ISLAMABAD: The World Bank remains moderately satisfactory with progress on $4.1 billion Dasu hydropower project, as Pakistan struggles to end a five-year old dispute over land acquisition that has also put a $100 million tranche at stake.
In its 10th report on series of Implementation Status and Results Report of the 2,160-megawatts Dasu hydropower project, the Washington-based lender upgraded the project rating to ‘moderately satisfactory’ – a notch above from the last rating of moderately unsatisfactory.
However, it has linked the future ratings with Pakistan’s ability on how quickly it resolves a five-year old dispute over cost of land acquisition for the project. The lingering dispute has also put at stake the over $100 million World Bank loan for land acquisition whose extended deadline is going to expire by end November.
The total project cost is $4.1 billion and the World Bank has given $588.4 million loan for its construction, which is nearly 15% of the total cost. It has also extended guarantees to acquire another $460 million loan from commercial banks, which has increased its exposure in the project to $1.1 billion or one-fourth of the total cost.
The result report, released last month, stated that the project implementation progress has improved in the last six months. At site, progress has been seen in construction of river diversion tunnels and the access to the underground powerhouse. Planning of local area development projects is in advanced stage and bidding for priority schemes for water supply and street lights will soon commence.
Project implementation progress rating has therefore been upgraded to moderately satisfactory. “However, a pre-requisite for keeping this rating is that necessary clearance is given for the revised land compensation rates and that this leads to award of prioritised lands during the next six months,” according to the report.
Out of $588.4 million, the World Bank had given $111 million for land acquisition. Due to almost negligible disbursements, the World Bank gave one-year extension to utilise funds for land in November last year, which is also going to lapse in the next two months. It was the third extension, which this time had been taken by the government of Prime Minister Imran Khan.
In its extension report, the World Bank had noted that the continued slow progress of land acquisition is delaying project implementation. Land acquisition has still only reached 740 acres, out of 1,987 acres required for the construction areas, and a total of 9,135 acres including reservoir area needed for the project.
The frequent interruption of work by project affectees, delayed payments by the Water and Power Development Authority (Wapda) to revenue staff and to project affectees, lack of control on illegal construction, poor safety management by contractors, consultants and Wapda and delayed decisions by Wapda on procurement and contract management in particular local area development program have contributed to slow progress on land acquisition, according to a World Bank’s report of November last year.
The project had been planned to be completed by 2021 – a deadline that both the World Bank and Pakistan will miss. There is no possibility of taking any action against those who are responsible for the delayed completion of the project.
Snail-paced PTI governance
In July this year, the Executive Committee of National Economic Council (Ecnec) had taken a decision to upward revise the land cost to end the dispute, subject to no-objection certificate by Ministry of Law and Justice. The Ecnec is chaired by Adviser to Prime Minister on Finance Dr Abdul Hafeez Shaikh.
The Ecnec had approved to increase the total project cost to Rs511 billion. The upward revision was primarily made in the land acquisition component, where the cost was conditionally approved to increase from Rs12 billion to Rs39.6 billion – a jump of Rs27.6 billion or 230%.
The Ecnec sought the Ministry of Law opinion on the revision of cost of land and build-up property after imposition of section four of Land acquisition Act of 1894. There was a view that cost cannot be revised after imposition of section four.
The law ministry had been given directions to inform about its decision within 15 days.
We have not received a report from the Ministry of Water Resources about the views of the law ministry despite lapse of almost two months, an official of the Ministry of Planning told The Express Tribune. He said that the Water Resources Ministry also did not present any report in the last Ecnec meeting, held in the last week of August.
The last Pakistan Muslim League-Nawaz (PML-N) government too had failed to resolve the dispute despite securing two extensions in timelines from the World Bank.
Owing to the slow physical progress, the World Bank released only $211.7 million or 43% of its loan component in the past almost five years, according to a project progress report of the lender.
The locals have demanded semi-urban property rates as against approved rural category rates. The commissioner of the Hazara division had recommended that either the locals’ demands be met or the land may be acquired through use of force.
The progress report stated that the preparatory work is only 26% finished compared to the expected 100% and main hydraulic structure works have reached less than 2% of the completion. Furthermore, poor safety management has resulted in accidents and fatalities associated with the construction work.
There is a plan to construct six power units of 360MW each but so far none has been completed. As of end July, there was also no progress on construction of 250 kilometre long transmission lines.
(This news/article originally appeared in The Express Tribune on September 10th, 2019)