Govt likely to divert NJ surcharge to Diamer Bhasha dam project development

ISLAMABAD : The government is likely to divert Neelum Jhleum (NJ) surcharge of Paisa 10 per unit on electricity consumers to development of 4800 MW Diamer Bhasha dam project, well-informed sources in Ministry of Water Resources told Business Recorder.

The $ 14 billion Diamer Bhasha dam project has been inaugurated multiple times - by former President, General Pervez Musharraf (retired) to former Prime Minister, Nawaz Sharif.

Recently, Prime Minister, Imran Khan kicked off the construction work at the project site, vowing to focus on hydel projects which do not require imported fuels. Army Chief, General Qamar Javed Bajwa also accompanied him.

The federal government has approved an amount of Rs 32.9 billion as technical supplementary grant for Diamer Bhasha dam through adjustments in PSDP allocations of FY 2019-20, after signing an agreement of Rs 442 billion between Wapda and a Joint Venture between Power China and FWO. International financial institutions maintain that since the project is situated in a 'disputed territory,' they cannot extend financial support. However, the Chinese ambassador was seen at the commencement of development work on the project and signing ceremony of the agreement.

Upon completion, Diamer Bhasha dam would store an extra 10,5 cubic meters( 8,500,000 acre feet) of water which would be used for irrigation and drinking, extend the life of Tarbela dam and control flood damage by the river Indus downstream during high floods.

The sources said, on December 12, 2007, the Economic Coordination Committee (ECC) of the Cabinet, headed by the then Prime Minister, Shaukat Aziz, had approved a surcharge of 10 Paisa per unit on electricity consumers except the then Karachi Electric Supply Company, now KE, and lifeline consumers for eight years starting from January 1, 2008 to 1 December 2015. However, the application of Neelum Jhelum surcharge remained in place, with approval of the ECC on different occasions. On May 31, 2018, the then ECC decided to continue recovery of NJ surcharge until the project achieves Commercial Operation Date (COD).

The sources said, unit 3 of NJ began generation on May 1, 2018, unit 4, on June 19, 2019, unit 2, July 2018 and unit 1, August 24, 2018.

The entire project achieved COD on December 2018 but neither Wapda nor its administrative Ministry requested the federal government to withdraw the surcharge and continued it without any justification.

Wapda has generated over Rs 70 billion from NJ surcharge during the first ten years, starting from January 2008 uptill June 2020 approximately at the rate of Rs 7.2 billion per annum.

"The government is now actively considering transferring the NJ surcharge to Diamer Bhasha dam project," the sources said, adding that it would extend about Rs 8 billion funding to the project per annum. There is also a proposal that the NJ surcharge of over Rs 10 billion collected after December 2018 and transferred to Wapda without any approval, should also be audited by the Auditor General of Pakistan for development of Diamer Bhasha dam project on same terms and conditions already approved by the ECC.

Copyright Business Recorder, 2020