Latest news with #Rs1.74
Express Tribune
15-05-2025
- Business
- Express Tribune
Dasu hydro project to cost a whopping Rs1.74tr
The government on Wednesday conditionally approved the construction of the Dasu hydropower project at a 240% higher cost of Rs1.74 trillion and also decided to build a new border crossing post at Wagah with India. The Executive Committee of the National Economic Council (ECNEC), which took the decisions also approved the construction of 30 anti-smuggling posts along River Indus and in Balochistan at a cost of Rs15 billion. Ecnec took up 10 projects for approval costing Rs2.1 trillion, including the construction of the Dasu hydropower project as an additional agenda item. Deputy Prime Minister Ishaq Dar chaired the executive committee meeting, which has the mandate to approve mega development schemes. Ecnec conditionally approved the revised Dasu project at a record-breaking cost of Rs1.7 trillion or $6.2 billion. Last month, the Planning Minister had termed the cost an "astronomical increase" of 240%. The conditional approval has been given for facilitating loan negotiations with foreign lenders. It was also decided that a helicopter will be procured under the Cabinet Secretary supervision for safe travel of Chinese contractors of the Dasu hydropower project. A Planning Commission's committee would still vet the project cost, according to the officials. Compared to the original cost, there was a massive jump of Rs1.3 trillion in the hydropower project cost with the per-unit cost of the supposedly cheapest water-based power generation scheme now coming to Rs8.79. The original project cost was Rs479 billion. In the Central Development Working Party meeting, Planning Minister Ahsan Iqbal termed had directed third-party validation of the astronomical increase in the revised PC-I. Planning Minister Ahsan Iqbal on Wednesday did not comment on the questions about the approval of the Dasu hydropower project as an additional agenda item and construction of new border crossing with India. The $6.2 billion cost of the project is now almost equal to the $6.7 billion cost of building a railway track from Karachi to Peshawar under the China-Pakistan Economic Corridor (CPEC). The project had been planned to generate 2,160MW of electricity and the government now needs more foreign and local loans. Wapda was in negotiations with the World Bank for a whopping $1 billion new loan. The $1 billion loan will be a mix of expensive and concessional loans. The World Bank has already given a $517 million loan for the project. The government will also get a $400 million foreign commercial loan by using World Bank guarantees. It will also search for Rs350 billion in domestic commercial loans. The government had earlier ordered an inquiry to determine the reason for cost escalation but it did not fix the responsibility on any single entity or individual and pointed figures at Chinese contractors, Wapda and the Planning Commission. The inquiry had also blamed the local administration of Kohistan district for a delay in land acquisition. It said that the cost was increased by Rs48 billion because of enhanced security arrangements after two deadly attacks on the Chinese contractors. The impact of security arrangement was hardly 3.8% in the total cost escalation. The ECNEC approved the construction of a new border crossing at Wagah with India. The government is already implementing a project with the loan of the Development Bank to construct border crossing points along the Afghanistan border. In July last year, the committee had decided that a similar post would also be built at a key crossing point with India, Wagah border. With a cost of Rs95.5 billion, two locations are already being constructed at Torkham and Chaman international borders. The contract for the Wagah post will be given through competitive bidding, according to the decision. Ecnec had asked the planning ministry to give its recommendation whether to build the Wagah border crossing site under the government deal or through international competitive bidding. The committee informed the ECNEC that the lessons learnt from the existing contract, documentary evidence provided by the FBR, comparative analysis on merits and demerits of open and the government-to-government contract, ADB's procurement regulation and Public Procurement Rules, it was advisable to give contract through competitive bidding. Ecnec also approved the construction of 30 anti-smuggling checkpoints along River Indus, Hub and in Balochistan with a cost of nearly Rs15 billion. The Federal Board of Revenue admitted before the ECNEC that the conventional anti-smuggling methods have failed to yield results and the economy was sustaining Rs750 billion revenue losses due to smuggling. The project aims to establish Digital and Mobile Enforcement Stations (DES), along with upgraded check-posts, to curb smuggling, enhance tax revenue, promote formal trade, and strengthen border security through technology-driven enforcement. The scope of work includes the development of 10 DES sites in Balochistan, along with 11 small, 6 mediums, and 3 large DES sites across designated locations. ECNEC approved Sindh Flood Emergency Rehabilitation Project Phase-II at a cost of Rs12.2 billion. The Phase-II envisages restoration and rehabilitation of 146-kilometer long 19-roads in four-districts affected by the floods. ECNEC approved a revised project for repair of 100 locomotives at a cost Rs16 billion. It also sanctioned a project in Khyber Pakhtunkhwa at the revised cost of Rs113 billion for the rural accessibility to markets, education and health facilities, through rehabilitation of the rural road network, measuring 878 km. The Mangi Dam at Rs19 billion revised cost was approved. The main objective of the project is to reduce the existing shortfall in the water demand that is currently being faced by Quetta City. At present, the estimated availability of drinking water in Quetta valley is much less than the minimum 15 gallons per capita per day. Adopting a water consumption of 20 gallons per capita per day, the present water requirement of Quetta is estimated to be 40.9mgd (76.0 cusecs). The proposed Mangi Dam will enable a supply of 8.1 MGD (15.1 cusecs) to Quetta City. ECNEC approved the project namely "Sindh Early Learning Enhancement Through Classroom Transformation" worth Rs46.6 billion. The project is proposed to be financed through the World Bank & Government of Sindh. Project aims to address critical supply-side gaps using a combination of results-based financing and traditional expenditure-based mechanisms to enhance school availability, teacher allocation, and learning outcomes across the province. ECNEC also approved the 220kV Transmission System Network Reinforcement in Islamabad and Burhan Area worth Rs11.3 billion. The main objective of the project is to enhance the capacity of the national transmission system to remove the transmission constraints in order to meet the growing load demand of IESCO and also for reliable dispersal of upcoming generation from Tarbela 5th extension project.
