ISLAMABAD, June 1: The federal government has decided to extend by four months the last date for submission of bids in respect of $1.5 billion Neelum-Jhelum hydropower project near Muzaffarabad in Azad Kashmir. The decision is aimed at providing reasonable time to international firms to participate in the process.

Water and power ministry sources told Dawn that the extension was being given on the request of a number of European companies. In this regard a formal announcement is expected within a week.

These companies had informed the federal government that they were interested in the project but it was difficult for them to complete the required formalities in three months allowed in the bid notice.

The government has realised that a hasty award of contract for the project, involving foreign financing of $1.5 billion, would lead to compromise on quality of work and may cause delays.

The sources said international companies were seeking at least a six-month extension in the bidding schedule but the government could not delay it for more than four months owing to questions relating to international river rights involved in the project.

They said that Islamabad-based missions of some European countries had conveyed to the government that a number of companies from their countries were interested in the project but time allowed by Wapda for such a big project was not sufficient to prepare bid documents and arrange $1.5 billion financing.

Wapda had called bids for the 969-mw project on February 28 this year and initially fixed the deadline of April 30 which was later extended till May 31.

The project has one of the most difficult designs. It involves construction of a 32-km tunnel, passing underneath the bed of Jhelum River, to divert Neelum River. Wapda’s bid documents suggest that technical information provided by it is tentative and the bidders should submit their bids on their own risk. This means that interested companies would have to carry out feasibility study of the project and required reasonable time to collect soil data and estimate tunnelling requirements and costs for bidding, the sources said.

They said the diplomats had asked the government that Wapda should either take the responsibility for soil data collection or extend the deadline.

Senior officials of the ministry of water and power concede that due to size and nature of the project, no contractor of international repute would take part in the bidding without undertaking verification study of technical aspects which would also be a requirement of international financial institutions to provide $1.5 billion financing.

They said even if Wapda was made responsible for the study, preparation of bid documents could not be completed in two or three months. They also agree that it is almost impossible for any company to arrange firm financial commitments of $1.5 billion in such a short period for such a difficult project.

The sources said about nine companies, two of them from Europe, had so far purchased the bid documents.