15 April 2005	Friday	04 Rabi-ul-Awwal 1426

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PESHAWAR, April 14: Security at the Gomal Zam dam has been scaled down after the Chinese firm building the multi-million dollar project refused to resume work unless it was paid $96 million over and above the original project cost. The Water and Power Development Authority (Wapda) in a letter to the Governor’s Secretariat said that security arrangements made for the protection of Chinese workers involved in the construction of the dam be scaled down since the state-run Chinese firm Sino Hydro Corporation had refused to resume work.

The firm had stopped work on the project and vacated the site following the abduction of its two engineers by militants in South Waziristan on Oct 10, 2004.

One of the workers was later killed when the military commandos mounted a rescue operation.

Officials, however, acknowledge that before the unfortunate incident the Chinese firm had been dragging its feet and had been seeking to renegotiate the terms of the agreement after finding it difficult to complete the project within stipulated time.

According to the letter, the Chinese firm has put up what it called ‘unrealistic’ proposals on March 1, 2005 following a meeting between Prime Minister of Pakistan and President of the Sino Hydro Corporation.

The meeting was followed by another meeting between the deputy managing director of the corporation and Wapda chairman on Dec 28-29, 2004.

“Though unrealistic and extra-contractual, the Wapda still proposed some concessions to the Chinese contractors, purely in the interest of timely completion of the project and as a gesture of good will and due regard to friendly relations between the two countries,” the letter said.

It said that the Chinese contractor was expected to resume work from March 1, 2005 but the government had not received any response and it could still take two to three months before it could be known whether they were still interested in the project.

“Keeping this situation in view it is requested that the present strength of troops deployed for the security of the Chinese may please by reduced by one-third till the resumption of work by the Chinese contractor.

The Governor’s Secretariat in a subsequent letter dated March 25 agreed to curtail the strength of troops but said that logistic arrangements would have to be made once the work resumed.

A senior official in Wapda said the Chinese wanted the government to raise the contract amount from the original $52 million to $96 million.

It merits a mention here that the project was initially designed to include irrigation system with a total stretch of 350-km running through villages in the southern district of Tank in the NWFP.

That would have cost an additional sum of $20 million but the system was excluded from the contract because of security concern.

The government now plans to award the contract to some other company to undertake the irrigation part of Gomal Zam project as well.

The official said that the Chinese firm by making an issue out of an incident was not only trying to renegotiate the contract but also to avoid Rs438 million in penalty that it was be required to pay in case of delay of more than three months in completion f the project.

Approved in 1963, the project that provides for water storage of 1.14 million-acre feet (MAF) and power generation of 17.4 megawatt power, has seen frequent delays due to a host of reasons.

The October last incident prompted the Chinese to stop work on the project again and the Wapda officials say that they would like to wait for another two to three months before making up their mind whether to award the contract to another company.

An insider said that initial talks had already been held with a prospective bidder.

“The Chinese firm had been weary of the project ostensibly because they had begun to realise the actual costs involved and they had been looking for an opportunity to wriggle out of their obligations. The October incident provided that opportunity,” a security official with knowledge of the project commented.

The dam is being built on Gomal river in the hitherto volatile South Waziristan tribal region where security forces had been battling foreign militants and their local supporters.