ECC may allow Wapda to float bonds for Ghazi Brotha Hydropower project

ISLAMABAD (February 25 2003) : The Economic Co-ordination Committee of the Cabinet (ECC) in its meeting on Tuesday (today) is likely to allow Wapda to float bonds worth Rs 5 to 7 billion for Ghazi Brotha Hydropower Project (GBHP), informed sources in the Finance Ministry told Business Recorder.

Sources said, Wapda has awarded mandate to ABN Amro Bank-led consortium to raise Rs 5 to 7 billion from the capital market, as the ECC would extend guarantee of GoP for repayment of principal on maturity and pay back the due amount on six monthly basis to the holders of 10th bonds.

The federal government, sources said, had agreed with the International Financial Institutions that Wapda would issue bonds during 2002-03 to raise amount from the capital market for meeting local rupee obligations of the project, which according to the utility was presently in its critical phase of completion.

Sources said, the Ministry of Water and Power had circulated its summary to the Ministries of Finance, Law and Religious Affairs besides Central Board of Revenue (CBR) and Secretaries and Exchanges Commission of Pakistan for comments, which agreed with the proposal.

The 1450-megawatt Ghazi Brotha Hydropower Project was in critical phase as the World Bank, which threatened to suspend the last tranche of $ 530 million loan if remaining issue like the rehabilitation of Terbela dam affectees would not be resolved immediately.

Wapda has submitted its compliance report to the WB, but it seems the bank was still not happy with the measures taken by the utility so far.

The bank once again has sought few clarifications including the timetable for the settlement of those issues, which the government had promised to complete as early as possible, sources added.

WB, sources said, would release $ 52 million as the last tranche for the project, but wanted to take assurance from the government those commitments would be fulfilled as per agreed schedule.

The general impression is that the testing of first unit scheduled to be operative in May next would be late due to controversy between Wapda and the Italian firm, Impreglio, which has approached to the International Centre for Settlement of Investment Disputes (ICSID) to resolve conflict.

But Wapda was of the view that there would be no change in the testing schedule of the first unit.

However, the Ministry of Water and Power, in its summary has indicated that the first unit of the project would start work by June 30.

Sources further said, Dr Tariq Hassan, Adviser to PM's Adviser on Finance and Additional Secretary Water and Power, Riaz Ahmad Khan were in Washington to deliberate with the Chairman ICISD on the issue.

“Both will stress the Chairman ICISD that Impreglio's plea should not be entertained as the firm can only approach the Dispute Resolution Board (DRB),” sources continued.

Interestingly, Wapda does not like the incumbent Chairman of DRB, but sources claimed that the former has never created any hindrance in the working of Chairman.

Impreglio, however, was of the view that when Wapda was not ready to accept the decision of BRD, it has no other option but to approach ICISD, sources maintained.

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