ISLAMABAD: Water and Power Development Authority (Wapda) is to seek extension in closing date of $390 million IBRD loan and $300 million Asian Infrastructure Investment Bank (AIIB) loan of for Tarbela 5 Extension to match the current construction timelines, well informed sources told Business Recorder.
This was indicated in a letter of World Bank, written to Secretary Ministry of Water Resources, Chairman Wapda and other concerned authorities.
The World Bank conducted an implementation support mission for Tarbela Fourth Extension Hydropower Project (T4HP) and Tarbela Fifth Extension Hydropower Project (T5HP) from August21-28, 2023.
According to the World Bank, Tarbela Fourth Extension Hydropower Project (T4HP) produces significant economic benefits for Pakistan. The project was commissioned in 2018, with cost savings. It provides cheap and clean electricity to the country at a nominal marginal cost.
T4HP had generated over 21,000 gigawatt hours (GWh) of electricity. In comparison to power plants running on imported Re-gasified Liquefied Natural Gas (RNLG) T4HP has generated economic benefits of over $2.7 billion so far, in comparison to RLNG plant with marginal cost of US cents 13 per kilowatt hour (kWh), which is about three times the cost of the project.
The World Bank highlighted the following key issues to Wapda management: (i) the IDA Credit 50790 for T4HP closed on June 30, 2023.
Wapda may submit withdrawal applications till October 30, 2023 for eligible project expenditures that were incurred before the Closing Date of 30 June 2023; and (ii) as the credit for T4HP is now closed, Wapda should commence transition T4HP from development phase to operational phase and meet the cost from operational budget as loan funds are no longer available.
The World Bank has appreciated that Wapda Chairman is monitoring the progress of works in T5HP and convened the technical meeting between the T5HP Project Implementation Unit (PIU), contractors, the engineer, the World Bank, and the AIIB on Aug 23, 2023. Despite the complexities of construction, Wapda is managing the Project well.
Wapda has emphasised that the contractors, Power Construction Corporation of China Limited (PCCCL) for the civil works and Harbin Electric International Company/ Harbin Electric Machinery Company (HEVHEC) for the electromechanical works, should commission all three units of T5HP by September 2025. PCCCL must complete the work on raised intakes of Tunnel 5 by May 2027.
All conditions for the contractors to implement their work in accordance with the revised project schedules and inter contact milestones have been fulfilled. According to the revised schedules, the contractors must make Tunnel 5 available for releasing water by June 2025.
The World Bank argues that PCCCL must improve its progress as it is behind schedule. Wapda had instructed PCCCL to provide a recovery plan to fulfil the inter-contract milestones by September 7, 2023. However, PCCCL has not been able to comply as yet.
The World Bank has requested Wapda Management to continue discussion with PCCCL Project Team and PCCCL management and obtain the recovery plan and firm commitment to meet the contract schedule.
The electro-mechanical contractor HEI/HEC is delivering on schedule to meet the next inter-contract milestones, and are preparing to ship parts.
On rehabilitation of T5 outlet gates, World Bank has proposed that with advice of the Independent Panel of Experts, Wapda and Tarbela 5 Consultants (TSC), and the engineer, it have been decided that rehabilitation (instead of replacement) of the low-level outlet gates and mechanical equipment of Tunnel5 is the most pragmatic option. The World Bank has supported this option as well.
Wapda has instructed the engineer and PCCCL to conduct a condition survey of gates and low-intra-contact level outlet of Tunnel 5 and propose a plan for rehabilitation as rehabilitation work is parallel activity and is not expected to affect T5HP’s gestation period. The current Closing Dates of IBRD Loan 86460 and AIIB Loan LN 0005-PAK, which are financing T5HP, are May 31, 2024 and June 30, 2025, respectively.
The Bank says it understands that Wapda plans to extend the Closing Dates for these loans to match the current construction timelines and noted that Wapda should submit requests for extension to the Ministry of Economic Affairs as soon as possible so that these requests can be processed prior to the Closing Dates.
Copyright Business Recorder, 2023