February 25, 2003	Tuesday	Zul Hijjah 23, 1423

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LAHORE, Feb 24: As the deadline for the commissioning of the Ghazi Brotha Hydel Project draws near, the Italian contractors for civil works have put up claims worth $450 million against Wapda.

Sources in the ministry of water and power claimed that the Italians have also moved the International Centre of Investment Disputes (ICSID) for recovering the amount.

They also said that the Italians have gone to the ICSID after their failure to convince the World Bank against releasing the last tranche of loan for the project and Wapda’s questioning of the impartiality of the new chairman of the Dispute Resolution Board (DRB).

Though the ICSID has not yet formally accepted the application, and meanwhile, Wapda has also asked the ICSID to allow it to make the representation.

According to Wapda’s claim, the ICSID has no jurisdiction in the matter because the dispute was about investment. The Italian contractors have not made any investment in the GBHP but were only contractors and not covered by the ICSID.

Tracing the history of repeated claims, the sources said that the Ghazi Brotha Contractors (GBC) have submitted huge claims of over $770 million for the alleged delays in 2001. But the Independent Consultant accepted only $45 million and claims amounting to $625 million were rejected.

They made another claim on Nov 18, 2002 and new DRB delivered majority recommendations for paying them $6.796 million and another Rs88.344 million to the GBC.

Wapda cried foul because it had identified numerous errors, omissions and inconsistencies in the DRB’s recommendations.

Wapda also cast doubt on the impartiality and independence of the chairman of the DRB but implemented the recommendations and released the amount. But, at the same time it also decided to challenge the conduct of the chairman DRB.

Apart from the chairman’s personal links with the Italian contractors, Wapda also pointed out violations in the hearing procedures established by the DRB itself, open expression of opinion by the chairman during the hearing, on the merits of contractors’ arguments in violation of contractual provisions which bar such an expression by any member of the DRB,they say.

But Wapda has not disassociated itself from the contractually-provided dispute mechanism and participated in the hearings of the DRB from Jan 27 to 30.

It may be mentioned here that after Sept 11, 2001, when the Italian contractor had abandoned works on the project, a new dispute resolution mechanism was concluded with it on April 14, 2002.

According to the agreement, Wapda, subject to the satisfactory mobilization by the contractor, pay an interest-bearing supplementary advance of $20 million against Bank Guarantee.

Wapda also pledged to make interest-bearing on-account payment of $25 million to be adjusted against contractor’s certificate claims.

The contractor promised to complete works by May 31, 2003 including impounding of barrage and power channel.

The agreement also stipulated the reconstitution of the Dispute Review Board (DRB), which has contractually provided dispute resolution mechanism. However, it allowed either party a right to challenge the conduct of the chairman, DRB, if it finds that he failed to act independently and to ask for his replacement through discussion between the parties.