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  • Feb 1st, 2005
  • Comments Off on Neelum-Jhelum power project: ban on foreign currency loans to be relaxed
The government will relax ban on taking foreign currency loans for 969mw Neelum-Jhelum hydropower project ready for international competitive bidding, well-placed sources in the finance ministry told Business Recorder. "Pakistan wants to start construction work on war footing on Rs 95 billion project on River Neelum, as negotiations with India on 330mw Kishanganga are not making much headway," sources added. The project would have gross head of 420ft and generate 969mw power through 17km long tunnel by diverting water of Neelum to Jhelum.

Sources said the finance ministry basically opposed relaxation in the established policy, saying the government had already made a decision that it would not extend sovereign guarantee for foreign currency loan for public sector entities and autonomous bodies, adding that when terms of buyer's credit were not known it was not possible to give confirmation of the sovereign guarantee.

However, it was only possible when the ministry of water and power would move to the economic co-ordination committee (ECC) of the cabinet through a summary after clearance of financial terms and conditions of buyer's credit by the finance division, sources maintained.

Sources further said local component of Rs 60 billion would be raised by the Water and Power Development Authority (Wapda) through local banks or increase in tariff while the foreign component of Rs 35 billion would be arranged as suppliers credit.

The much-delayed Neelum-Jhelum hydropower project was of vital importance because of Pakistan's rights on waters of River Neelum.

Kishanganga hydropower project, being constructed by India, would divert water to Jhelum upstream of Pakistan's project site, thereby, reducing the power output of Neelum-Jhelum project.

Water and Power secretary has recently discussed pace of work on Kishanganga project by India and directed Pakistan Commissioner for Indus Waters to take up the issue more vigorously.

Pakistan was anxiously waiting formal response from the World Bank regarding appointment of neutral expert to resolve controversy on Baglihar hydropower project.

Copyright Business Recorder, 2005


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