THE Prime Minister’s Inspection Commission has taken a note of the poor planning, improper monitoring and inordinate delay in implementing strategically important projects that has resulted in project cost over-runs too.

A detailed report in this context is expected to be furnished shortly to the prime minister, recommending remedial measures for the completion of delayed projects and action against officials responsible for the delays.

Prime Minister Yousuf Raza Gilani had directed the commission in July last year to play an effective role and assist the government in improving efficiency and transparency in the government and public sector organisations, in addition to its originally assigned responsibilities of redressing the public grievances. The objective was, through the commission’s enquiries and monitoring, to check wastage of public funds in the ongoing mega projects.

The commission has been entrusted with the scrutiny of the Public Sector Development Programmes (PSDP). The scope of recent enquiry conducted by the commission encompasses five projects, mostly water-related, which include 969-MW Neelum-Jhelum hydropower project that is three years behind the schedule. Rainee Canal project the cost of which has more than doubled, and the two Naltar hydropower projects that have not taken off even after three years of sanction.

The Naltar projects, phase-III of 15.9 MW and phase-V of 14.1 MW capacity are of vital importance for the socio-economic development of the Giligit-Baltistan region that has the lowest per capita annual electricity consumption of 300 kWh.

These projects, declared as priority schemes by the government, were scheduled for commercial operations in 2011, generating average annual revenue of about Rs600 million. Generation cost of the projects worked out to be cents 2.77 per kWh. One can visualise the loss to the national economy, in particular of Gilgit-Baltistan, on account of long delays in project execution.

The government is committed to develop the region on priority basis, and has planned to construct a number of small and mini hydropower projects to meet growing demand of agriculture, industry and trade on sustainable basis. The region is not connected with national grid and instead, has an isolated network for power transmission and distribution. It has great potential for exploiting hydropower, which is known as a clean and renewable form of energy that also provides low-cost power generation compared to any other source of energy.

Currently, there are 98 power stations in operation with cumulative installed capacity of 133 MW, most of which are termed as mini and minor hydropower stations. These are run-of-the-river projects, with some having daily storage for peaking. The power supply does not meet the demand resulting in severe shortfall, while only about 50 per cent of the population has access to electricity. To meet the peak demand and reduce loadshedding, diesel generators of total capacity of nearly 10 MW are installed.

There are 27 hydropower schemes of total capacity 248 MW under various stages of planning, whereas another 136 sites (in the range of below 50 MW) have been identified with a potential of over 500 MW cumulative capacity. The proposed projects to be constructed on the right bank of Naltar River, are located at 25-28 km from Gilgit City. Naltar River and its tributaries have a potential of generating over 60-MW electricity. Three power stations, Naltar-I of 0.08 MW, Naltar-II of 2.2 MW and Naltar-IV of 18 MW capacity are currently in operation.

Another project, Naltar-VI of 0.75 MW capacity, is at planning stage. Interestingly, Naltar-IV of 18 MW capacity, which was constructed on turnkey basis by a foreign company, was completed in October 2007 at a cost of $23.49 million, most of which was incurred in foreign exchange. The project was completed in about four years, more than one year behind the schedule, also resulting in increase in project cost by about 25 per cent.

The Executive Committee of the National Economic Council (ECNEC) has approved the projects in August 2009 deciding that Naltar-III will be fully financed by the government at its own resources and constructed by the Heavy Mechanical Complex, a state enterprise operating under the ministry of industries and production, on turnkey basis i.e. “from water to wire”. The ECNEC also decided that Naltar-V will be implemented through the international competitive bidding (ICB) in foreign credit financing mode, with built-in mechanism to encourage indigenous manufacturing, and the two projects to be constructed in parallel.

Earlier, the Central Development Working Party (CDWP) had cleared the PC-1 of the two projects in April 2008 recommending project execution on similar lines. Subsequently, the projects, Naltar-III at a total cost of Rs1,372 million and Naltar-V at Rs1,715 million, were included in the 2009-10 Annual Plan prepared by the Planning Commission and allocations made.

Nonetheless, there was no headway on any project and expenditure incurred until June 30, 2010 remained less than two per cent of each project cost. Allocations for 2010-11 were Rs411.55 million for Naltar-III and Rs658.48 million for Naltar-V, but have been slashed as no physical progress was achieved. Till date, there has been no progress either on award of contract to the state enterprise for Naltar-III or for calling ICB for Naltar-V.

In a major policy initiative, the government has decided construction of Naltar-III by Heavy Mechanical Complex as a model project based on advanced hydropower technology, aiming at establishing a sound base for indigenous design and engineering, manufacturing and technical services for undertaking complete small hydropower projects.

Apparently, the vested interests have frustrated so far the government efforts to strengthen the existing capacity of local engineering industry to assimilate related advanced technology.