Pakistan to ‘self-finance’ Gwadar’s water treatment plant

ISLAMABAD: Pakistan decided on Monday to self-finance the Rs5-billion water treatment plant in Gwadar after China remained non-committal to fund the scheme despite its importance to the China-Pakistan Economic Corridor projects.

The federal and provincial government of Balochistan would now equally share the construction cost of the 5-million gallons per day osmosis sea water treatment plant for Gwadar city, according to a revised plan approved by the Central Development Working Party (CDWP).

Amid questions over the exorbitantly high cost, the CDWP also approved the revised project for land acquisition and relocation of utilities for construction of the Karakoram Highway phase-I of CPEC.

The project has been approved at 92% higher cost. Against the original price tag of Rs6.9 billion, the federal government escalated it to Rs13.2 billion. Land has been acquired for construction of the 120-kilometer section.

The government had to clear the 5-million gallons per day water purification plant to meet the Gwadar city’s emergent water requirements, although it did not allocate the money for the project in this fiscal year’s Public Sector Development Programme.

According to the original plan, China was supposed to commit 90% financing for the project. In 2016, Pakistan had requested the National Development Reforms Commission (NDRC) of China to provide a grant for the project.

China informed Pakistan that the grant may take at least two years for approval and the country could not afford to wait that long, according to officials of the Planning Ministry.  They said due to the delay by the Chinese side, Planning Minister Ahsan Iqbal directed to invite private sector parties for project completion.

But the government of Balochistan was of the view that financial viability and sustainability of the project on a Build-Operate-Transfer (BOT) model was questionable as so far, no major industry existed in Gwadar. This led to a decision to self-finance the project, according to officials.

Gwadar’s water requirements by 2020 are estimated to go up to 20 million gallons per day, as against the current supply of only 2 million. The new project will take about two years for completion.

Water is planned to be pumped from the sea for purification and onward supply to the residential and industrial areas in Gwadar.

Land acquisition project

The CDWP also cleared the project for land acquisition for the under-construction KKH-I road project at a revised cost of Rs13.2 billion. At the original cost of Rs6.9 billion, the government had a plan to acquire 1,381.7 acres of land.

According to the revised project, the government would acquire 1,500 acres of land. But the cost increase is significantly higher. The government has already spent roughly Rs8 billion on the project.

“The original rates were based on the baseline survey carried out in each district in February 2015. Now the instant rates are bases on actual market price of October 2017,” according to project documents. Land requirements also increased by about one-fifth due to a link road and other allied facilities.

But the transport and communication section at the Planning Ministry said the cost escalation seems fishy. “The cost has increased by 92.1% while land areas increased by 19.5% … this is a substantial difference,” according to the section’s analysis.

It added that there were contradictions in statements given to justify the increase in cost. The transport section was of the view that the 2015 prices should be taken as ‘firm cost’, as these were based on rates collected by the relevant Commissioner’s Office.

The transport section also found a discrepancy of Rs1.04 billion in the cost estimates given by the National Highway Authority.

In total, the CDWP approved 20 projects worth Rs80.6 billion out of which five projects worth Rs60.9 billion were referred to the Executive Committee of National Economic Council (ECNEC) for further proceeding.

Published in The Express Tribune, January 16th, 2018.

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