Federal Constitutional Court Clears Legal Hurdles Delaying Nai Gaj Dam Project

The Federal Constitutional Court (FCC) has cleared major legal hurdles delaying the Nai Gaj Dam project by overturning Sindh High Court rulings that allowed the contractor to claim price escalation beyond the original contract.

The court also directed that the remaining work be completed under the original agreement, the arbitral award, and the September 21, 2021 memorandum of understanding.

In a 21 page judgment issued on Monday, a two member bench headed by Chief Justice Aminuddin Khan and Justice Ali Baqar Najafi ordered the contractor, NEIE SMADB LILLEY RMS Karachi, to complete the project under the agreed terms.

The court also barred any fresh judicial intervention until the dam is completed, except through the dispute resolution mechanism outlined in the contract, to prevent further delays.

The FCC directed Wapda to decide within 15 days if the contractor submits a formal request to resume work. While Wapda may grant a reasonable extension based on the remaining work, the court made it clear that no extension would entitle the contractor to additional price escalation, compensation, or any financial benefit beyond what has already been settled.

If the contractor fails to resume work under the agreed terms, Wapda will be free to award the remaining work through a fresh tender on a risk and cost basis in accordance with the law.

Located on the Gaj River in Sindh’s Dadu district, the Nai Gaj Dam is intended to provide irrigation to the rain fed areas of Kachho and Kohistan, restore freshwater flows to Manchar Lake, generate about 4.2 megawatts of hydropower, and bring nearly 28,800 acres under cultivation.

The project, awarded in 2012 for Rs. 38.79 billion, has faced years of delays because of litigation. The FCC emphasized that the dam is a nationally significant public infrastructure project serving irrigation, agriculture, water conservation, and environmental restoration.