OBSTACLES TO DEVELOPMENT OF HYDROPOWER IN PAKISTAN

Ads 

An assessment of the energy sector in Pakistan reveals that since 2009 the self reliance objective has not been achieved and at the way plans are finalized by 2023 there would be little movement towards achieving the objective of reliance related to indigenous energy. One aspect of this is the failure to increase the share of hydropower in the energy mix.

1.       Share of hydropower in energy and power mix. Energy and power data suggest that hydropower share in total mix has stagnated and this trend is likely to continue to 2023 , in fact in 2023 hydropower share will decrease slightly  compared to 2017 .There are several reasons for this . the last many  hydropower plants added to the system  in the public sector have faced inordinate delays ( Golen Gol, Allai Khwar, Khan Khwar, Nelumn Jhelum , Jinnah, Gomal Dam, Punjab and KP Low heads and Tarbela extension ) have also registered significant  cost escalation .Insufficient studies, mismanaged resettlement and land  acquisition,  , indifferent contract management, and funding woes triggered these delays . The unresolved issue of the (‘profits on hydroelectric power generation ‘) royalty also creates indirect hurdles in development of hydropower. Friction between KP and the centre on this issue has starved KPs hydroelectric power potential to be severely underutilized, in evidence the better utilization of AJ&K hydropower potential as compared to KPs potential (KP hydropower potential is generally more economic to AJ&Ks mainly due to superior geology. Large hydro’s take more than 5 years to complete therefore the government which has a mandate for 5 years is not interested in projects that will complete after its tenure completion. There is very little coordination between Provincial/local governments and Federal governments related to execution of hydropower plants. Land acquisition and resettlement issues are poorly tackled. Preconstruction facilities and infrastructure for construction receives insufficient attention, these all emanate from indifferent feasibility studies that are poorly monitored and controlled. HEPO has been weakened, underfunded and its ability to provide guidance in hydropower issues has been compromised. Capacity building has not received much attention. KP has faced issues with transmission lines, there have been instances where   power plants were ready but transmission lines were not. Rules on who has responsibility to construct lines and methodology of resolving transmission issues are not available. KP has now called for building two 500 kV lines for evacuation of power from Chitral. They neither have the financial capability nor the technical capability to perform this task. Small hydropower plants are having issues with approvals, CPPA now wishes to offer: pay what you take basis for contracting capacity; this is the result of faulty planning. Small plants also have trouble getting approval of DISCOs to connect their plant to the distribution system.

Rectification of Hydropower Share in Total mix

Share of hydropower in energy mix has stagnated; this has impacts upon the self reliance target and also on the share of clean energy in the total energy mix. . To rectify this there is need to take the following steps:

1.                   Provincial inputs in policy and plan formulation. The 18 th. Amendment of the constitution has altered the role of Federal and Provincial Governments with respect to energy in general and hydropower in particular. This needs that the decision making process is amended to cater to this changed constitutional provision. It is suggested that a policy and planning committee on power be constituted with representation from the Provinces. There is also need to periodically refer the policy and plan formulations of this committee to the CCI. Hydropower potential in AJ&K has been utilized in a much better and smoother fashion than that in KP. The primary reason for that is that hydropower falls under the AJ&K Council which has declared that hydropower potential above 50 MWs will be dealt with by PPIB whereas the potential below 50 MWs will be dealt by the AJ&K Hydroelectric Board. KP wishes to deal with all hydropower potential except that on Main Rivers for multipurpose use. KP provincial PPC has also not performed well seems there is a message to KP Government in this statement.

2.                   Preparation and monitoring of feasibility studies. Feasibility studies need inputs from a set of varied technical disciplines, there is need to: monitor and control the development of feasibility studies by an experts panels that is fully empowered; assess risk mitigation and identify the residual risk that needs to be controlled during the construction stage, like tunnel geological risk in the feasibility study.

3.                   Capacity Building. There is currently little attention paid to capacity building in the hydropower sector. ; organization engaged in development of hydropower ( HEPO/WAPDA, PEDO, AJ&K Electricity Board; Provincial Energy departments and organizations , and GB Energy departments) do not have in place a human resource enhancement program related to hydropower . Presently the Centre for Excellence in Water Resources (CoEWR) carries out a MSc. program in hydropower; there is also a hydropower training center in Mangla Dam. It is proposed that: short courses related to various aspects of hydropower (like hydrology, geology, seismicity; economics; mechanical, electrical, mechanical, turbines, financial, resettlement, environmental etc.) should regularly be arranged through the CoEWR and other institutions; funding should be provided to send candidates to the MSc. Course in the CoEWR.

