From Shamim Ahmed
Feb 14 - 20, 2000
Ghazi Barotha hydro power project which was suffered because of many
lapses in the pest mainly on the part of WAPDA is likely to be delayed further by another
18 to 24 months as WAPDA has not so far been able to arrange its share in the cost as the
matching rupee component which is a precondition for release of funds from foreign donors.
The commissioning of the project which was seheduled in June 2002 cannot take place before
June 2004 even if WAPDA pays Rs. 15 billion as its share in the next 2/3 months.
Lack of preparedness on the part of WAPDA and non completion of basic
requirement such as acquisition of land, payment of compensation and resettlement
programme of affectees even in the initial stages caused lot of resentment among the donor
agencies such as World Bank, Asian Development Bank, Islamic Development Bank and Japan.
It was after repeated protests, reprimands and even threats of termination of agreement
that WAPDA completed preliminaries and actual work started on the project after loss of
over one year. The reports indicating apprehension of delay of another 2 years in the
completion of the project is most deplorable. The major and rather the only hurdle was
stated to be the serious resource crunch faced by Wapda which was not able to maintain a
regular flow of investment in the construction of this project which would have a capacity
to generate 1,450 megawatt of power. The resource gap estimated at Rs. 15 billion
constitutes Wapda's share in the project, the foreign currency loan assistance from the
World Bank, Asian Development Bank and the government of Japan is available. However,
since the matching rupee funds have not been forthcoming from Wapda according to the
timeframe of construction work, the inevitability of delay in the completion of the
overall project appears to be difficult to overcome unless the government takes some
initiatives to deal with the crisis.
Ghazi Barotha dam is crucial to the country's programme to speedily
improve the power supply. The delay in the construction of the proposed dam would further
postpone the accomplishment of several development plans. Moreover, hydel power generation
is much cheaper than thermal power. The power generation from this project would thus be
most economical for the country. In this context, any further loss of time in the
development of the country's hydropower potential cannot but be seen as a setback in the
vital energy sector.
The total cost of the project has been estimated at 2.250 billion US
dollars out of which $ 360 million or 16 percent has been sanctioned by the World Bank
with maturity period of 20 years. Other donors include the government of Japan with a loan
of $ 350 million (15.6 percent), Asian Development Bank with $300 million (13.3 percent),
government of Germany with $ 150 million (6.6 percent), European Investment Bank with $ 40
million (2.7 percent) and Islamic Development Bank with $ 40 million (2.7 percent) while
Wapda's internal cash generation would provide Rs. 850 million beside $ 153 million being
Wapda's share in foreign exchange.
A source in the Ministry of Finance told this correspondent that the
current stage of completion is about half a way behind the schedule, and it needs at least
fifty percent increase in the speed of work just to catch up to it. Due to lack of
availability of rupee component payment to affectees had become a problem.
Since it is not clear as to when the GoP funds will be made available
as per schedule the position of the release of foreign component is also not crystal
clear. The World Bank alone has a US$ 360 million financing component. The source said
resource crunch is mainly due to WAPDA's poor financial health. Because of a massive
overdraft and lingering debt it is finding difficult to fund its investment commitments,
even for the running projects. The government has already decided to provide Wapda with a
liquidity injection and to write off Rs. 35 billion of its debt.
It may be recalled here that the relatively slow pace of construction
of the Ghazi Barotha project due partly to the resource gap with Wapda and consequent
mishandling of private contractors including the foreign based contracting companies had
upset the foreign donor agencies about two years ago who were compelled to vigorously
suggest corporatisation and privatization of the Ghazi Barotha project. Back in 1998 the
proposal was accepted by the Ministry of Water and Power which had chalked out a detailed
plan for the implementation to this proposal.
However, the plans which were earlier supported by Wapda authorities,
were finally dropped since it backed out of its earlier concurrence. As a result of the
widening of the resource gap with Wapda, the fate of the Ghazi Barotha project appears to
have run into uncertainty. It is indeed a tragedy that an important mega project in the
power sector which is being fully supported by the international financial institutions
with loan assistance, has come to a stage when its implementation on due dates has become
doubtful. It may be recalled here that the World Bank and the Asian Development Bank in
addition to the government of Japan had been persuaded after long-extended negotiations
for their financial support to this project but now these institutions appear fed up with
the difficulties they are facing in their dealings with Wapda.