Hydroelectric plant in Pak-occupied Kashmir hangs fire

Pak struggles for funds as Beijing, Abu Dhabi dither on lending

With its potential lenders like Beijing and Abu Dhabi dilly-dallying, Islamabad is finding it difficult to mobilise funds for a hydro-electric plant it has been building in Pakistan-occupied Kashmir (PoK) and citing as its ''downstream use'' to block an Indian project upstream on a tributary of Jhelum.

 Invoking the 1960 India-Pakistan Indus Water Treaty (IWT), Islamabad in 2010 sought arbitration by an international court on its dispute with New Delhi over the 330 MW Kishenganga Hydro Electric Project (KHEP), which the National Hydro-Power Corporation Limited is building in the Baramulla district of Jammu and Kashmir. Islamabad recently argued before the Court of Arbitration in The Hague that the KHEP would adversely hit power generation at the 969 MW Neelum Jhelum Hydro Electric Project (N-JHEP), which it has been building downstream on the same river in the Pakistani side of the LoC.

Uncertainty, however, looms large over the N-JHEP, as Beijing is yet to clear the China Export Import Bank’s proposed loan of $ 448 million to Pakistan for the hydel project.

New Delhi has been protesting against Beijing’s plan to provide assistance to Islamabad for the N-JHEP, as the project is located in PoK, which India claims as its integral part. 

The Abu Dhabi Fund for Development – a lending arm of Abu Dhabi Government – has also withheld a $ 100 million loan it had earlier pledged for the project.

Claiming that Islamabad had “consistently failed to substantiate” its claim of downstream uses of the water of the Kishenganga or Neelum, India recently argued before the Court of Arbitration that Pakistan had “failed to demonstrate its commitment to the realisation” of the N-JHEP.

Pakistan, however, claimed that it had remained committed to the project since 1989. Islamabad argued that India’s plan for diversion of water of the Kishenganga into another tributary of Jhelum for the KHEP was in contrary to the latter’s IWT obligations.
The seven-member Court of Arbitration headed by eminent American jurist Stephen M Schwebel finished hearing arguments of both Indian and Pakistani representatives on August 31 last and is expected to deliver the final award by February 2013.

New Delhi argued that the IWT required India to take into account Pakistan’s downstream uses only up to a date at which designs of its own hydroelectric projects would be finalised. India pointed out that if it had to continuously adjust its hydel projects’ designs to Pakistan’s downstream uses as they develop, then the express right granted to it by the IWT to use waters of the “Western Rivers” to generate hydropower would stand negated. Pakistan claimed that the treaty protected its “downstream uses as they would exist from time-to-time”.

But a recent deposition by N-JHEP project director Muhammad Zubair before Pakistan National Assembly’s Standing Committee on Economic Affairs revealed that the construction of the hydel plant is far from reality and has been hit by fund-crunch. The Islamic Development Bank pledged $ 357 million, but halted release of fund after China’s EXIM Bank slowed down the process to clear its loan for the project. Pakistan’s Auditor General also pointed out recently that the inordinate delay had raised the project’s cost by 225.29 per cent to $ 2.94 billion.