4.                   EPC Contracts.  The organizations involved in hydropower sector development are not familiar with the working of the EPC contracts. There is need to provide capacity building opportunities to professional engaged in contract management of EPC contracts. EPC contracts in the IPP mode also present an issue. Sponsors engage EPC contractors that are very closely related to the main sponsor , the EPPC bidding is not transparent and is questionable, it is proposed that a third part evaluation of cost must be carried out to verify the lowest EPC bid veracity and authenticity ..

5.                   ToRs of Feasibility Studies. ToRs (terms of Reference) of feasibility studies need to be amended to reflect the concerns with identification of preconstruction activities. Delays in completion of hydropower plants partly result due to inadequate provision for pre construction facilities.

6.                   Resettlement and Environmental Issues.-Pakistani agencies have struggled with resettlement land acquisition issues. Land acquisition costs have risen sharply in areas where large infrastructure projects have been or are implemented.

7.                   BASHA, KALABAGH-Construction of Bhasha dam. Kalabagh dam could not be built due to internal political differences and Bhasha dam could not be built because of external factors. We should go on our own. This should be initiated without any further delay. Dasu has been stalled, in any case Dasu would only provide electricity, and water scarcity has become an equally important factor if not the most important factor in our development priority. Construction of Kalabgah Dam could be initiated at the earliest possible as it would be acceptable to both WB and ADB, we however need to achieve consensus amongst ourselves.

8.                   Transmission interconnection-WAPDA has complained that NTDC have not been able to add evacuation lines in time and have sought control over NTDC, this has correctly been disallowed by the government. The issue, however, needs to be resolved. In recent times NTDC have failed to add transmission lines associated with both public and private power plants in time. It is proposed that the penalty that is imposed upon IPPs for completion after due date should have also compensation for NTDC, provided, however, the transmission lines have been completed. WAPDA under construction hydropower plants also need their PPA’s altered to include to include penalty to be paid by WAPDA in case of delayed completion of power plant and a provision in this is to be made for compensation to NRDC for non-utilization of completed transmission lines   and penalty to be paid by NTDC to WAPDA in case of delayed completion of transmission lines associated with the project .

Update : Dasu Hydropower Plant 

The handling of he Dasu Hydrpower plant, which has partial funding for parts of the first phase of the project is a important case  that validates parts of the analysis presented above. There were issues with transmission line voltages but a more crucial and potentially project threatening issue us the resettlement cost , which has been been mishandled. 

Dasu Hydropower Project Jan.,26,2019: A crucial meeting of the Dasu Hydropower Project`s Steering Committee was postponed again for a second time, delaying discussion and finalization of the already tardy land acquisition and compensation to people to be affected by the project under a recent and jointly agreed formula. , the meeting couldn`t be held due to engagements of top officials including the federal minister for water resources and the KP chief minister. special committee was all set to submit its preliminary report to the steering committee in the scheduled meeting on Thursday, but it was postponed again  the report had been prepared after holding a series of meetings with the landowners, local MNAs, MPAs, notables etc. The report,   suggested to the government to accept the landowners/affectees` demand of award of compensation to them according to the formula applied for compensating landowners/affectees of Diamer-Bhasha Dam. the financial impact arising in the wake of accepting the affected people`s demands is approximately three per cent (Rs18 billion or so) of the total project`s cost (over Rs600bn) for two stages of this mega project.

Dasu Hydropower Plant: Indigenous energy: Feb., 17, 2019: The Steering Committee for Dasu Hydropower Project could not take decision over the compensation criterion for land owners after it observed that the special committee did not give any recommendation, leaving the final decision on the part of the government keeping in view the options mentioned in its report   , there are many constructions that were done after enforcement of section-4 of the land acquisition act. Under the law, no constructions can be done after enforcement of this section. But the locals did this just to get more and more compensation. If the government regularise such constructions and award compensation to their owners, it would be illegal.  

Update: Mar., 21, 2019:

Suki Kinari :

  People on Wednesday staged a protest demonstration, demanding market price for the land acquired by the district administration for the 840-megawatt Suki Kinari dam being built under the China-Pakistan Economic Corridor (CPEC).

“The district administration signed an agreement with the families affected by the project that they would be paid the market price for their land but we are still without payments and our houses have been destroyed,” a resident, Sadaqat Ali Shah, told a rally in Kaghan valley on Wednesday.