Express Tribune
13-04-2025
- Business
- Express Tribune
Dasu inquiry fails to fix responsibility for soaring cost
Listen to article An official inquiry has not fixed the responsibility for an "astronomical increase" of 240% in cost of the Dasu Hydropower project to $6.2 billion on any single entity or individual but pointed figures at Chinese contractors, Wapda and the Planning Commission. The three-member committee also blamed the local administration of Kohistan district for a delay in land acquisition. It said that the cost was increased by Rs48 billion because of enhanced security arrangements after two deadly attacks on the Chinese contractors. The impact of security arrangement was hardly 3.8% in the total cost escalation. The report stated that "complex interplay of factors and unforeseen challenges" caused the 10-year delay and Rs1.3 trillion or 240% increase in the Dasu hydropower project cost to Rs1.74 trillion. In dollar terms, the cost was equal to $6.2 billion — an unreasonable price tag for a 2,160 megawatts hydropower project. The committee said that the Chinese contractor ignored the consultants' instructions, local administration could not timely acquire the land and more importantly Wapda awarded the construction contracts "without ensuring availability of the land required by the contractors, which resulted in delays and idle claims". The committee failed to fix the responsibility on any of the Wapda chairmen or any senior officer by name despite finding that it awarded contracts without having land in hand. The Planning Commission has been held responsible for underestimating land acquisition and resettlement problems. Headed by Planning Minister Ahsan Iqbal, the Central Development Working Party on Friday conditionally recommended the Dasu hydropower project for the approval of the Executive Committee of the National Economic Council. "It is a considered opinion that the delays in Dasu Hydropower Project (Stage-1) are the result of a complex interplay of factors," reads the findings of the three-member committee. In December, the government ordered the inquiry to identify the reasons and fix responsibility for inability to complete the project after the first revision made in the cost in 2019. The inquiry committee was led by civil engineer Ather Hameed. Among the other members was Syed Ayaz Muhammad Haider, director monitoring of the Water Resources Ministry and Imran Najam procurement expert of the ministry. The inquiry concluded that the construction delays have been compounded by unforeseen significant administrative challenges and procedural bottlenecks in land acquisition, compensation payment and resettlement processes". Unforeseen technical challenges have further distracted the project implementation schedule. Social issues, including community grievances and resistance, have further slowed progress, according to the committee. The inquiry committee further stated that the lack of seamless coordination between contractors and consultants, security challenges in the project area and natural causes such as difficult terrain, unforeseen geological conditions and flash floods have added to the delays. "These issues are interconnected, making it clear that no single stakeholder or entity can be solely held responsible", concluded the inquiry committee. When contacted, Water Resources Ministry Secretary Syed Ali Murtaza said that the inquiry was conducted by chief engineering adviser, which is an independent entity and is meant for undertaking such inquiries. The secretary further said that the inquiry committee found out that 85% increase in the cost was because of increase in the prices and the remaining 15% was due to changes in the scope and design of the project. The inquiry committee stated that the success of the project depends on a collaborative approach that fosters alignment and cooperation among the federal government, the provincial government of Khyber-Pakhtunkhwa, district administration of Kohistan, Wapda, contractors, consultants, and local communities. The inquiry recommended enhancing stakeholders' coordination, streamlining the compensation and resettlement processes. It also proposed proactively addressing social issues particularly on 132kV transmission line and implementing a robust management strategy to handle technical, social, and security challenges. But these are the issues that should have been catered for in 2014. The project has already been delayed by 10 years to 2029. The original PC-I costing Rs486 billion had been approved in 2014 with an aim to generate 2,160MW of electricity and the completion date was 2019. Due to increased land rate, the cost was revised to Rs511 billion in October 2019 and implementation was extended to June 2024. The main civil work contractor for Stage-I is M/s China Gezhouba Group Company (CGGC) while supervision is