ISLAMABAD, June 29: Wapda has decided to launch Rs84.5 billion Neelum-Jhelum hydropower project through international competitive bidding, enabling Pakistan to retain its legal rights over Jhelum waters.

Wapda sources told Dawn on Sunday that in view of international interest in the mega project, authorities have decided that “the project should be implemented on international competitive bidding basis with financing to be arranged by the contractors.”

A Chinese firm — M/s CNT — had earlier offered $1 billion through a mix of equity and credit to construct the 960-megawatt power project.

No funding has been earmarked for the project in the public sector development programme (PSDP 2003/4) because the contractors are expected to arrange the financing, sources said.

A team of the company was scheduled to visit Pakistan in April to discuss modalities and financing arrangements to implement the project. However, the firm had informed that their visit to Pakistan would not be possible and should be allowed to start working on the project’s letter of intent (LoI).

Subsequently, Wapda had received a draft LoI along with proposed terms and conditions but it had decided to avoid complexities, instead deciding to hold international bidding.

Power ministry sources said if the Neelum-Jhelum project is not started near Muzaffarabad in Azad Kashmir immediately, Pakistan would be obliged under the 1960 Indus Waters Treaty to allow India divert Jhelum waters for power generation.

The executive committee of the national economic council (ECNEC) had approved the project last year with the condition to execute the project after arranging requisite funding.

Expressions of Interest (EOIs) concerning pre-qualification of contractors were submitted by 10 firms and joint ventures. However, before these could be approved, some other firms contacted the Wapda and showed interest in executing the project.

To allow reasonable time for these companies to submit detailed technical and financial proposals, recommendations of the evaluation committee regarding the EOIs were kept pending. Similarly, the appointment of consultants for the projects has also been kept pending till arrangement of funding.

Pakistan had refused a couple of months ago to allow even a minor diversion of Jhelum River by India because that could have jeopardized the development of Neelum-Jhelum power system in Azad Kashmir.

New Delhi had requested Islamabad to allow it diversion of Ganga waters in the Indian-occupied Kashmir for power generation from its proposed Kishanganga project.

Sources said that diversion by India would not reduce the overall water level in Jhelum on the Pakistani side of the line of control but it would affect the river’s flow. Decline in the river’s flow reduces the pressure required to generate electricity in Azad Kashmir.