ISLAMABAD, Sept 19: The government has set up a special cell to construct the 969MW Neelum-Jhelum hydropower project, costing Rs87 billion, in Azad Kashmir on “war footing” to protect Pakistan’s priority rights over the Jhelum waters.

An official told Dawn that the cell had been directed to brief the president and the prime minister regularly about the progress on the project.

The cell led by the water and power minister comprises the Rawalpindi corps commander and some senior officials. It would be responsible for examining proposals from the private sector and finalizing terms and conditions of financing arrangements for the project.

The government has also asked a consortium comprising firms from the United States, Canada, Cyprus and two local companies to develop the project on turnkey basis.

The consortium has been asked to submit its terms and conditions of financing and technical proposals by Sept 30 with a financial package of $1.5 billion for the project.

The Sachal Engineering and Synergics Hydro of the US have completed negotiations with three other firms, one each from Cyprus and Canada and a local company, to develop the project on the request of the government.

The decisions were taken after the government was informed that offers from Chinese companies were not up to the mark and contained financial conditions unacceptable to the government and the Water and Power Development Authority.

It was felt that a project of such a strategic importance should not be left with Wapda, which has been dragging its feet in this regard for years.

The government was advised by the military authorities that the project was crucial to Pakistan’s interests and should be treated as a special case.

They said that if Pakistan failed to start the project immediately, it would be obligated under the Indus Waters Treaty to allow India to construct a 450MW project on river Neelum.

The dam would be constructed at Nossari and connected through a 28.5km underground tunnel to a powerhouse to be located 9km off Kohala towards Muzaffarabad.

The feasibility study of the project has been prepared by Norconsultant.

The tunnel would pass under the bed of river Jhelum and could be constructed by a company which had the requisite expertise to work in the peculiar geological conditions.

Sources said a delegation of the consortium members would visit the federal capital by end of this month to start negotiations with the government.

The project could be started within three months once financial arrangements were agreed to, an official said.