Energy from Azad Kashmir

[Mirza Ghalib]

Energy from Azad Kashmir
by Zulfiqar Abbasi
Saturday, April 07, 2012

Pakistanis have welcomed the recent decision of the Supreme Court of Pakistan to scrap the Rental Power Projects set up through non-transparent and questionable deals, providing electricity at the extremely high rates of Rs35-40/unit. These power purchase agreements were signed and executed overnight and advance payments worth billion of rupees were promptly made. The sweetheart deals were concluded on incredibly generous terms. This happened while private-sector hydel developers of Pakistan and Azad Kashmir had been standing queued up for 16 years offering hydroelectric power at less than Rs2/unit after their loan repayment period, and yet they were not given the power purchase agreement facility by the government and its subsidiary entities which enjoyed absolute monopolies.

The government of Pakistan announced it hydroelectricity policy in 1995 for private-sector developers offering a tariff per unit of 4.7 US cents, which today amounts to just Rs4.27/unit. Around 30 companies from all over the world turned up to set hydel Projects in the private sector comprising 3,000 MW. Since Wapda cash strapped, this policy was the best option for the country as all the hydel projects were to be transferred back to the government free of cost after being in the private sector for 25 years. But the policy was scornfully dumped by the then chairman of Wapda, Gen (r) Zulfiqar Ali Khan and finance minister Ishaq Dar, who found the tariff of 4.7 US cents very high.

Holding back hydel development in the private sector under this lame excuse, space for oil-based thermal projects and RPPs was created by Wapda. which argued that in the absence of political consensus on water-storage projects Wapda can’t generate hydel electricity. As an interim solution a number of thermal and rental projects were inducted into the system, and this is affecting our national economy now. As a matter of fact, 70 percent of hydel projects need no storage dams to generate cheap, affordable and renewable hydel energy at an average cost of Rs2/KW after their debt servicing.

Unfortunately, political disagreement over construction of water reservoirs in Pakistan has provided room for highly influential oil trading lobbies to push for thermal projects, landing the national power sector into crisis with no solution in sight in the foreseeable future. The shooting oil prices are swelling our circular debt, increasing electricity tariffs and closing our options for thermal generation.

In this gloomy national scenario Azad Kashmir is emerging as a saviour for Pakistan’s power sector, developing small hydel projects and mega-projects such as raising of Mangla Dam to 1,300 MW and Neelum-Jhelum to 969 MW in Public sector, Patrind 148 MW, Kohala 1,100 MW, Karot 700 MW and Azad Pattan 640 MW in the private sector. These are already under process.

The competitive advantage of Azad Kashmir over Khyber-Pakhtunkhwa and Gilgit and Baltistan (carrying the same hydel potential) is its nearby location, as rivers Jehlum, Neelum and Poonch, together with their tributaries, are located at a proximity of 50 to 150 kilometers from the national grid with the huge hydel potential of 18,000 MW.

In addition to the ongoing projects, there are many other projects including Mahl 550 MW, Dudhnyal 550 MW, Chakothi 500 MW, Ashkot 250 MW, Sehra 350 MW, Kotli and Gulpur 250 MW and Rajdhani 126 MW, with a number of smaller projects at different stages of implementation which can be developed and inducted into the system shortly.

Development of 8,000-MW hydel projects in Azad Kashmir can turn around Pakistan’s power sector and revive Pakistan’s industry and economy. The government needs to facilitate private-sector developers and set in place Transmission Ways from the valleys of Jehlum, Neelum and Poonch up to the national grid to pick the generated power into the national grid. Development of hydel industry in Azad Kashmir may also bring the much-needed investment of $20-25 billion in the country through the private sector, which may inject new blood to our sinking economy. Azad Kashmir, with a domestic demand of only 350 MW, can send the rest of the energy to the national grid in Pakistan reviving the struggling industry and sharply increasing exports as a result.

The dozens of small hydel projects below 50 MW with a cumulative capacity of 2,000 MW could have been developed and inducted in the national grid in the shorter term of two to three years but have been stalled due to smaller issues awaiting resolutions by the government of Pakistan. The issues include tariff determination, issuance of sovereign guarantee for project financing and signing of power purchase agreement which can be resolved within days and weeks but are pending since 1995 as the ministry of water and power is not showing adequate interest despite being apprised many a time.

Under the prevalent law, the government enjoys monopoly over transmission and distribution of electricity and no private project can be set up or operated unless given access to the national grid by the federal entities such as Wapda, NTDC, CPPA, DISCOS and PEPCO. The irony of the situation is that these monopolistic organisations which went running all the way to sign agreements with the RPPs to purchase electricity at Rs35 to 40/unit seem uninterested in purchasing hydel energy at Rs2/unit after their debt servicing from small hydel projects.

The time has come to undertake serious and decisive steps by the ministry of water and power to promote private-sector hydro power industry, so as to ward off serious crises by following an integrated plan in the country with focus on Azad Kashmir. The pending issues of tariff determination, sovereign guarantees for financing and PPA signing must be resolved forthwith, and all those responsible for inordinate delays on these counts must be taken to task.

The government and State Bank must ensure that local banks and DFIs make special allocations for hydel projects and advance money for this purpose, making no viable hydel project suffer for financing. Industrial units based on captive hydro projects must be given special incentives to set up sustainable industry.

The writer is the president of the Hydroelectric Power Association (HEPA).

http://www.thenews.com.pk/Todays-News-9 ... ad-Kashmir

Email: kohsarhydro@gmail.com

[semirza]

ISLAMABAD - With the award announced in the Kishanganga dispute by The Hague-based Court of Arbitration to divert only a minimum flow of water from the Neelum/Kishanganga River for power generation, the 969MW Neelum-Jhelum Hydropower Project would be badly affected and would have to be redesigned.

