PESHAWAR, June 18: The Sino Hydro Corporation {SHC), a Chinese construction company in the public sector, and the Water and Power Development Authority (Wapda) are close to an agreement to restart work on the Gomal Zam dam project in South Waziristan Agency, it is learnt. “Negotiations are under way and Chinese are likely to restart work on the project soon,” a senior official said.

“Both parties are negotiating terms and conditions to revise the contract and the Chinese have almost agreed to take over the project again,” he said.

The SHC suspended work on the multi-billion rupees project after militants kidnapped two Chinese engineers along with their local guards from the tribal region in September 2004. One Chinese was killed during a commando action carried out by the Special Services Group to free the hostages.

Following the incident, the Chinese firm suspended work and linked the resumption to payment of compensation and revision of the contract.

The company asked Wapda to increase the project cost, pay $9 million in compensation and enhance time for completion of the project.

The sources said that the Chinese were asking for $149 million, but the government wanted them to settle at a low cost.

“Now they have come down to $130 million, including $113 million for construction of the dam and $17 million additional funds which will cover $9 million for compensation,” the sources said.

Brig (retd) Mushtaq, Wapda’s General Manager (projects-North), told Dawn that they were negotiating the contract and it would be finalized within a week.

He said the Chinese firm had softened its stance and were willing to restart the construction work very soon.

The project has a water storage capacity of 1.14 million acre feet and 17.4mw electricity generation. About 14 per cent work has been carried out so far.

The sources said authorities have made maximum security arrangements at the site.