ISLAMABAD, Oct 16: The Frontier Works Organisation (FWO), a subsidiary of the armed forces, has issued a notice to Water and Power Development Authority (Wapda) informing it that it is terminating construction of Rs13 billion Gomal Zam Dam project immediately for its failure to clear over Rs4 billion outstanding dues.

Sources in the FWO told Dawn that the organisation had been using its own resources to ensure uninterrupted progress on the strategic project in the militancy-hit Waziristan region.

“Despite repeated assurances Wapda has failed to meet its commitment to ensure orderly payments.” The FWO, therefore, was left with no option but to withdraw its workforce from the project site, the sources said.

The contract of the project was given to the organisation in April 2007 following suspension of construction work by a foreign firm after kidnapping and then killing of a Chinese engineer that led to termination of the contract by China.

The main dam project was completed more than a year ago ‘with the filling of reservoir currently in progress’ but construction works on canals and distributaries were yet to be completed.

The FWO had earlier threatened to stop work owing to non-payment of Rs1.5 billion outstanding dues at that time. Wapda had, however, committed in August this year at a high-level meeting that the outstanding dues would be cleared in a month and hence the construction work should not be stopped.

The payments, however, were not made, resulting in increase in arrears to Rs4 billion.

The sources said the FWO had issued a formal notice to the Wapda about suspension of activities but had also withdrawn a major chunk of its workforce.

Initially, the Chinese government was providing a major part of the funding for the project which was later dovetailed by financial assistance from the US Agency for International Development (USAID).

Gomal Zam Dam in South Waziristan is already behind schedule by more than five years even though its main dam structure was completed in March last year. The filling of reservoir was started in April with the expectation that the project would begin power generation by November.

The 120-metre high rolled concrete dam has a water storage capacity of 1.1 million acre feet and a generation capacity of 17.5MW. Its construction was taken up in 2002 and the Chinese contractors terminated the contract in October 2006.

The contractors asked the government and Wapda to renegotiate the project cost on the basis of market prices but their plea was rejected on the grounds that a renegotiation could lead to litigation by competing contractors.

The project was awarded to the FWO and the USAID agreed to contribute $40 million.

The dam is estimated to irrigate more than 191,000 acres of land in Tank and D.I. Khan districts and help expand crop areas and yield.