Chinese company refuses to build power project as joint venture with Wapda

China International Water and Electric Corporation (CWE), has reportedly, refused to build 1100 MW Kohala hydropower power project as joint venture with the Water and Power Development Authority (Wapda), well-informed sources told Business Recorder.
The Economic Co-ordination Committee (ECC) of the cabinet, in its meeting on March 16 presided over by the Finance Minister. Dr Abdul Hafeez Shaikh had directed Chairman Wapda, Shakil Durrani to negotiate the project with the Chinese firm.
The sources said when Chairman Wapda contacted the local representative of the Chinese firm and offered to establish the project as a joint venture the latter regretted entering into any such agreement with Wapda. According to sources there is a confusion between the government and the Chinese firm over the legal status of the document signed in 2008. Wapda argues that the project should be awarded on International Competitive Basis (ICB) instead of awarding it to a single firm in violation of PPRA Rules.
Chinese firm, in a latest letter to the GoP claimed that the signed document was an agreement and not a Memorandum of Understanding (MoU) as was being stated by the Ministry of Water and Power. Official documents reveal that MoU was signed on October 16, 2008 in Beijing between the Ministry of Water and Power and CWE for the implementation of the project located on River Jehlum in Azad Jammu and Kashmir (AJ&K). Earlier, the project was approved by Ecnec on August 23, 2006, for carrying out feasibility study, detailed engineering design and tender documents through Wapda.
The ECC, while reviewing the implementation status of the decisions made in its March 1 meeting, desired the case to be brought before it, if there were some hurdles. In light of this, the Ministry has submitted the case before ECC for implementation of the project in private sector.
In the light of ECC directives, the Ministry of Water and Power has prepared a summary seeking a waiver of the requirement of PPRA Rules as, according to the Ministry, the project was awarded to CWE through a MoU. Wapda maintains that PPRA Rules are applicable since the feasibility studies, detailed engineering design and tender documents were fully financed out of public funds.
According to Wapda, there are no grounds for urgency so as to grant any waiver from PPRA Rules and the cost of the project worked out by the sponsor was higher by $344.32 million than cost estimates. PPIB, which has been given the responsibility to implement the project on fast track basis through a Letter of Interest (LoI) to CWE on January 15, 2009granted, in principle, approval for implementation of the project in the private sector.
The Board of PPIB, headed by the Minister for Water and Power, in its meeting held on April 9, 2009 approved the issuance of LoI to CWE and recommended waiver in relation to certain codal formalities of the Power Policy 2002. Chairman Wapda, assigned the responsibility to renegotiate with the Chinese firm, was not available for comments.