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Ghazi Barotha project may be delayed for funds shortage

TAHIR DHINDSA

ISLAMABAD: Commissioning of US$ 2.2 billion Ghazi Barotha hydropower project is likely to be delayed by at least 15 months due to financial problems, official sources disclosed here on Wednesday.

Talking to Business Recorder, sources said there is a net gap of at least Rs 15 billion of the Government of Pakistan (GoP) components, which has slowed the pace of work at the site.

"June 2002 was the commissioning date which in any case cannot be met," they said. "With the expected delay, now the project cannot be completed before the end of 2003," they added.

The project is being built with a financial support of multilateral donors, in the form of loans, but without the availability of rupee counterpart funds, a major portion of dollar denominated loans cannot be availed.

Sources said the current stage of completion is about a way behind the schedule, and it needs at least fifty percent increase in the speed of work just to catch up to the it. Due to lack of availability of rupee component payment to affected had become a problem.

Since it is not clear as to when the GoP funds will be made available as per schedule the position of the release of foreign component is also not crystal clear. The World Bank alone has a US$ 350 million financing component.

The sources said resource crunch is mainly due to WAPDA's poor financial health. Because of a massive overdraft and lingering debt it is finding difficult to fund its investment commitments, even for the running projects. The government has already decided to provide Wapda with a liquidity injection and to write off Rs 35 billion of its debt.

A progressive time-to-time adjustment in tariff has also been advised to maintain a health balance sheet. It has been proposed that tariff should be maintained at a level where Wapda could cover its operational cost and future investment programmes. After the restructuring of Wapda some improvement in the situation is expected.

According to the understanding with multilateral donors, Wapda is supposed to fund at least 40 percent of its investment programme from its own income, which it is not following in spirit, sources concluded.