Construction of three hydel power projects in KP: Security arrangements, other factors contribute to cost escalation

Security arrangements as well as depreciation of rupee against the dollars apart from other factors have contributed to cost escalation to Rs 15.7 billion of three hydel power projects constructed in Khyber Pakhtunkhwa under renewable energy development sector investment programme (REDSIP).
Sources said that Executive Committee of the National Economic Council (ECNEC) chaired by Finance Minister Ishaq Dar was requested by the Ministry of Planning, Development and Reforms that approval of the 2nd revision of the PC-I of the project will add 56MW more reliable and cheap power to the remote and rural areas of KP and national grid.
The ECNEC was informed that original PC-I of the REDSIP project was approved with Rs 4.7 billion in 2007. Original PC-I was first revised in 2011 with cost escalation to Rs 12.9 billion. Three power projects, 36.6 MW Daral Khwar Hydra Power Project (HPP) in Swat, 17 MW Ranolia HPP in Kohistan and 2.6 MW Machai Mardan are being constructed under REDSIP.
On December 20 2016, in the 2nd revised PC-I, cost of the REDSIP has been further revised upward to Rs 15.7 billion. The project aims at producing 56.2 MW power to meet the demand of domestic, agriculture and industrial sector as well contributing to reduce the load shedding. The reasons for second revision of the PC-I 36.6 MW Daral Hydel power project were stated to be increase in EPC cost includes US$-rupee parity, security arrangements, and preliminary works as well as provision of environment, health & safety price adjustment.
While reasons for 2nd revision of PC-I of 17 MW Ranolia heo project was increase in cost includes escalation, price adjustment as well as design change in switchyard and transmission line due to changing from 132kV to 220 kV by NTDC.
The Ministry of Planning, Development and Reforms cited the reason for 2nd revision of PC-I of 2.6 MW Machai hydro project were increase in EPC cost due to change/increase scope of 'work under the contract agreement, which were previously not foreseen during the revision of the first revised approved PC-I.
The ECNEC was informed that ADB offered a Multi-Tranche loan of US$ 500 million for REDSIP which besides hydro power projects also includes construction of Pakhtunkhwa energy and power department (PEDO) office Hayatabad, and feasibility studies of Koto, Jabori & Karora HPPs (PC-II). KP government is also financing for the project through Annual Development Plan/Hydro Development Fund.
The main objective of the REDSIP project is to develop sustainable, environment friendly and affordable, renewable power generation in Khyber Pakhtunkhwa.
The ECNEC was informed that the overall physical progress on the above hydro power project is 85 percent and under REDSIP three feasibility studies of Koto HPP (31 MVV), Jabori HPP (8 MW) and Karora HPP (9.8 MW with the total potential of 48.8 MW were completed in the year 2010 and the projects are under implementation and are at various stages of physical completion.
The ECNEC was stated that despite huge hydro power potential, Pakistan has been an energy deficient country. The hilly areas of KP are facing power shortage due to harsh climate. There is a huge potential of water resources in these hilly areas for power generation and other irrigation purposes which could not be harnessed so far. The power generation from other sources like oil and coal is not environment friendly.
Ministry of Planning further stated that the government of KP has developed a strategy and giving priority to hydropower generation projects both in public and private sectors. Although there is huge potential of water resources in these hilly areas for power generation and other irrigation purposes, KP government is taking full interest to use this potential for the benefits of the people especially in the same areas.