The federal cabinet will today (Tuesday) accept the resignation of Water and Power Development Authority (Wapda) Chairman Lt Gen (Retd) Muzammil Hussain, who leaves behind a Rs2.6 trillion development portfolio, including the mismanaged Diamer Bhasha Dam project.
The Pakistan Muslim League-Nawaz (PML-N)-led coalition government faces a challenge to revise what Planning Minister Ahsan Iqbal calls “an inaccurate cost estimate of Rs480 billion” for the Diamer Bhasha Dam and then bridge the hole of around Rs200 billion to complete the project on schedule.
Prime Minister Shehbaz Sharif has desired to complete the dam part of the project by 2026 – three years earlier than the schedule.
The outgoing Wapda chairman has submitted his resignation to PM Shehbaz Sharif after serving for more than five years. He had been appointed by former prime minister Nawaz Sharif in August 2016 and won a second term from ex-premier Imran Khan.
The resignation cannot take effect until it is accepted by the federal government, according to the Pakistan Water and Power Development Authority Act of 1958.
With the acceptance of Hussain’s resignation, the process for the appointment of a new chairman will begin under the Wapda Appointment and Terms of Service of Chairman and Members Regulations 2020.
The selection of the new chairman requires an advertisement in the leading national newspapers and involves a rigorous process that includes interviews by a selection board, headed by the minister for water resources.
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Dual or foreign nationals cannot be appointed as the chairperson of Wapda and the chairperson must have a graduate degree in engineering or a master’s degree in business administration or management, according to the Wapda regulations.
The chairperson should be a member of a recognised body of professional accountants or a civil servant of Grade-21 and above and should have 25 years of experience.
In his resignation, the outgoing Wapda chairman has mentioned that more than 10 projects costing over Rs2.6 trillion are underway.
However, the most crucial ongoing project is the Diamer Bhasha Dam having an initial estimated cost of Rs480 billion. But Wapda has begun construction activities on the project without first achieving financial close and having firmed-up prices.
A revised draft PC-I of Diamer Bhasha Dam is with the Ministry of Water Resources and the ministry officials are pointing out that the cost can range from Rs680 billion to Rs700 billion, said Ahsan Iqbal.
Muzammil Hussain began work on the Diamer Bhasha Dam project on the basis of inaccurate cost and a three-year-old PC-I that had become irrelevant due to rupee depreciation, said Iqbal.
The PC-I of the project had been approved with parity of Rs105 to a dollar in 2018 while the current exchange rate is around Rs188 to a dollar, which will require significant adjustments.
Although Wapda has said in the past that it has lined up the required funds for the construction of the scheme, which was approved in April 2018, the entire amount is still not available.
According to a statement submitted by the Ministry of Planning in a parliamentary committee meeting in August last year, an amount of Rs234 billion will be provided from the budget, Wapda will provide equity of Rs100 billion and a commercial loan of Rs146 billion will be arranged.
The federal government had split the original Diamer Bhasha Dam project into two parts due to funding constraints. In 2018, it approved the building of the dam first and then set up the power plant of 4,500 megawatts. The Rs480 billion original cost was only meant for building the dam, which is now estimated to cross Rs680 billion.
Last year, the National Assembly Standing Committee on Planning also raised questions over starting work on the Diamer Bhasha Dam without first achieving financial close.
The federal government has so far allocated Rs43 billion, of which Rs29 billion has been spent in the last two fiscal years. In addition to that, Wapda is spending funds from its share.
The standing committee had objected to the Ministry of Planning’s approach to compromise financial discipline and execute the project in bits and pieces that increased the cost manifold. Its members objected to the appropriation of funds that had been allocated for the Diamer Basha Dam but were utilised for other schemes.