During a meeting held between WAPDA, Neelum Jhelum Project Company, Ministry of Finance, and other concerned parties, the idea of privatizing the Neelum Jhelum hydropower project was rejected. Ishaq Dar, the finance minister, rejected the proposal citing valuation and financing issues would arise.
The cost of the project has already increased from Rs 130 billion to Rs 414 billion making it difficult for financiers to loan money for the project. The cost increased because WAPDA had initially withheld certain expenses from the project estimate in order to show a less estimate. After a recent review, it decided to include all the expenses, thus significantly increasing the cost.
If the project is to be privatized, 2004 Public Procurement Rules will apply, making the process to find financers a six month process. This time frame is sufficient for Public Procurement Regulatory Authority to carry out transparency and anti-corruption tests but would delay the completion of the project.
During the meeting, it was revealed that financing arrangement with the National Bank of Pakistan and a number of local banks had been finalized for Rs 100 billion Islamic Sukuk bonds. A $576 million loan through China Axim bank had also been approved. Other financial sources are also being explored.
The government is determined to set up power plants across the country in order to tackle the energy crisis. With the demand for electricity increasing day by day, it is estimated that the energy issue won’t be solved until 2018.