Chinese contractors deal in river project deal in Pakistans Azad Kashmir

Two Chinese contractors have bagged the complete set of contracts for a
massive $1.5 billion river diversion and hydro-electricity project in
(Azad Kashmir) . The project being built on Neelam river, which flows
from India, will employ 1,100 Chinese engineers and workers besides a
larger number of Pakistanis.

The project involves a 42-km underground tunnel that will divert the
waters of Neelam river in (Azad Kashmir) to Jhelum, which flows through
the plains of Pakistani provinces of Punjab and Sind. Neelam flows from
India into Pakistan across the Line of Control. India has built the
Krishna Gaga Hydro-electricity project on this side of the border.

“The
project is in the construction mobalisation stage. The contractor is
involved in landscaping and making arrangements for its employees to
work there. About 20 employees are already there. This is going to be a
technically superior project,” Zersis Rustom Birdie, general manager of
Adamjee Insurance Company, the biggest privately run insurance company
in Pakistan, told TNN in an interview here on Sunday.

The main
contract for civil works has gone to Gezhouba Construction Group of
China, which built the massive Three Gorges Project in China. CMCE, a
Beijing based contractor, has been awarded mechanical and electrical
works of the project. The construction phase is 93 months. But the
contractors would be expected to supervise the project for another 12
months.

India has already objected to the project on the
ground that it did not meet some of the conditions stipulated in a
river sharing agreement between the two countries. For one thing,
Pakistan has already exceeded the time-limit specified in the
agreement, sources said.

But the Pakistani move to award the
contract to Chinese companies is believed to be a cause for concern to
New Delhi, which plans to erect a “security exclusion zone” for Chinese
power equipment manufacturers so that they do not invest in bordering
states of Arunachal Pradesh and Jammu and Kashmir.

The
Neelam-Jhelum project in *** is not too far from LOC. In fact, much of
the *** is made up of the Neelam valley, which is a 144 km long
bow-shaped forested region.

Neelam enters Pakistan in the
Gurais sector of the Line of Control, and then runs west till it meets
the Jhelum north of Muzzafarabad.

An interesting aspect of the
project is that international reinsurance companies like Swiss Re and
Munich Re are shying away from the opportunity to sell their risk
covers. Reinsurers are worried about war risk, terrorism risk and the
possibility of earthquake damaging the underground tunnels in the
project. These reinsurers have quoted extremely high premium rates of
1.4 per cent to 1.5 per cent to cover the project, Birdie said. He is
now in China trying to tie up reinsurance deals for the project with
Chinese reinsurance companies.

“We expect to get lower quotes
of 0.3 per cent to 0.5 per cent from the Chinese reinsurers. This is
much, much different from the 1.4 per cent and more quoted by Swiss Re
and other big reinsurers,” Birdie said.

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on Feb 28 2008. Filed under Local. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry