Sinohydro issues notice of contract suspension in work on 1,410-MW Tarbela-4 hydro project

Tarbela-4 hydro

Sinohydro has issued a contract suspension notice to Pakistan’s Water and Power Development Authority for the 1,410-MW Tarbela-4 extension project, according to The Express Tribune.

The Tarbela-4 extension, in Khyber Pakhtunkhwa Province, involves installing three turbine-generator units with a total capacity of 1,410 MW at Tunnel No. 4 of Tarbela Dam. This will add to the existing 3,487 MW of capacity. Sinohydro reports its contract for this work is worth $90.63 million.

Tarbela Dam, completed in 1974, was designed to store water from the Indus River for irrigation, flood control and the generation of hydroelectric power. The 148-meter-high, 3,000-meter-long dam has two gated spillways and five tunnels that provide irrigation releases and power generation. At the time of construction, tunnels 1, 2 and 3 were scheduled for power generation and tunnels 4 and 5 were designed exclusively for irrigation release.

Sinohydro’s action comes after the government of Pakistan moved to recover the incentive money paid to the company under a work acceleration plan, The Express Tribune says.

The government had committed to paying Sinohydro a $50 million incentive if the company succeeded in completing the Tarbela-4 extension project by June 2017. It appears Sinohydro will not make this deadline given the work completed to date on the project, The Express Tribune says.

The incentive is taxpayer money and $25 million has already been given to Sinohydro.

Because the project is on schedule to be commissioned by the original date of February 2018, rather than the accelerated schedule of June 2017, Pakistan’s Finance Minister Ishaq Dar said in August 2016 the incentive money paid to Sinohydro needs to be recovered.

However, in November 2016 WAPDA Chairman Muzammil Hussain called for stopping this recovery, saying that the decision should be reviewed because the recovery would not be easy for reasons “beyond the control of the contractor.”

The government has now decided to pursue reclaiming the $25 million paid.

Previously, a dispute arose, and was settled, regarding financial issues in the Tarbela-4 expansion work. Sinohydro told WAPDA it had spent $23 million on “stepping up activities” at the site. “As a result of the $50-million incentive, he said, a dispute with the contractor involving $130 million had been settled,” The Express Tribune says. It is not clear where the $130 million amount comes from.

The Tarbela-4 project is a component of least-cost energy generation plan, which is being implemented by WAPDA on priority, according to the WAPDA website. Work on the project began in August 2013 and was financed by the World Bank.

In September 2016, HydroWorld reported that the World Bank had approved an additional $390 million for the Tarbela-4 and 1,300-MW Tarbela-5 projects.

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