Apr 25 - May 1, 2011

Pakistan currently faces chronic power shortages due to rapid growth in demand for electricity. Power outages increased significantly due to the widening gap between electricity supply and demand over the past three years. It has adversely affected the industrial output and economic growth of the country. Analysts suggest that Pakistan needs to shift towards its renewable sources such as water, wind, and sunlight and reduce the dependency on conventional thermal based generation facility owing to unstable prices and supply of oil and gas across the globe.

Hydroelectric power is a renewable form of energy, as clean electricity can be generated constantly so long as sufficient water is available. Pakistan has a hydropower potential of more than 40,000MW, while it has managed to tap only 6,500MW.

China has sought free hand for making investment of an estimated $15 billion in the country's hydel power sector. China plans to add 8,920MW of electricity to the national grid by making investments in hydropower projects in energy-deficient Pakistan. It has not only shown interest in setting up hydroelectric and renewable energy sector projects but is also willing to manufacture wind power equipments in the country.

The state-owned China Three Gorges Project Corporation (CTGPC), operator of the world's largest dam, has demanded the Pakistani government to remove legal bottlenecks in the award of contracts for mega hydropower projects - Bhasha, Bunji, Kohala and Karot. Pakistan has already signed Memoranda of Understanding with the CTGPC for the construction of 7,100MW Bunji and 1,100MW Kohala hydropower projects in Gilgit-Baltistan during President Asif Ali Zardari's visit to China in July last year.

This month, a visiting 10-member delegation led by CTGPC Chairman Cao Guangjing held meetings with top officials in Islamabad to sort out the differences in the implementation of the MoUs signed last year. The hydropower projects delayed, as Chinese firms were not interested in following the Public Procurement Regulatory Agency (PPRA) rules or participating in international competitive bidding (ICB), instead they demanded award of projects on single-bid basis. The government has assured Chinese investors that it would expedite progress on removing the legal barriers that are hindering investment in the country's hydel power sector.

The CTGPC is the operator of Three Gorges dam on Yangtze River, which is one of the biggest hydropower-complex projects in the world. With a registered capital of RMB 111.598 billon, CTGPC is a wholly state-owned enterprise. It was founded in September 1993 as part of the initiative to build the Three Gorges Project and develop the Yangtze River. CTGPC is strategically positioned to become a clean energy conglomerate specializing in large-scaled hydropower development and operation. Its principal operations include hydropower project engineering, construction and management, electricity production, and provision of related technical services.

The Chinese company is also willing to join hands with the Water and Power Development Authority (Wapda) for development of various large-scale hydropower power projects in the country.

CTGPC recently signed an agreement for the construction of a 720mw hydel power project at Korrat bordering Punjab and Azad Kashmir at a cost of $1.2 billion. Karot Dam site is located on Kahuta-Kotli Road, nearly 68 Km from Rawalpindi in Punjab province. The Karot hydropower project has been proposed on the River Jhelum, 74 Km upstream of Mangla Dam.

President Zardari, during his sixth visit to China in July, met with the Chairman of the Chinese firm, who showed willingness to invest $10 billion in hydropower projects and an MoU was signed between Ministry of Water & Power and CTGPC on Bunji hydropower project. Last year, New Delhi protested over the China's plan to launch Bunji project in AJK.

Kohala hydroelectric power project in AJK would require a 16kms tunnel, a diversion from Seran village and a powerhouse in Barasala. The project would be linked to the national grid at Rawat near Rawalpindi through a115kms 500kV transmission line.

In October 2009, Sinohydro Corporation, a Chinese company showed interest in the Kohala project. Sinohydro Corporation is already involved in the Gomal Zam Dam and Khan Khawar and Dubair hydropower projects in the country.

Neelum-Jhelum hydroelectric project will be built on Neelam river, which flows from India. Neelam enters Pakistan in the Gurais sector of the Line of Control, and then runs west till it meets the Jhelum north of Muzafarabad.

Under former government of President Pervez Musharraf, Pakistan awarded contract of Neelum-Jhelum to a consortium comprising China Gezhouba Group Company (CGGC) and China Machinery Export Corporation (CMEC). CMCE, a Beijing based contractor, had been awarded mechanical and electrical works of the project.

Neelum-Jhelum project has one of the most difficult designs, as it involves construction of a 47-km tunnel, passing underneath the bed of Jhelum River, to divert Neelum River. The project site near Muzaffarabad is blessed with abundant hydropower potential by virtue of its topography, meteorology and hydrology. The rivers Jhelum and Neelum along with their tributaries flow through AJK. They have immense hydropower potential in their laps.

Neelum-Jhelum project was scheduled to commence in July 2002 and to be completed in June 2010. The project could not come in a take-off position owing to the issue of foreign exchange funding. The project was delayed by more than six years due to lack of public-sector allocations for the project.

India objected to the project on the ground that it did not meet some of the conditions stipulated in a river sharing agreement signed between the two countries in 1960.

The 272-metre-high Diamer-Bhasha dam with a capacity to generate 4,500MW of electricity per day would be one of the world's highest dams, as compared to the famous 642 feet high Itaipu dam in Brazil/Paraguay and the 607 feet high Three Gorges dam in China. Work on the $12.6 billion Bhasha dam delayed. The project is scheduled to be completed in 2016. The project is located on the Indus River, 165 km downstream of Gilgit and 40 km downstream of Chilas. China has already agreed to extend Rs10 billion supplier credit out of total cost of Rs12 billion for construction of Karakorum Highway road to establish linkages with the site of the Basha dam, which will help to transport heavy machinery to the site of the dam.

For up gradation of the Karakoram Highway, the two countries have already agreed to bear cost of 15:85 per cent ratios respectively over the three years 2008-2011. Islamabad has already released its share of Rs2 billion for construction of this linkage road to the Basha dam site. The major chunk of 85 per cent cost of this project will be borne by China and Beijing will provide supplier credit to Islamabad to this effect.