MUZAFFARABAD, Aug 20: A foreign firm has expressed concern over a recent advertisement by the Azad Jammu and Kashmir Hydro Electric Board (AJKHEB) about a power project and has asked the AJK government to ensure that a Memorandum of Understanding (MoU) signed in this regard is honoured in totality, Dawn has learnt.

As per the MoU signed by the AJK government with Canadian Commercial Corporation (CCC) in May last year the CCC was to assist in the development and implementation of hydropower projects on an engineering, procurement and construction managements (EPCM) basis. Specific project identified in the MoU was 43.5 megawatt Jagran-II, located in Neelum valley to the northeast of Muzaffarabad. CCC was also to assist in identifying possible sources for financing.At the signing-in ceremony, journalists were told that under the MoU the project's foreign component to meet entire electromechanical equipment and services cost will be provided by the CCC through mixed credit (soft and commercial loans) whereas the local (rupee) component covering the civil work cost will be arranged by the AJK government out of its public sector development programme (PSDP).

In a recent letter to the AJK government, a senior official of Genivar, another Canadian firm, has claimed that it had obtained a written manifestation of interest by Export Development Canada (EDC) for financing of the project after the signing of the MoU.

The company, claimed the official, had interacted with the AJKHEB “extensively” besides undertaking “gratis review” of the feasibility cost of Jagran-II.”

The Genivar official recalled that the Canadian Trade Commissioner was told by the AJK government functionaries during his visit to Muzaffarabad in April this year that the project had been cleared by the Cabinet Development Committee and was forwarded to the government of Pakistan for necessary approvals.

Around same time, according to Genivar official, his company had furnished “sufficient project information and analysis” for EDC to agree issuing Term Sheet Negotiation documents as soon as the formal request for financing was sent to them through proper channels in Pakistan and the AJK.

Thus Genivar had factually arranged for the projects to start as soon as approved and cleared by the Pakistan government as it had agreed to be remunerated from local projects allocated funds during EDC/AJK negotiation periods, he said.

“However, we have noted with distress that the AJKHEB has advertised for carrying out detailed engineering studies for the projects with the intention of offering them for development on a competitive bidding basis. The above activity is covered under our valid MoU and we are at a loss to understand as to where we stand in light of the advertisements,” the Genivar official had said in the letter, a copy of which was obtained by Dawn.

However, when contacted by this correspondent, an AJKHEB official pointed out that the project financing of Jagran-II had been pledged by the federal government and it had also appeared in the federal PSDP for 2008-09.

In order to construct the project through competitive bidding, tender documents were the basic requirement, which had been invited by the AJKHEB from the consultants through the advertisement, said the official who declined to be named.

He made it clear that the AJKHEB advertisement did not contradict the provisions of the MoU nor did it prevent the CCC from participation in the project development.

“If the Canadian firm is interested in implementing the project, it can do it by participating in the international competitive bidding,” the official said.