Pak govt rejects wapda’s fund raising plan

Islamabad: The government has rejected Water and Power Development Authority (Wapda) plan of generating money from the market to meet the funding requirement of Mangla dam raising project, a factor that could further slow down the already delayed scheme.

Sources said that Wapda was planning to generate around Rs 20 billion through issuance of bonds at 10 percent interest rate, with maturity period of six months.

The Authority had proposed the scheme due to increase in the overall cost of the project from Rs 62 billion to Rs 101 billion. Besides this, the government was not in a position to fund such a huge funding requirement amidst horrifying economic difficulties.

Sources said that Finance Ministry and the Planning Commission (PC) had directed Wapda to generate this money only if the bond's maturity period was extended to at least 7 years. The PC was of the view that the government and Wapda could, in no way, ensure repayment to the bond holders in a short period of six months, sources added.

The upward revision in project cost is still to be approved by Executive Committee of the National Economic Council (Ecnec), but the Central Development Working Party (CDWP) has given go-ahead signal to cost raise proposed by Wapda, they said.

The project, whose rescheduled completion date is December 31, 2008, would face serious difficulties if the government failed to meet the funding requirements of the project in the last quarter of this fiscal year and first quarter of the next fiscal year. The project is already delayed by more than six months.

It is interesting to note that most of the increase in the cost was made in project's resettlement plan, which was increased to Rs 60 billion from originally proposed Rs 26 billion. 'Our executing agencies always fail to assess the right estimates of projects cost, due to which the cost of development projects often are revised upward,' sources said.

The timely execution of infrastructure projects always remains one of the big issues that hold the development plan back from yielding the desired results, sources said, adding that the PC monitored around 37 development projects being executed in water and power sector.

The monitoring authorities identified 25 projects as slow moving. That is a serious source of concern for the development agencies, they said. Sources said that if the additional allocation was not made for the project, the resettlement plan could be in jeopardy that could intensify the reservations of the affectees.