ISLAMABAD, May 13: China has offered $1 billion through a mix of equity and credit to construct a Rs87 billion worth of 960-MW power project that would enable Pakistan to maintain its legal rights over the waters of river Jhelum.

Power ministry sources told Dawn on Tuesday that if the Neelum-Jhelum project was 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.

A top-level delegation of China Machine Tool Company (CMT) would meet a Wapda team led by Chairman Zulfiqar Ali Khan on May 22 in Lahore to discuss technical details and financing options of the project.

These sources said the Chinese state-owned power construction company had approached the federal government and expressed its willingness to finance the project through equity and also make available credit from the Chinese banks on very competitive terms.

The federal government, said these officials, authorized Wapda chief Zulfiqar Ali Khan to discuss technical aspects of the project with the company and sign a memorandum of understanding (MOU) to develop the project on a fast-track basis.

Islamabad has been discussing with Beijing the possibility of the latter financing the project, but early last year China expressed its inability to fund any new project in Pakistan for the time being because of its commitments for economic assistance to other Asian and African countries, and slow progress on some of the ongoing projects it had financed.

“Both the issues are no more there, and China can take up new projects in Pakistan,” said a senior power ministry official.

Early this year, Wapda had offered to make available Rs15 billion out of its own resources and wanted the federal government to arrange a similar amount to start the project on a war-footing within the current fiscal year.