A FRENCH-funded strategic hydropower project of 48 megawatts for Azad Jammu and Kashmir, scheduled for commissioning in June last year, could not take-off owing to poor governance.

It is only last month that international tenders for award of the engineering, procurement and construction (EPC) contracts for Jagran-II hydropower project were opened in Muzaffarabad, the last tender being scrapped.

The run-of-the-river hydropower project on the Jagran Nullah located in district Neelum about 90km from Muzaffarabad and originally of 43.5MW capacity was approved on March 30, 2009. In 2010 a detailed bankable feasibility study established viability of a 48MW power station.

The French Development Agency (AFD) on July 7, 2012 signed an agreement to give a soft loan of €68m (over Rs7bn) for the project whereas local portion of Rs785m was to be provided by the AJK government. Work on the project was to commence in FY 2011-12 for which an initial sum of Rs18m was allocated.

Speedy implementation of power projects in the pipeline is turning into an imperative

Tenders for design, manufacturing, supply, erection, testing and commissioning of power station were opened in September 2013, but the letter of award could be issued to selected bidders only after almost a year, in September 2014. Only two bids were received, both from Chinese firms, Sinohydro Corporation and China International Water and Electric Corporation (CWE), at Rs6.9bn and Rs7.4bn, respectively.

Intriguingly, both companies were blacklisted by the World Bank Group and thus become ineligible to participate in the tender according to the PPRA Rules. However, a letter of award was issued by Power Development Authority (PDO) of AJK in favour of CWE, which was contested by Sinohydro.

The tender was cancelled and reissued in January 2015. Last date for receiving bids was extended a number of times. The response has been much wider this time. Interestingly, AFD had also financed Jagran-I power station of installed capacity of 30.4MW, executed by a consortium of French and Swedish companies in 1993 and completed in 2000, at a revised cost of Rs4,646.8m.

Over a dozen hydropower projects of cumulative capacity of about 150MW are in various stages of completion by AJK PDO since long, having missed scheduled completion targets a number of times. These include 40MW Dowarian and 35MW Nagdar hydropower projects. Technical and financial proposals for EPC contracts were invited in April 2015, but last dates for receiving bids for both projects have been extended a number of times, from June until November last year, and their present status is not known. The under-construction projects too have been inordinately delayed, such as Rehra (district Bagh) of 3.2MW capacity and Sharda (district Neelum) of 3MW capacity.

In spite of being hub of hydropower generation, the AJK suffers from a severe energy crisis. The region, located at proximity of 50-150km from national grid, has one of the lowest per capita annual electricity consumption. The AJK government is not totally dependent on national grid for power supply and has constructed a number of power stations over a period of time, utilising its own resources. Currently, a total of 12 small, mini and minor hydropower stations are in operation, with cumulative installed capacity of about 45MW, besides various community-based power units.

Considering the growing electricity requirements for agro-based industry, mineral-mining, tourism and trade, the demand is projected to increase over 1,000MW by 2020 with its unexploited potential of developing 8,830MW hydropower. Speedy implementation of power projects in the pipeline is turning into an imperative.

The writer is former chairman of the State Engineering Corporation.

Published in Dawn, Business & Finance weekly, February 8th, 2016