Background interviews and discussion with energy experts show that with the verdict of International Court of Arbitration, Pakistan would have to face around 150 billion annual loss as the designed capacity of 969MW Neelum-Jhelum Hydropower Project will be reduced by 150MW. The verdict has an ultimate impact on Pakistan as it will reduce water flow in the River Neelum, leaving very little water for Pakistan. They were of the view that the International Court of Arbitration ruled in favour of India on the diversion of Neelum (Kishanganga) water, setting aside objections by Pakistan that halted work on the 330MW Kishanganga Hydropower Project in Indian Held Kashmir. A detailed order in the shape of the fine print will be made public soon.

They were of the view that the verdict is a clear green signal for the Kishanganga project because Indian spokesperson Syed Akbaruddin, announcing the decision on Monday late night, asked Indians to celebrate the coming Sunday as a celebration day.

Official sources, on the condition of anonymity, held Special Assistant to Prime Minister on Water Resources and Agriculture Kamal Majidullah responsible for the defeat in the legal battle over the Kishanganga hydropower project. Giving the reasons for this debacle, they said the team leader had no knowledge about trans-boundary water management. In addition, an undue delay was made by the government of Pakistan in the launch of Neelum-Jhelum Hydropower Plant, which was approved in 1989 and was to begin in 2002. “This vital point gave an edge to India that started Kishanganga in June 2006, while in Pakistan, On July 7, 2007, the Chinese consortium, CGGC-CMEC (Gezhouba Group and China National Machinery Import and Export Corporation) were awarded the contract to construct the dam and a power station, said an official in the water and power ministry, on the condition of anonymity.

Arshad H Abbasi, a water expert, when contacted, made it clear that with the ICA verdict, Pakistan would have to redesign the 969MW Neelum-Jhelum Hydropower Project and it would also cause reduction in hydel power. He said due to the disputed Kishanganga Dam, work on the Neelum-Jhelum Hydropower Project had already been badly affected. At present, Pakistan is facing financial hardship in implementing the Neelum-Jhelum project. The Water and Power Development Authority (Wapda) is also facing internal problems in generating funds for the project and the Finance Ministry is reportedly not providing funds, he added.

In 1960, Pakistan and India hammered out the Indus Water Treaty, which governs the sharing of water on rivers heading downstream from India to Pakistan. However, India had been racing to complete the 330MW Kishanganga project which would divert the River Neelam to Wullar Lake, leaving very little water for the Pakistani project, which is just 70 kilometres downstream from Kishanganga, thus reducing the power generation capacity of the 969MW Neelum-Jhelum plant by about 11 percent. On May 17, 2010, Pakistan instituted arbitral proceedings against India under the Indus Waters Treaty 1960 and approached the International Court of Arbitration (ICA) against the violation of the treaty.

The arbitration went through tumultuous phases after New Delhi and Islamabad failed to agree on the nomination of three neutral judges. Both sides invoked a provision in the treaty under which UN Secretary General Ban Ki-moon had to nominate Stephen M Schwebel, a former president of the International Court of Justice, as the head of the seven-member arbitration bench. The bench for which the two countries nominated two members each visited both sides of the LoC before beginning a detailed hearing which concluded on August 31 last year.

The seven-member International Court of Arbitration (ICA) barred India from undertaking any permanent works above the riverbed level at the Gurez site of the Kishanganga hydel project dam. Due to the effect of the stay order, work remained suspended for more than one year.

An official of Wand Power Ministry told this scribe that Pakistan needs Rs2 billion on a monthly basis to continue work on the Neelum Jhelum project. Due to the undue delay in the proper commencement of the Neelum Jhelum project, the cost of the project has ballooned from 84.5 billion to a staggering Rs 274.8 billion, which might result in an exorbitant power generation cost of over Rs 10 per unit, against the existing hydroelectric generation cost of 16 paisa per unit.

The burden of the costs arising out of delays and inefficiency is also expected to be transferred to consumers, as the government has decided to arrange 40 per cent of the required funds through a levy on consumed energy imposed by the Government of Pakistan

It is a matter of deep concern that a permanent works above the riverbed is not allowed. But India went ahead with the construction of a powerhouse, tunnelling works, constructing cofferdams, temporary bypass tunnel and concretisation under the riverbed for the dam. And the controversy owes its genesis to India’s plan to build a 330-megawatt hydropower plant in Held Kashmir across the Jhelum River.

The dam site is located 160 km upstream from Muzaffarabad and involves the diversion of Kishanganga River (called the Neelum River in Pakistan) to a tributary named Bunar Madumati Nullah of Jhelum near Bunkot. The diversion will change the course of the Neelum by about 100km, which will then join the Jhelum through Wullar Lake near the town of Bandipur in Baramula district. As a result of this diversion, the Neelum and Jhelum rivers which at present join each other near Muzaffarabad at Domail will meet in Indian Held Kashmir.

http://www.nation.com.pk/pakistan-news- ... redesigned

[Mirza Ghalib]

This stupid decision on the part of The Hague Arbitration Court is a tremendous setback for our Neelum Project, quite agree. I suspect corruption in The Hague in all this but, nonetheless, we no doubt richly deserved our defeat. We've spent our time robbing our country and playing the apologists for all things Indian or coming out of the west. So this present defeat is to be added to the many others we have suffered in recent years. I suggest to my fellow Pakistanis that we wake up at long last, brush up a bit on our patriotism and finally cultivate honesty and efficiency as a way of life instead of its opposite traits. We'll no doubt find a solution to the Neelum Project fiasco just as we will find a solution to the matyrdom of occupied Kashmir. But let us begin by finding a solution to our own indifference and stupidity.