WAPDA couldn’t have lost as much ever in any project as it has in mismanaging the Ghazi Barotha Hydro-Power Project (GBHPP), a $2.5 billion project, initially planned to start generating power on 10/3/2000. This gigantic project unique of its kind would be generating 1450 mw through five 290 mw machines or units now by late next year viz by the end of 2004. Its first machine, if Wapda is still to be believed after umpteen revisions in commissioning dates, would be available for testing in late May or June this year.
According to Wapda, the rest of the four machines would join in at a steady interval of three months each. Thus the total of five machines would start generating, if all goes well, in a 24-month period. The press releases, however, give a false notion that all is well and GBHPP’s 1450 mw of cheap generation would revolutionize Wapda’s present lopsided thermal-hydel mix ratio and would also be able to absorb the IPP shock of Rs116 billion (according to the President a positive attribute as per his recent briefing at the commanders’ conference) for the FY 2001-02 against 24 billion units of such purchase by Wapda.
The information submitted by the utility itself in its last petition to NEPRA states their expenditure as Rs109 billion. As the presidential assertions could not be incorrect, the utility seems to have submitted incorrect information to NEPRA, while posting wrongful information in its balance sheet too, where IPP payments are cited as the main reason for Wapda’s continued losses.
Experts, on the other hand, are rightly skeptical about GBHPP’s commissioning in accordance with the many times revised Wapda time tables. And they have reasons for their skepticism; foremost being Impreglio’s— the Italian contractors— pending $750 million case before international arbitration. The contractors have taken Wapda to international arbitration even after the later’s silently awarding $45 million or the colossal sum of Rs2,700 million to the former. This sum was paid by Wapda to the contractors through what is known as the supplementary agreement No. 1.
As ostensibly the contractors had left work immediately in the wake of 9/11, although the GBHPP site fell in Punjab and away from the strike-declared NWFP— indeed not considered as a case of force-majeur, Wapda acquiescing and ordering payment of $45 million for enticing the run-away contractors back to work proves the situation to be otherwise. Impreglio is, however, very clear about its claims comprising of extension of time and its related delay cost claims, financing costs of now duly certified amounts, on account of delay, disruption and site logistics support, on account of work stoppages due to third party interference and demurrage charges on imported equipment, etc. The Italians are also confident of winning their case. Wapda as per earlier practice is totally averse to contesting any such claims before international forums.
The recent capitulation to Hubco after wasting three full years is an indicator of the things likely to happen in the Italians case too. The chairman, Wapda, on the other hand, does not forget to lull the nation about the phantom savings of US $ 6 billion over the life of the renegotiated PPAs and the great effect it is currently having on the electricity tariff of the country. Sadly the President fed on false information also echoes the same savings. This bolsters the need for a strong ministry for water and power and a very efficient audit system, otherwise false hoods would hold sway leading to the ultimate dead end.
Coming back to the Italian company Impreglio’s claim of upwards of $750 million and Wapda’s proverbial shutting its eyes, we can always make the prophesy that this amount would have to be paid and quite soon enough.
Lately the Auditor General Pakistan has issued its audit report on GBHPP comprising of 27 pares clearly listing the total damage of Rs82 billion on account of delayed completion/ commissioning of the project and a host of other irregularities. The loss comprises loss on account of non-consideration of offers given by local donors, unnecessary expenditure for designing and construction of spillway, non-follow-up of necessary commercial covenants for the contract, purchase of luxury vehicles, inapt consultancy, irregular payments of huge bonus to Dong Feng Engineering Corporation (DEC) favoured contractor, inappropriate payments made through variation orders, payments against avoidable claims again to DEC, escalation payments made over and above contractual provisions on account of doubtful consultancy, spurious plantation and non-maintenance of Bermuda grass at the power channels, improper compaction and filling embankments, non-recovery of interest on revolving fund with the contractors, continued but irregular grant of financial assistance even during the period the contractors had nearly stopped work, payment on account of abandoned works, allowing generation allowance to project staff when actual generation is to take place by the end of 2004, on account of irregular acquisition of residences at Rawalpindi, etc.
Loss of tools and plants and other stores items, non-submission of complete inventory of imperatives in gross deviation of the provisions of the contract, unjustified payments to some lawyer specially when no cases were under trial or pending in the court of law and when enough legal advisors and Wapda’s own legal cell were already available, illegal acquisition of land in excess to the requirement, unauthorized expenditures/ payments to the consultant of about Rs8 billion; not covered under any agreement and such like irregularities. The clearance of this detailed and most damning audit report is however still underway, but the loss, viz Rs82 billion, to the nation remains without any investigation by the GOP.
Of most important nature remains the inordinate delay of over 30 months in the completion of the project. It is also pertinent to state that as per clause-6 (b) (iii) of the consultancy agreement, the consultants or engineers to the project have to ensure appropriate standard of work and that too at a minimum cost, whereas in this case Wapda has incurred stupendous loss. This loss can easily be apportioned, in monitory terms and then recovered from the consultant against the payments due, while other actions can be initiated against Wapda or the project officers. If need be, punitive action can also be taken up against the contractors. The consultant or the engineer to the project, on the other hand, fixes all the responsibilities on the shoulders of Wapda, as according to him, the authority simply lacked the vision to understand the dynamics of a mega-project like GBHPP and also stood bereft of the required vision.
According to insiders, the most trusted set-up at Wapda HQ responsible for over-seeing contracting and allied issues simply did not understand anything and as a consequence decisions were hard to arrive at and often highly delayed. The contract for imperative generator transformers for GBHPP eventually awarded to DEC took nearly two years to get approved and in the end was a fiasco as the contract is most lacking.
Another serious issue remains the main structure of the project, which stands compromised by use of low quality steel and cement. Wapda reportedly conducted an enquiry into the affair, but it seems that nothing much came out of it and no one was ever penalized. This strange silence speaks ominously about the nexus between Wapda HQ, the project authorities and the contractors with the consultant being mum and mute about the whole affair.
According to experts in structural engineering, a commission of experts, other than the brains with Wapda and the consultants, need to be deputed to give the main structure a clean bill of health or otherwise. Here we also see that the main channel has developed cracks and may not be able to sustain the upcoming work loads once the projects starts delivering at full steam in early 2005.