The government has rejected a high interested loan which was offered by Exim Bank of China for the Neelum Jhelum hydropower project. Exim Bank had already financed a loan for this project at 4.4% interest, but the new loan was being offered at 7%. The government rejected the loan citing its negative impact on national finances and foreign currency reserves.
The government is finding it hard to find financers for the Neelum Jhelum project ever since the Middle East financers backed out. The project cost had quadrupled from its original estimate, prompting the financers to back out. Since Axim Bank had also loaned for this project, the government was keen to finance through them again. WAPDA was keen to accept the loan terms, but the government refused it since they wanted the loan to be approved on the same interest rate.
Work started on the 969 megawatts hydropower plant during Musharraf’s tenure and it was expected to be completed by October 2015. With only 72% of the work complete, the completion date has been pushed forward to November 2016.