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ISLAMABAD: After a prolonged dispute, the Khyber Pakhtunkhwa government has surrendered its claim to collect service charges from the Water and Power Development Authority (Wapda) on account of land acquisition for Dasu hydropower project.
The decision came following protracted negotiations between the provincial government and the power authority. “KP Chief Minister Pervez Khattak played a decisive role after a couple of meetings with Wapda Chairman Zafar Mahmood,” a senior Wapda official told Dawn on Wednesday.
The process to acquire 80,000 kanals had been held up for almost a year when the KP government imposed 2.5 per cent service charges on the value of the land by treating Wapda as a private entity. This was not acceptable to Wapda — a wholly owned entity of the federal government — that feared this could lead to similar demands for its numerous water and power projects in other provinces and areas under the federal government, i.e. Azad Kashmir, Gilgit-Baltistan and the Federally Administered Tribal Areas.
Mr Khattak was finally convinced that other economic and financial benefits of the project of Dasu’s scale — the $4.5 billion project would produce 4,300 megawatts when completed — would far outweigh a 2.5pc service charge and “waived off the service charges”.
Subsequently, the land acquisition agreement for the project has been finalised and signed on Wednesday by the commissioner of the Hazara Division and Wapda.
“With signing of the agreement, the impediment has been removed and land for the project will be acquired accordingly by the Khyber Pakhtunkhwa administration at a fast pace,” he added.
Wapda has already received international bids for three major components of the $2.5bn first stage of the project and is currently in the process of technical and financial evaluation of bids.
The federal ministries were concerned that a delay in completion of land acquisition could lead to cancellation of a $1.1bn funding by the World Bank. The land acquisition of the project is a fully funded component of the World Bank, having a precondition for its completion by Oct 31.
The project is one of the top-priority hydropower projects under the 2013 Power Policy and Vision-2025.
The World Bank is providing $590 million loan along with a $460m credit limit as partial risk guarantee for external commercial financing. Mid-term review of loan agreements has to be completed by Oct 31 this year. Separately, Wapda has contracted about Rs144bn from commercial banks to make available matching financing to meet local expenses.
As the dispute prolonged, the affected people started protests and stopped construction activities many times. As a result of non-payment to locals, illegal construction of houses and other facilities was also started, increasing the land acquisition cost by Rs8-10bn.
After completion of the first stage, the project would generate about 33.5 gigawatt hours per day, translating into Rs335m per day (at Rs10 per kilowatt hour).
A 10-month delay in payment of land compensation is estimated to have caused Rs100bn economic loss to the nation besides Rs11bn revenue loss to the KP government on account of net hydroelectric profit at the rate of Rs37m per day.
The project is to be constructed in KP on the Indus River, about 350 kilometres from Islamabad and 240km upstream of Tarbela Dam.
Being executed by Wapda, the first phase of the project is scheduled for completion by 2019. Its second phase of another 2,160MW has to be completed by 2022.
The priority project is being developed through World Bank’s support to modernise and expand energy supply in the country.
In order to address concerns of local people, the federal government decided to have negotiated settlement at market rates through the provincial government ins-tead of forced compulsory land acquisition.
With approved rates after negotiations, Wapda had put Rs1.5bn at the disposal of district collector of Kohistan for the payment of land and property compensation of priority areas to the affected people.
Published in Dawn, August 4th, 2016
