ISLAMABAD: The Water and Power Development Authority (Wapda) told the Supreme Court on Tuesday that the government had not yet released a staggering Rs240 billion for equity injection on part of the authority for construction of much-needed Diamer Basha and Mohmand dams.
Despite earlier undertaking given to the Supreme Court on Feb 20, 2020, the Power Division had not released the outstanding receivables, which currently stood at Rs240bn, being the authority’s equity contribution, Wapda Chairman Muzzamil Hussain told a five-judge SC bench.
Wapda requires to inject a total of Rs700bn as equity on its part for development of the two mega projects.
Headed by Chief Justice of Pakistan Gulzar Ahmed, the Supreme Court bench had taken up the case to oversee the projects of construction of 4,500 MW Diamer Basha dam and 700 MW Mohmand dam.
Wapda plans to launch $500m Green Eurobond next month, says chairman
Assisted by Advocate Nayyar Abbas Rizvi, the Wapda chairman gave a presentation to the court highlighting speedy construction of the projects.
At the last hearing on Feb 12, 2020, the apex court had ordered the power secretary to ensure payment of the dues to Wapda within a year by adhering to the payment schedule for the construction of the two dams.
When called, Additional Attorney General Sohail Mahmood told the court he needed instructions from the government to explain why the amount had not been released.
Other than the stuck-up amount, Wapda is comfortable with the cash flows out of the allocated amounts in the Public Sector Development Programme for the year 2020-21 amounting to Rs16.5bn for Diamer Basha dam and Rs7bn for Mohmand dam.
The Wapda chairman told the Supreme Court that the authority was going to launch $500 million Green Eurobond by the middle of next month. This would be a regular feature of the authority’s strategy to access the market through a plan of issuing bonds in a phased manner for which the government had given its consent through a letter of comfort, he said.
According to a report furnished before the Supreme Court, the foreign currency requirement for the next two years for the construction of the two dams is $600m but Wapda intends to approach the market for a debut benchmark size of $500m for which the services of the J.P. Morgan Bank have been hired.
To a query by the court, the Wapda chairman said the completion date for Mohmand dam was May-June 2025 and that of Diamer Basha dam 2028.
Despite the challenges Wapda faced in the wake of the Covid-19 pandemic, like restrictions on the movement of the foreigners and the locals, non-supply of material and equipment from the local and foreign markets and cross-border incidents restricting foreign movements, the construction schedule had not been impeded and the timelines for the mega projects were being met, Mr Hussain said.
Moreover, the resettlement issues of Mohmand dam and the long outstanding boundary dispute of Diamer Basha dam project had been resolved and the legitimate demands of the locals were being fulfilled, he said.
However, the report highlighted that the reduction in the prevailing rate of return on Wapda equity from 17 per cent to 10pc by the federal government might impair Wapda’s ability to contribute its share on the equity since it would then be met through additional debt with its ensuring cost.
Though this decision was across-the-board for the hydel and thermal powerhouses, the federal government however had committed to fill this gap through special grants, the report said.
The Wapda chairman said the government had been suggested to consider building of 8-10 km long Babusir tunnel which would cut down at least one year in the construction of Diamer Basha Dam and the government had issued directives to the National Highway Authority in this regard. The tunnel would be a force multiplier, he said, adding the construction of the dams would also mitigate flooding concerns of Charsadda, Mardan and Naushera, etc.
The chief justice regretted why they always had to seek assistance of foreigners and why services of fresh graduates were not utilised. The chief justice also wondered why the services of the dormant Pakistan Steel Mills were not utilised instead of importing steel for the projects.
Published in Dawn, March 31st, 2021