and Saudi Fund for Development have also committed $300 million and $200 million respectively. Pakistani and IDB officials are expected to hold meetings by end of Feb 2009 to finalise the modalities of the deal. The construction contract of the project has already been awarded to a Chinese company and the work is in progress.

The project cost is Rs 128.4 billion and Pakistan is seeking assistance from different countries to meet the cost of the project, sources added. Sources said the government has also requested Kuwait Fund for Development and Abu Dhabi Fund for Development to provide financing to carry out Neelum-Jhelum Project.

The government recently arranged the visit of representatives of these funds to visit the site of the project. The Water and Power Development Authority chairman also visited the site along with the delegation. The project is located in the vicinity of Muzaffarabad in Azad Jammu and Kashmir. It envisages the diversion of water of Neelum River through a tunnel into Jhelum River. The government had also imposed 10 paisa per unit surcharge during last year to be charged to electricity consumers to generate financing for the project. The project would be completed with Chinese assistance in eight years and officials described it as another symbol of Pak-China friendship.

The representatives of Funds were informed that Pakistan was currently facing power shortfall and the Neelum Jhelum Project would help meet the shortfall. The Pakistani authorities said that a power project would greatly help the government to meet its energy requirements, badly needed for economic development of the country.

The construction of Neelum-Jhelum Project would enable Pakistan to get water usage rights and any further delay in construction of the said project would allow India to use water for power generation under the Indus Water Treaty brokered between the two countries by the World Bank.

Source: Business Recorder