• Closure of Neelum-Jhelum Power Project of Pakistan Causes Rs33bn Loss, NA Told

• Neelum-Jhelum hydropower plant has been closed since May 1, 2024, due to tunnel collapse, leading to an estimated Rs33 billion loss.

The Neelum-Jhelum hydropower plant, a critical energy project in Pakistan, has been out of operation since May 1, 2024. The collapse of both headrace tunnels has caused an estimated financial loss of Rs33 billion due to non-generation of power. The Ministry of Water Resources informed the National Assembly (NA) about the issue, highlighting the complexities involved in the repair process.

Reasons for Neelum-Jhelum Plant Closure

The shutdown was caused by the collapse of the headrace tunnels, which are responsible for channeling water to generate power. This structural failure has led to a complete halt in power production.

Key Factors Leading to the Collapse:

• Possible geological instability in the tunnel area.
• Design and material failures in the construction process.
• Lack of adequate maintenance and monitoring of tunnel integrity.

Financial Impact of the Shutdown

According to the Ministry’s written response in NA:

• The estimated loss from power non-generation stands at Rs33 billion to date.
• The financial burden has increased due to Pakistan’s reliance on alternative, expensive energy sources.
• Industries and consumers face increased electricity costs due to supply shortages.

  

Estimated Repair Costs and Challenges

The preliminary assessment suggests that repairing the tunnels will require 2.5 km of concrete lining and restoration of other damaged sections.

Breakdown of Estimated Costs:

• Initial estimated repair cost: Rs21.7 billion
• Additional expenses may arise after technical investigations.
• Further recommendations from independent experts and project consultants could increase the total cost.

The Ministry cautioned that the final repair cost will be subject to ongoing inspections and expert evaluations.

Inquiry and Government Response

The government has taken multiple steps to investigate the collapse and assign responsibility:

• May 20, 2024: Prime Minister formed an inquiry committee.
• January 7, 2025: A second committee was constituted to further probe the causes.
• February 1-7, 2025: A consulting firm visited the project site for technical assessment.
• Findings from these investigations are awaited, with potential legal and financial implications for contractors and consultants involved in the plant’s design and execution.

Key Players in the Investigation:

• Independent panel of experts
• Project consultants
• Civil and EMH contractors
• Ministry of Water Resources

Future Implications for Pakistan’s Energy Sector

The prolonged closure of the Neelum-Jhelum hydropower plant has serious repercussions for Pakistan’s power sector:

• Increased Dependency on Thermal Power: Pakistan may have to rely on expensive thermal power to compensate for lost hydropower generation.
• Impact on Energy Prices: The shortfall in electricity supply could contribute to higher electricity tariffs.
• Risk of Further Delays: Given the complexity of tunnel restoration, there’s a risk of prolonged power shortages if repairs extend beyond expectations.

Potential Solutions:

• Expediting repair work under expert supervision.
• Implementing advanced monitoring systems to prevent future collapses.
• Diversifying Pakistan’s energy mix to reduce reliance on individual projects.

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Neelum-Jhelum hydropower plant was constructed and operated by by Chinese companies to support Pakistan to overcome the power shortages in the country that crippled national economy and industry since 2010, according to the data reports of WAPDA, a national body on water and power projects.

Conclusion

The closure of the Neelum-Jhelum hydropower plant has had a severe financial and operational impact on Pakistan’s energy sector, with Rs33 billion in losses and repair costs estimated at Rs21.7 billion. The government’s ongoing investigations will determine the exact causes and those responsible for the failure. The future of this critical project will depend on effective repair strategies and lessons learned to prevent similar incidents.

Further Reading:

• Pakistan’s Renewable Energy Policy
• Hydropower Projects in South Asia

External Resources:

• Water & Power Development Authority (WAPDA)
• International Federation of Consulting Engineers (FIDIC)