The Suki Kinari hydropower project, being built on the Kunhar River, is the first energy sector project being executed under CPEC in Khyber Pakhtunkhwa. The protesters, who were raising slogans in support of their demands, said that they would end their protest till they were paid appropriate price of their land. Another resident, Imran Shah, said that people were being expelled forcibly by the administration. “Our houses are being razed and the land is already acquired but we have not received the payment,” he added. He said the district administration had also announced to provide land for the graveyards, which submerged under the dam reservoir, but they were without an alternative land for the cemetery to date.

Dasu :

The Dasu Hydropower Project, funded by the World Bank, now runs the risk of further delays as bureaucratic wrangling has broken out between the Ministry of Water Resources and other members of the steering committee that is empowered to make critical decisions regarding the project.

At issue are the decisions taken by the Project Steering Committee (PSC) in its 14th meeting on acceptance of demands of landowners and affectees on the issue of compensation and land acquisition for the mega 4,300MW hydropower project. The decisions were changed allegedly by the Ministry of Water Resources when the minutes of the meeting were circulated on March 15.

Participants who were present in the meeting tell Dawn that in reality an entirely different discussion took place from the one reflected in the minutes. According to an email sent later by the WB representative to all steering committee members after receipt of the minutes agreed to the proposal of revising the compensation package to Rs36.914 billion and then forward the same to the Executive Committee of the National Economic Council (Ecnec) for approval. `But the decisions outlined in the minutes of the 14th PSC meeting don`t reflect the decisions taken in the meeting. The ministry may have a different view, which it can take, but the minutes of the meeting should reflect what was decided in the meeting,` reads the email which was shared with Dawn by a recipient. `I also request you to follow up so that the minutes be corrected and revised to reflect the decisions of the meeting and not alternative truth,` the email states.

`It is really surprising that the actual decisions taken unanimously by the participants of the meeting presided over by the federal minister for water resources on March 5 were deliberately omitted in the minutes of the meeting prepared and circulated on March 15 among the members of the project steering committee,` he told Dawn. `At the end of the meeting, we even greeted and congratulated each other for resolving the longstanding issue of compensation to the landowners and affectees of land acquisition for the project. But why and how this happened, it is really surprisingly,` the official added, requesting anonymity.

Meanwhile Irfan Ali, who holds charge as secretary water resources, tells Dawn that the omission was necessary because Ecnec was the right forum empowered to approve any changes to the compensation package. `I do agree with you that the steering committee had accorded its recommendation over this package and the same should have been incorporated in the minutes of the meeting` he tells Dawn when asked about the omission. But at the same time, I am of the view that the same proposal must be sent to Ecnec for an objective discussion and approval,` he adds.He also admitted that there should be issuance of an addendum to the minutes of the meeting regarding recommendation of the steering committee on the revised compensation package.

In the meeting, Khyber Pakhtunkhawa`s Senior Member Board of Revenue told the members about affectees` willingness over withdrawal of their demand of change in land category if the earlier negotiated land rates, approved byEcnec in 2015,be escalated at the  rate of 10 per cent (per annum) for all categories (accumulative 40pc for four years 2014 to 2018) and awarding compensation to them for houses /construction and development made on the land after imposition of Section-4 of the Land Revenue Act. He also explained that the land cost that was earlier Rs19.163bn would jump to Rs36.914bn if aforementioned demands of the affectees are accepted.

The minutes circulated af ter the meeting say that PSC member decided to circulate all options to various departments for comments, including Wapda, water division and others.

Mr Ali, however, is not convinced. `It is not a matter of one project alone, as we want transparency in all projects, including Dasu. So the steering committee recommendations will be honoured in this regard, as it is also an important forum, ` he said.

Dasu land acquisition: July, 16, 2019: The federal government on Monday conditionally approved an upward revision of the cost of Dasu hydropower project to Rs511 billion aimed at removing bottlenecks in the land acquisition process that has delayed the construction of 2,160 megawatts power project. The upward revision has primarily been made in the land acquisition component, where the cost is conditionally approved to increase from Rs12 billion to Rs39.6 billion –a jump of Rs27.6 billion or 230   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 Ecnec also approved the project for the evacuation of Power from 2,160 MW Dasu hydropower to Islamabad via Mansehra at a revised cost of 90.8 billion. The meeting was informed that the changes in the cost of the project occurred due to changes in the exchange rate. 

.Dasu Progress: Sep., 13, 2019: 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, 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.  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.