In a landmark ruling, the Gilgit-Baltistan Chief Court terminates a multi-billion rupee hydel contract, finding the FWO-CNEEC joint venture used a capacity-enhancement ruse to avoid performing a deliberately under-bid agreement.
Special Report
The Gilgit-Baltistan Chief Court on Tuesday delivered one of the most sweeping judicial interventions in the province’s infrastructure history, ordering the outright termination of the contract for the 20-megawatt Hanzel hydroelectric power project and directing that the contractor’s performance guarantee be forfeited entirely. The unanimous two-judge bench found that the contractor joint venture, FWO-CNEEC, had deliberately abandoned a project it had won with an unrealistically low bid, hiding behind a self-serving proposal to double the plant’s capacity as a pretext to renegotiate costs.
The writ petition was filed by Adeel Ahmed, a resident of Pasban Colony, Jutial, Gilgit. It placed before the court a pattern of failure that the judges said amounted to a fundamental betrayal of the people of Gilgit-Baltistan, citizens who, the court noted, endure between 18 and 20 hours of daily power cuts even in the depths of winter.
Adeel Ahned Vs FWO CNEEC . JV Final draft (1) - Adobe cloud storageTHE BID GAP THAT EXPLAINS EVERYTHING
At the heart of the court’s analysis is a striking comparison of bids. When the Hanzel 20 MW project went to tender, two serious competitors emerged: Power China, which offered to build the plant for approximately Rs. 17 billion, and the FWO-CNEEC joint venture, which undercut that figure by roughly Rs. 4 billion, securing the contract at Rs. 12.921 billion. The court found this gap, not some genuine technical discovery about power potential, to be the true driver of the contractor’s subsequent refusal to build.
Almost immediately after the work order was issued on 7 September 2021, FWO-CNEEC halted mobilisation, claiming that government consultants had fundamentally mis-estimated the river’s power potential and that the project should be redesigned at 40 MW rather than 20 MW. The contractor submitted a formal proposal demanding a revised project scope and a near-doubling of costs, from Rs. 12 billion to Rs. 21 billion.
The court was scathing: the contractor’s reliance on a proposed project variation, for which no formal approval existed on record, served as a pretext to avoid performance of its primary obligations. The court further found that the capacity-enhancement argument had been raised and firmly rejected by the project’s own consultants as far back as 2017, years before the contract was even signed.
THE 2021 MEETING THAT SEALED THE CASE
Much of Tuesday’s judgment rests on minutes of a meeting held on 27 December 2021, filed by the contractor as an exhibit. The document backfired spectacularly. The court noted that the meeting record showed NESPAK, the designated Project Manager, had already explicitly told FWO-CNEEC that the 20 MW specification was final, that bidding documents had been prepared on that basis, and that the contractor was bound to complete the project at the agreed price and within the agreed timeframe. The minutes further stated that at the time of bidding, the contractor had the option to propose alternatives but chose not to do so.
Despite this clear direction on record, the court found, the contractor failed to commence work and persisted with its enhancement proposal. The judges concluded that the contractor had unilaterally suspended work in defiance of explicit directions and that the sole responsibility rested with FWO-CNEEC.
PROVINCIAL GOVERNMENT ALSO CENSURED
The court reserved significant criticism for the Water and Power Department of the Government of Gilgit-Baltistan, finding that provincial officials, rather than enforcing the contract, had given the contractor’s capacity-enhancement proposal official credence by forwarding it to the federal Planning Commission and ECNEC for approval. This effectively placed the primary contract in suspended animation with no legal basis to do so.
The court noted the contractor had no written authority from any competent body to revisit the original feasibility report or demand additional federal financing. The priority of the Water and Power Department, the bench wrote, ought to have been the timely completion of the project, not its impediment.
PROJECT DIRECTOR RELIEVED AND PENALISED
The Project Director of the 20 MW Hanzel project was relieved of his duties with immediate effect. The bench found it telling that he had sent his first formal reminder about delays and liquidated damages to the contractor only on 22 May 2025, after the entire 34-month contractual period had already elapsed. Throughout the project’s life, the court said, he had acted merely as an agent of the Contractor JV.
All salary and perquisites received beyond the 34-month contractual window are to be recovered from him.
PPRA RULES AND THE RULE OF LAW
The judgment also addresses the broader legal framework, ruling that any material variation in contract scope or price cannot be accepted without a fresh competitive procurement process under PPRA Rules. While limited quantity variations of up to 15% may be permissible without rebidding, a doubling of capacity and cost is categorically beyond that threshold. Accepting such a unilateral demand, the bench found, would not only be illegal but would represent an undue favour to a party and a loss to the national exchequer.
The court also drew an uncomfortable comparison: the Astore valley road contract was rescinded after a six-month delay, and a 2 MW project at Thak was terminated for relatively minor slippages. The 20 MW Hanzel and 16 MW Naltar projects, by contrast, had accumulated years of delays with no administrative or legal consequence, until Tuesday.
WHAT COMES NEXT
The court has ordered that fresh procurement proceedings for the Hanzel 20 MW project begin at the earliest opportunity and that the bench be briefed at every stage of the new tender process. Copies of the judgment have been sent to the Secretary of the Water and Power Department, the Chief Minister, and the Chief Secretary of Gilgit-Baltistan.
In a separate but related order, the court also directed that three independent, experienced evaluators be nominated to assess progress on the 16 MW Naltar hydel project. That matter is yet to be concluded.
