May 28 - June 3, 20

The EXIM Bank of China, though after a long delay, has finally approved $450 million to finance the 970-megawatt Neelum Jhelum hydropower project near Muzaffarabad in Azad Kashmir, which would add over five billion units of cheap electricity to the national grid every year by 2016. Confirming this, the official sources told this scribe that the economic affairs ministry has also received an official intimation from the Chinese bank in this regard.

Sources also said the venture needed $700 million foreign funding to complete the project, which has already been committed by Kuwait, UAE and Saudi Funds for Development and the Export-Import Bank of China. The project was originally planned more than a decade back at almost half of the present cost, but the costs had witnessed skyrocketed rise because of delays in execution for various reasons including the change in the original design. But, a detailed examination of the figures has shown that the primary cause for the increase was delay in execution. During this period, however, major groundwork, which amounts to about 25 to 30 percent of the total work, has already been completed.

On completion, the project, despite providing electricity at comparatively much cheaper rates, would earn about Rs40 billion in revenues annually and would, therefore, be able to pay off all the loans and recover the entire cost of construction within seven to eight years.

Despite this fact, why the EXIM bank was hesitant to release this amount loan which was committed by the top Chinese leadership during the visit of President Asif Ali Zardari to Beijing in 2009, is not understandable. This delay in the release of loan amount has almost come to a halt and this delay was causing concerns in the relevant circles for some other reasons too.

The latest decision of the EXIM bank of China has provided much needed relief to the Neelum Jhelum hydropower project company as this will enable them to fully accelerate the construction work to meet the deadline.

The project which was earlier feared to get delayed on account of cash flow constraints would have provided an edge to India, which is building Kishanganga hydroelectric project on the same Neelum river on its side of Kashmir. According to Indus Water Treaty, the country that first completes its project on the Neelum tributary will have priority rights on the water of Neelum River. Now with the approval $450 million loan for the project has bailed out Pakistan and the concerns over slowdown in pace of completing the project have evaporated.

According to the concerned officials, now the project will be completed on time in 2016 as $93 million high- tech tunnel boring machines are on way to project which would help expedite the pace of work and "may be we complete the project before the time schedule."

Dr. Waqar Masood, secretary of the economic affairs division, while talking to reporters informally at an other function, confirmed that China EXIM bank has approved the loan of $448 million for the project.

"The loan is a commercial buyer credit in nature. Now the government is in the process of completing the required documentation," he said adding that the loan will be disbursed within a month time. "China has emerged as the largest development partner and creditor of Pakistan in the last three years and its loan portfolio has increased to $3.3 billion," he said.