Neelum-Jhelum Project Declared ‘Failure of Planning, Execution,’ Auditor General Reports

Islamabad – The Auditor General of Pakistan (AGP) has formally declared the country’s flagship Neelum-Jhelum Hydropower Project a failure in its objectives, planning, and execution. A performance audit report for 2022-23 submitted to parliament revealed the project, which cost Rs507 billion, has been plagued by a series of critical failures, including tunnel collapses, extensive delays, and massive cost overruns.

The report highlights that the project has fallen short on every single objective it was designed to achieve:

• Failure to Secure Water Rights: The audit confirms that the project’s extended delays, spanning nearly a decade, led to Pakistan losing its water rights over the Neelum River. The report specifically notes that this failure contributed to Pakistan’s legal setback against India’s Kishenganga Project in the International Court of Arbitration.
• Failed Power Output: The project has been unable to generate its designed annual energy output of 5,150 GWh. This is primarily due to multiple tunnel collapses, including a significant one in the headrace tunnel last year that has kept the power plant shut and caused massive generation losses.
• Cost and Time Overruns: The audit reveals a stunning escalation in the project’s budget, which ballooned from an initial estimate of Rs15 billion in 1989 to over Rs500 billion, an overrun of nearly Rs500 billion. The project also suffered an eight-year delay.

• Structural and Design Flaws: The report casts serious doubt on the quality of work, citing the collapse of the tailrace tunnel just a few years after the project was completed. It also mentions that contractors failed to provide necessary spare parts and fulfill contractual obligations.

The audit has exposed a long history of mismanagement and financial irregularities, including over Rs70 billion in lost revenue due to the non-approval of the reference tariff and Rs20 billion in losses from the tunnel collapses for which no inquiry was conducted.

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