T4HP: Govt seeks another extension in closing date of World Bank loan


The government has requested the World Bank for extending the closing date of credit for Tarbela Fourth Hydropower project for fifth time, aimed at enabling Water and Power Development Authority (Wapda) to finance remaining payments on ongoing contracts, complete activities to support sustainable operation of project and address remedial measures for fixing issue identified at the intake of the power tunnels constructed under the project.

Official documents revealed that the restructuring for the extension of the closing date of IDA Credit- to June 30, 2023 is in response to the request received from Wapda, via Ministry of Economic Affairs on December 13, 2022. This is the fifth extension of the IDA Credit, which had the original closing date of December 31, 2018 and has the current closing date of December 31, 2022.

During the extension period, the project will utilise the un-disbursed balance of SDR 24.2 million and around SDR 1.7 million in the designated account from the IDA Credit. Around US$30 million is expected to be utilized for payments to civil works contractor, E&M contractor, and construction supervision consultant.

The remaining amount will be utilised for: (i) installing instruments for monitoring Tarbela Dam, flow and sedimentation in Tarbela Reservoir, survey equipment, and upgrading testing laboratory; (ii) activities to strengthen the capacity of Wapda, which include information technology systems and equipment and trainings; and (iii) environmental and social activities.

T5HP: WB agrees to amend IBRD, AIIB loan agreements

Tarbela Fourth Extension Hydropower Project comprises: (i) A Parent Project comprised development of a 1410-Megawatt (MW) power plant namely T4HP on Tunnel 4 of the Tarbela Dam, dam safety and monitoring program, as well as, associated social action plan, environmental management plan, project and construction management and supervision, and evaluation of project’s impacts.

This is financed by a $400 million in IBRD financing (IBRD-81440) which is fully disbursed and closed, and SDR 283.7 million in IDA Credit, approved by the World Bank on March 20, 2012. IBRD Loan-81140 and the IDA Credit also finance technical assistance, trainings, and preparation of strategic projects. On July 12, 2016, SDR 81.9 million and as of July 4, 2022, SDR 22.86 million were cancelled from IDA Credit, due to savings in the key contracts. The current closing date of the IDA Credit is December 31, 2022.

(ii) An additional financing of $390 million in IBRD Loan-86460 was approved by the World Bank on September 20, 2016 for development of another 1,530MW power plant on Tunnel 5 of Tarbela dam, the Tarbela Fifth Extension Hydropower Project (T5HP). US$300 million in co-financing from the Asian Infrastructure Investment Bank was also approved by the AIIB on September 27, 2016 for T5HP. IBRD Loan- also finances a 500-kV transmission line from T5HP to Islamabad West substation; social and environmental management plans, project and construction management and supervision, and evaluation of project’s impacts; technical assistance, future project preparation; and a pilot project with floating solar plant in the Tarbela Reservoir. The Closing Date of IBRD Loan-86460 has been extended to May 31, 2024; and AIIB has extended the closing date of its loan to June 30, 2025.

The documents revealed that the project’s progress towards achieving the Project Development Objective (PDO) and the overall implementation progress are satisfactory.

T4HP was commissioned in 2018 and has since generated over 18,200 Giga Watt-hours (GWh) of sustainable energy. The generation from T4HP started on schedule. T4HP supplies inexpensive electricity from renewable hydropower generation; and the economic benefit from T4HP, so far, has exceeded US$2.3 billion. The plant was completed with cost savings of 10 percent, which is rare for a large hydropower project. These savings resulted in cancellation of over US$135 million from IDA.

T5HP funded from the additional financing is under implementation and progressing well. Key contracts are awarded and fully financed by the Bank and AIIB. T5HP will be commissioned in 2025 with installed capacity of 1530-MW. The key contractors for civil works and electro-mechanical (E&M) works have been mobilized. Under civil works, the contractor has been excavating the sites for raised intake, penstock, powerhouse back slope, and tailrace canal of the T5HP. E&M contractor is working with the project supervision consultant for design review and to achieve its contract milestones. Tunnel 5 is available to the contractors for construction works. Civil works and E&M contractors are coordinating with project supervision consultant to finalise the integrated schedule for T5HP, which is expected to be commissioned in July-August 2025.

The contract for 500kV transmission line from Tarbela to Islamabad West grid station is effective. The National Transmission and Despatch Company (NTDC) (implementing agency for the transmission line) issued advance payment to the contractor in October 2022. The contractor has been mobilised and must commission the transmission line by November 2024.

It further stated the extension of closing date of the IDA Credit to June 30, 2023 is necessary to finance: the final payments to civil works and E&M contractors after tests and issuance of acceptance certificates; and most importantly replacement of trash racks in the raised intakes of hydropower tunnels; services of construction supervision consultant; dam safety and monitoring program; and capacity strengthening of WAPDA.

This work could not be completed by the current closing date of December 31, 2022 as required inspections can only be done by a team of divers and tests on the raised intakes of the tunnels can only be performed when the reservoir levels are low in the months of February and March 2023.

Preliminary assessment shows that the trash racks on raised intakes are partially damaged due to fatigue. Findings from inspections are necessary for final acceptance of works on the intakes, determination of remedial works by the contractors – including replacement of trash racks, and subsequent final payments to civil works contractor.

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