Energy security: Cancellation of Dasu Hydro Power Project

By Shahzadi Tooba Hussain Syed

The Dasu Dam is a gravity dam currently being constructed on the Indus River 7 km upstream of Dasu village in Khyber Pakhtunkhwa Province, 74 km downstream of Diamer-Bhasha Dam and 345 km from Islamabad. The 242 m tall dam will support a 4,320 MW hydroelectric power station which will be built in two 2,160 MW stages. Current status according WAPDA’s official page is that Five contracts for preparatory were awarded and Contractors mobilized to site. Out of five, two Contracts of Project Colony (PC-01) and Dasu Resettlement Sites (Choochng) & Shatial Open Air Museum terminated due to breach of Contact by Contractor. However, works on three Contracts are in progress. Letter of Acceptance for Contracts of Main Works (MW-01, Main Hydraulic Structure (RCC Dam), Spillway, Low level outlets, River Diversion & Hydraulic Steel Structures, MW-02, Underground Power Complex, Tunnels & Hydraulic Steel Structures) issued on December 29, 2016 to a Chinese company M/s China Gezhouba Group Co. (CGGC)  being the lowest responsive bidder. Commencement work expected at site probably in March/April 2017.

The first stage cost an estimated US$ 4.278 billion including funding by the World Bank (US$ 700 million), the Industrial and Commercial Bank of China (US$1.5 billion), Deutsche Bank (US$1billion) and Aga Khan Development Network (US$ 500Million). DHP is one of two hydropower projects mentioned in the Pakistan Vision 2025, managed by the Power Wing of WAPDA. Dam Design and Construction Supervision has been assigned to a joint venture Dasu Hydropower Company led by a Japanese firm Nippon Koei and Dolsar (Turkey) with local Sub-Consultants. The construction is expected to start in 2015 and completed by 2022.

Dasu Hydropower Project is of immense importance not only for generating a large quantum of electricity to stabilize the national economy but also for sociology-economic uplift of the remote and backward areas of Kohistan in Khyber Pakhtunkhwa.

A few days back a rumor just surfaced that this very project has been cancelled later it happened to be that its just not a rumor, but the project has not yet been cancelled, it’s the contract which was  initially awarded to a Chinese company named China Railway First Group (CRFG) in November 2015. Moving swiftly, Wapda has not only encashed the performance guarantees of the two contracts awarded to China Railway First Group (CRFG) in November 2015 but also ordered the contractor to vacate the project area immediately, while calling for fresh tenders to make up for lost time.

According to the contractor i.e. CRFG, quoted by DAWN, “practically no work was done because of Wapda’s inability to settle land disputes with locals. “Wapda is the defaulter because it didn’t provide the land. The contractor actually had the right to terminate the contract, but it didn’t.” In its response, Wapda chairman retired Lt Gen Muzammil Hussain, the authority said it had “provided the partial possession of the site to the contractor M/s CRFG in line with the Contract Discussion Agreement/Conditions of the Contracts”. Another reason presented by WAPDA is that World Bank had loaned 58 percent of the cost of the project, and if the World Bank’s requirements were not fulfilled, the loans could be repealed. Earlier Wapda had blamed the CRFG for subletting the contract to a Lahore-based blacklisted company in order to terminate the contract, even though the former was not a legal contract.

Further when the court has been consulted the Additional Attorney General (AAG), Rana Waqar, informed the court that under the presidential ordinance of 1960, the government has full right to award contracts. He informed the court that the government had inked an agreement with the International Development Agency (IDA).

The project lingered on due to acquisition of land but after two years of delay in kick-starting Dasu Dam Project, Pakistan Water and Power Development Authority (WAPDA) reached a consensus in December 216 with affectees of the project relating to acquisition of land. In this case the Chinese company CRFG seems right but the partial possession of the land was also handed over to the company. No any clear reason came up of the issue because WAPDA has awarded the project to Chinese Company.

To cap all, an impartial judicial enquiry should be made to protect the rights of both the parties; of course it has made some reputational impacts. Each party should accept its mistakes. In this case WAPDA has shown all the authority to award or cancel the project. The authoritative culture laced with excessive bureaucratic controls and corruption is the main reason to hinder the FDI to Pakistan. The development in the country has suffered because of this culture in absence of an efficient judicial system. Foreign companies are reluctant to do business here because their rights are not protected. Until and unless, we reform ourselves, our development shall remain stagnant and the nation shall not be able to realize its economic potential.

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Shahzadi Tooba Hussain Syed

Shahzadi Tooba Hussain Syed works at Strategic Vision Institute in Islamabad. He can be reached at

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