ISLAMABAD, July 16: The Water and Power Development Authority has cleared three international bidders for a contract for the construction of the $1.6 billion Neelum-Jhelum Hydropower Project in Azad Kashmir to secure the country’s rights over river Jhelum, threatened by an Indian move to use its waters for power generation and diversion.

Sources told Dawn on Sunday that the bidders would go through technical evaluation by a panel comprising National Engineering Services of Pakistan and Norconsultants of Norway before their financial bids were opened for awarding the contract.

A consortium of Frontier Works Organisation and Vinci International of France, the China Gazhhouba and the China International Water and Electric Corporation have met the requirements of the bids, including bid bond.

A bid from Sino Hydro of China, which had given up the Gomal Zam dam project without completion, was rejected because it did not contain bid bond, the sources said.

The government had earlier refused to award the contract of the 969 megawatt project to a Chinese firm in the aftermath of Oct 8 earthquake because other bidders had refrained from competing citing presence of fault-lines in the area.

Wapda originally planned to develop the project on build-operate-transfer basis but later decided to hire an engineering, procurement and construction contractor and it replaced the condition of supplier’s credit with buyer’s credit so that bidders could arrange finances from anywhere. The bidders are now required to provide $800 million buyer’s credit to finance imported machinery and equipment.

The government had re-advertised the project last year following a poor response to initial bidding, but results remained unchanged.

A French contender, Vinci International, had backed out of the bidding process quoting ‘structural disturbances’ in the soil owing to the earthquake and called for re-survey and seismic investigation of the area. It is now partner with the FWO.

The project can protect Pakistan’s priority rights over Neelum waters besides producing cheap electricity.

It involves construction of a 32km tunnel under the bed of Jhelum River to divert Neelum River.

India is constructing the Kishanganga hydropower and water storage project on the same river upstream and Pakistan considers it a violation of the Indus Waters Treaty.

If Pakistan does not make reasonable progress on the Neelum-Jhelum project, it will be obliged to allow India to continue with the Kishanganga project.

When completed, the Indian project will reduce flow of the Neelum River and decrease the power generation capability of the Neelum-Jhelum Project by more than 20 per cent.