Diamer Bhasha Dam: Russia wants to take up project without bidding
12 September 2012
Daily The Pak Banker
ISLAMABAD. Russia is seeking direct award of a construction contract for
the $13 billion Diamer Bhasha Dam in a government-to-government deal
without resorting to international competitive bidding, sources say.
Faced with water and power shortages, Pakistan is looking for funds from
China and Russia, who in turn want a government-to-government deal
without international bidding.
The governmentï¿½s search for funds came after multilateral donors asked
Pakistan to get a no-objection certificate from India for the damï¿½s
China and Russia want a similar arrangement for undertaking the
Iran-Pakistan gas pipeline project, which has faced fierce opposition
from the United States.
According to sources, Pakistan and Russia are likely to strike a final
deal on the dam during visit of Russian President Vladimir Putin to
Islamabad next month.
"A meeting of Pak-Russia inter-ministerial commission will be held
before the visit of Russian president, which will work out a mechanism
for financing mega projects," a government official said.
In a meeting of the Inter-governmental Commission (IGC) held here on
Monday, government officials gave a detailed briefing to the Russian
team on planned energy projects. However, sources said, Russia made no
firm commitment to the dam.
According to the official, it was just a preparatory meeting to discuss
different projects, which could be tabled during deliberations with the
In the IGC meeting, the Russian side was told that Bhasha Dam was a
strategic project with power generation capacity of 4,500 megawatts to
overcome the energy crisis. It will have water storage capacity of 8.5
million acre feet to feed the agricultural sector.
The Chinese government has already offered Pakistan skilled labour for
the construction of Bhasha Dam. China has 17,000 skilled workers, who
have worked on the giant Three Gorges Dam, which is producing 30,000
megawatts of electricity.
On the other hand, multilateral donors have asked Pakistan to seek a
no-objection certificate from India to pave the way for financing the
dam, which they say is situated in a disputed territory. Instead, they
have offered to finance another project ï¿½ Dasu hydropower, but the
government has rejected the plan and wants to complete Bhasha Dam first.
On Monday, a delegation of the World Bank, headed by Country Director
Rachid Benmessaud, called on Federal Water and Power Minister Ahmed
Mukhtar and once again offered to finance phase-I of the Dasu project.
Dasu hydropower project is situated 7 km upstream of Dasu village on
Indus River and 350 km from Islamabad. The project is located in
Kohistan district of Khyber-Pakhtunkhwa.
Guyana endorses US$506M construction deal in China
September 12, 2012
The construction agreement of what would be Guyanaï¿½s costliest
infrastructural project ï¿½ the Amaila Falls Hydroelectric Project (AFHEP)
ï¿½ has been signed, government announced yesterday. Construction is
expected to start in mid-2013.
According to a statement issued by the Government Information Agency
(GINA), the Engineering, Procurement and Construction (EPC) agreement
for the construction of the Amaila Falls Hydro project and Transmission
Line was yesterday executed in Xian, China, by Sithe Global, the
developer, and China Railway First Group (CRFG), the construction
company. There were no indications before yesterday that a government
team had left for China for the signing.
The contract, valued at US$506M, was signed by Bruce Wrobel, Chief
Executive Officer (CEO) of Sithe Global, and Dr. Sun Yonggang, Chairman
of China Railway First Group (CRFG).
According to GINA, speaking at the signing ceremony, Finance Minister
Dr. Ashni Singh described the occasion as a historic moment for Guyana
and for Guyana-China relations. He alluded to "the strong historic
relations between the two countries and the increasing role that Chinese
enterprises are playing in the development of Guyana."
According to the Minister, the Amaila Falls project presents an
opportunity for these relations to enter a new phase as the project
represents the single largest investment in Guyana and one of the
largest Chinese investments in the Caribbean.
Also in China for the signing were Chairman of the Guyana Power and
Light, Winston Brassington; Office of the President Advisor, Steven
Grin, along with representatives of the Province of Shaanxi, the China
Development Bank, China Export and Credit Insurance Corporation, the
Inter-American Development Bank (IDB), and other representatives of
Sithe Global and China Rail.
"This transformational project is the single largest investment in
Guyana and will allow Guyana in one single step to move from being
almost entirely dependent on costly fossil fuels to being supplied
almost entirely by renewable energy. We are delighted to have such
credible partners recognize the importance of the project and be ready
to invest private capital in Guyana," Minister Singh said.
Wrobel stated that, "We are pleased to be associated with this project,
long in the making, that will make a huge difference to the people of
Guyana and is representative of the globalised world that we inhabit, a
project with many important players, such as the CRFG, CDB, IDB, the
Government of Norway, and the GoG."
The Chinese construction firm, CRFG, was founded in 1950 and is a
state-owned entity, with over US$9B in annual revenue. It is part of
China Railway Engineering Group, a company with over US$90B in revenue
and the third largest construction company in China and one of the top
100 construction companies in the World, GINA said. CRFG is
headquartered in Xian, China.
Sithe Global is a fully-owned subsidiary of the Blackstone Group.
Blackstone is said to be one of the largest private equity funds in the
world with over US$120B under management. China Development Bank is one
of the largest commercial banks in China with assets in excess of
US$900B. The project is being led by the Shaanxi branch of the CDB, in
Xian. The IDB is one of Guyana's oldest development partners in the
energy sector and an institution with over US$171B in capital.
In June, Sithe Global said that it was hoping to have financial closure
on the project by March 2013. It has established a local company, Amaila
Falls Hydro Inc. (AFH), to handle the project in Guyana.
There were no details in the statement yesterday as to whether there was
financial closure for the project and how the US$840M will be spent.
During meetings in Guyana earlier this year, Sithe Global officials had
offered a detailed look into the project costs, timelines and issues
leading up to the financial closure of the project.
The company had also warned of cost increases.
"One risk of delay is that the project's construction contract price
could increase. Such increases could result from changes in foreign
currency exchange rates or other factors. While previous currency
adjustments resulted in substantial cost increases, the US Dollar to
Chinese Yuan Renminbi foreign exchange rates have not moved
significantly in the first half of 2012."
The project has been marred by concerns over the high costs which
started from US$600M and has risen to over US$800M without a stone being
laid or a screw turned.
It was also hampered by the scandalous US$15.4M road project contract
awarded under controversial circumstances to Makeshwar 'Fip' Motilall.
The contract was terminated earlier this year because of the absence of
a performance bond.
The Amaila Hydropower Project, (approximately 165MW capacity), to be
located in western Guyana, in Region Eight, will include a new 270 km
transmission line and new substations leading to Georgetown. Currently,
nearly all electric generation in Guyana is provided through small units
burning either diesel or heavy fuel oil. A significant portion of the
countryï¿½s foreign exchange is spent on importing fossil fuel.
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