Kohala power project: Wapda chief to negotiate with Chinese firm

Chairman Water and Power Development Authority (Wapda), Shakil Durrani,is said to have been given a key role in negotiations with the Chinese firm, China International Water and Electric Corporation (CWE) to resolve row pertaining to 1100 MW Kohala Hydropower Project, sources close to Minister for Water and Power told Business Recorder.
The government had awarded the project to CWE after signing a Memorandum of Understanding (MoU) three years ago but when the matter came under discussion in the ECC, last year a number of questions were raised by the ministers over the transparency in awarding the project to the Chinese company. When the Private Power Infrastructure Board (PPIB) approached the local representative of the company for negotiation on the project, he conveyed that the company would not enter into talks with Pakistani officials.
A MoU was signed on October 16, 2008 in Beijing between the Ministry of Water and Power, Government of Pakistan, and CWE for the implementation of a 1100 mw 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.
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, 2009 granted, 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.
Sources said that when the proposal came before the Economic Co-ordination Committee (ECC) of the Cabinet on October 15, 2010, a number of questions were raised over transparency in awarding the project to CWE. The ECC constituted a committee, comprising Minister for Water and Power (Convenor), Minister for Petroleum and Natural Resources, Secretaries of Finance, Economic Affairs Division, Water and Power and Managing Director PPIB, with the following Terms of Reference (ToRs): (i) to examine all matters related to 1100 mw Kohala hydropower project and submit a 'way forward' for its further implementation, keeping in view the commitments of the Chinese firm; (ii) to streamline the development and implementation of the much-needed hydropower projects in private sector and to attract foreign investment; and (iii) suggest a simplified mechanism for fast track induction of cheaper hydropower project in the national grid.
Sources said that the ECC's decision consists of two parts. Pursuant to the first part, a meeting of the committee was held on November 23, 2010 wherein it was decided that (i) the policy guidelines for hydropower should be prepared on similar pattern as already approved by the ECC for thermal power projects, and (ii) the policy should not be project-specific and should cover all prospective hydropower sites, in general. To follow the decisions, a summary titled 'Guidelines for fast track induction of hydropower projects in national grid' was circulated among all stakeholders for comments on January 8, 2011.
To deliberate upon second part which related to the implementation of the project, another meeting of the committee was held on January 15, 2011 wherein the following decisions were taken: (i) a reference was to be sent to the Ministry of Finance regarding applicability of Public Procurement Rules for 1100 mw Kohala hydropower project, and (ii) PPIB was requested to seek feedback from China International Water and Electric Corporation (CWE) on the international competitive bidding (ICB).
According to official documents, the Cabinet considered the summary submitted by the Ministry of Water and Power on November 18, 2009 and accorded its ex post facto approval to the MoU. Since the project is located in AJ&K, the AJ&K Council Secretariat on July 31, 2009 conveyed approval of the Council for development of the project in accordance with the terms of the MoU, through PPIB under the Policy for Power Generation 2002.
The sources said, the Ministry of Water and Power informed the ECC on March 16, 2011 that the Chinese firm is reluctant due to certain lacunas in the MoU to be signed between the parties. "Negotiation to settle the issue are underway and hopefully hurdles will be removed shortly and a summary to this effect will be submitted in the next ECC meeting," the sources quoted, Ministry of Water and Power as assuring the ECC.
ECC Chairman (Finance Minister Dr Abdul Hafeez Sheikh) felt that the PPIB is not capable and directed that Chairman will negotiate with the Chinese firm to resolve the outstanding issue, expeditiously. The Ministry of Water and Power will submit the summary in the next ECC meeting.