SRINAGAR, Jan 20: Indian-held Kashmir's Chief Minister, Mohammed Sayeed, said neutral technical experts were "welcome to inspect" the one-billion-dollar plant in south Kashmir, saying it in no way breaches a water-sharing treaty with Pakistan.

"We're on a sound footing," he said in reply to Pakistan's move this week to seek international mediation over the 450-megawatt Baglihar hydro project. "For our future power generation, Baglihar is the flagship," said Sayeed, urging Pakistan not to stall construction of the plant.

After talks with India over the dam collapsed earlier this month, Pakistan asked the World Bank, which brokered the Indus Water Treaty, to name a neutral expert to settle the dispute as per the agreement.

Islamabad's move marked the first time it has sought outside help to settle differences under the treaty, one of the most enduring accords between the nuclear rivals, having held during two wars.

Islamabad says it fears the dam on the Chenab river flowing from Indian Kashmir to Pakistan could deprive its wheat-bowl state of Punjab of vital irrigation water and charges it violates the 44-year-old water agreement.

Analysts also say Pakistan is concerned that in the event of another war, India could use the dam to cause flooding or droughts in Punjab. But Sayeed said the project does not breach the treaty as "we're not storing water" and will not interfere with the water flow.

He also said the plant could go a long way towards ending routine 12-hour blackouts plaguing the Himalayan state. The power shortages affect people most during the freezing winters when with no electric heat, people spend chill nights huddling around stoves or clutching kangris - pots for carrying hot charcoal.

"If Pakistan is sincere towards the people of Kashmir, it should not try to stall the construction as the project is aimed at ending the prolonged hardship of people on the power front," Sayeed said.

The treaty bars India from interfering with the flow of the three rivers feeding Pakistan - the Indus, the Chenab and the Jhelum - but allows it to generate electricity from them.

Work on the project began in April 1999, and the first phase is due to be completed later this year. The Jammu and Kashmir government plans to start work on a second 450-megawatt phase and has taken loans from nine financial institutions to fund the project.

Kashmir has the potential to generate 20,000 megawatts of power, but less than 10 per cent of it has been exploited. Massive power theft has compounded the state's woes with people refusing to pay power bills. -AFP