By Zahiruddin
CHITRAL: The Chinese Construction Company remains far behind the target in completion of work in the under-construction 69-MW Lawi Hydropower Project, near Drosh town in Lower Chitral due to the devaluation of Pakistan rupees against dollar which forced the company to decelerate work to save financial losses.
When the agreement agreement was signed between between the Chinese company and the Pakhtunkhwa Energy Development Organization (PEDO) of the government of Khyber Pakhtunkhwa in October 2016, one American dollar was equivalent to Rs. 100 and the payment was to be made in local currency.
The construction company is said to be in a great distress financially in the aftermath of the devaluation of Pakistani currency by 54 percent which tends to inflict a colossal loss on it.
According to knowledgeable sources, about 35 percent work has been accomplished by the company against the target of 65 percent by January this year while the work is to be completed in November 2021.
The company is said to have landed in an embarrassing situation as it can neither back out from the project facing forfeiture of their work and performance securities amounting to billions of rupees nor the company can continue the work on required pace which causes its loss per each day due to escalation in the prices of construction materials.
The sources said that as per agreement terms, the company cannot claim for escalation in its rates per item due to the fall in the value of Pakistani currency and it is the sole discretion of the government to adjust the prices commensurate the existing market rates.
The power project of Rs.16 billion entails a tunnel of 14 kms to which water is diverted from the stream of Shishi Koh valley and the power station will be constructed at the foothold of Lawi village on Drosh-Chitral road.
The construction work is in progress in almost all the components of the project like weir structures, intake structures, sedimentation basins, main headrace tunnel, surge chamber, powerhouse building and residential colony.
Presently the company is employing 480 persons both as skilled and unskilled workforce out of them 130 are foreigners whose salaries have been paid till this month but the payment to the local petty contractors are said to be pending since long.
An employee of the company said that although the company is in loss which is accumulating day by day but it has been clearing the dues regularly to the employees during last couple of months.
He said that there is no issue in the payment to the company by PEDO as per work done and nothing is pending for payment against the government which has always released the funds timely to the executing agency.
Another source in the project feared that the work on the power project will finally come to halt and the cost of the project will increase many times in such an eventuality because its estimate was based on market rate prevalent four years ago.
He said that if the Chinese company finally backed out of the contract, then the remaining work will be contracted out as per existing composite scheduled rates which have increased by more than 60 percent over the years.
The project director of Lawi Hydro-power project, Niamat Khan confirmed that the work was in snail’s pace making it difficult to complete the work by the stipulated time in which hardly eighteen months left.
He said that due to the devaluation of Pakistani currency, the construction company may be in loss but it is also a fact that the as per terms of the agreement, they had to carry on their work without requesting for raise in the item rates.
“Rise in the rates of dollars is a common phenomenon in the international contracts a company always includes the impending fall in the value of local currency and so did have the Chinese company.
Revision in the rates is, however, beyond the scope and authority of PEDO and it can be done only on high level through the Chinese Embassy seeking government to government interaction”, he said.
When asked why the PEDO is failing to get the work accelerated, he said that the construction company has been given dozens of notices in this regard during the last two years but to no avail thereby admitting to the inability of the executing agency.
