Project developers say the reluctance of foreign backers to release funds for a major power scheme in Pakistan is preventing them securing the letter of credit (L/C) financing they need to complete the project.

Pakistan's partially completed 969MW Neelum-Jehlum Hydropower project (NJHP) has 59 per cent of construction work still pending.

External funding

Two of the project's major external financiers have not yet come up with the funds the project needs as a condition for the L/C funding.

Once the external financiers' money is in place, NJHP should be able to open a US$113 million L/C from the Islamic Development Bank (IDB) to finance equipment needed for the project.

Foreign financiers

Export Import Bank of China (EximChina) has committed US$448 million to the project but cannot release funds until it has received final approval from the China State Council.

The Abu Dhabi Fund, which has committed US$100 million to the project, has not released funds either. The reasons for its refusal to release the money are not clear.

According to a document seen by local media, the IDB will release the L/C once funds from EximChina and the Abu Dhabi Fund are shown in NJHP's accounts.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.