provided by a joint venture of M/s Nippon Koei of Japan and M/s Dolsar of Turkey in association with local sub-consultants including M/s DMC, M/s NDC and M/s PEES, according to January 2025 inquiry report. As of January, the overall physical progress is 23.3% and the financial progress at 23%, states the inquiry report on the second revision. The project is mainly funded by the World Bank, local and foreign commercial banks and through Wapda equity. So far, Rs317 billion have been spent on the project. The Rs1.73 trillion total cost included Rs479 billion interest on the loans to be taken for the completion of the project. The World Bank had given $517 million and out of which till December $385 million had been utilized. The Credit Suisse Bank also provided a $350 million loan. The local bank's consortium led by M/s Habib Bank Limited also provided a Rs144 billion loan against the original cost of the project. The World Bank is also ready to pour in another expensive loan of $1 billion for the project. Cost escalation break-up The inquiry report has listed a comparison of increased cost from Rs511 billion to Rs1.73 trillion. The civil works cost increased from Rs224.5 billion to Rs771 billion -a surge of Rs547 billion or 243%. The electrical and mechanical work cost increased from Rs54.3 billion to Rs87.3 billion -an increase of Rs33 billion or 61%. The social resettlement cost was increased from Rs57.5 billion to Rs140.3 billion — a surge of Rs82 billion or 144%. The security cost was increased from Rs1.5 billion to Rs50 billion -an increase of Rs48.2 billion or 3136%. The project has faced two suicide attacks resulting into killings of 15 Chinese nationals and four Pakistanis. The project administration cost was increased from Rs13.5 billion toRs54.4 billion — an increase of Rs41 billion or 304%. The consultancies cost was increased from Rs8.3 billion to Rs56.5 billion — a surge of R48.2 billion or 580%. Since the quantum of the loans jumped, so does the interest cost. The interest cost increased from Rs107 billion to Rs479 billion — an increase of Rs372 billion or 349%. The contingencies were increased from Rs44 billion to Rs99 billion -an increase of Rs55 billion or 124%. The inquiry committee said that there was a significant delay in acquisition of land of 9,875 acres. But the land cost impact had already been included in the first revised project, and it is not the reason for the cost escalation in the second revision. The committee noted that the design of the relocation of 52-kilometre-long Karakoram Highway underwent significant changes due to land acquisition delays and geological conditions. However, the committee did not fix the responsibility for ignoring geological conditions at the time of planning first in 2014 and then in 2019 when the project was revised. The committee validly identified the security as a reason for the delay but it increased the cost by only Rs48 billion out of the total additional increase in the cost of Rs1.27 trillion. Fixing Responsibility The inquiry committee identified lack of coordination between contractor and the engineer. It said that delays occurred due to "the contractor's failure to submit activity plans, frequent disregard for the consultant's instructions, insufficient deployment of resources despite repeated directives and inadequate coordination between the contractor and the engineer". It further said that the contractor's reports indicated that the resources currently available at each worksite are inadequate to achieve the target completion dates. The committee said that the district administration was responsible for acquiring the land, which it could not timely acquire. The committee said that the Wapda awarded the contracts without ensuring availability of the land required by the contractors, which resulted in delays and idle claims. The slow pace of the local area development programme eroded community trust and exacerbated local resistance, reflecting a lapse in Wapda responsibility for effective community agreement. "Both Wapda and the Planning Commission not only clearly underestimated land acquisition and resettlement but also showed lack of cognitive approach regarding project planning and scheduling without substantial completion of land acquisition and resettlement process". The inquiry committee said that the Chinese Contractor is also responsible for slow progress in the construction of the dam and powerhouse works due to mobilization of inadequate resources. The committee said that Dasu Hydropower Consultants ad Design and Supervision Consultants were responsible for "frequent design changes, which highlight shortcomings on the part of the design consultant. The absence of an approved dedicated PC-I for land acquisition as recommended by the Planning Commission, indicates a policy oversight that has contributed to the project delays.
