Islamabad: The Pakistan government has approved the construction of the Neelum-Jhelum hydropower project in Pakistan-occupied Kashmir, a move that could give the country “priority rights” over India to the use of the waters of the Neelum river.

The project, estimated to cost Rs7,873 crore, will be built by a consortium comprising China Gezhouba Water and Power Company and China National Machinery and Equipment Import and Export Corporation (CMEC) in eight years.

Chairing a meeting of the cabinet that cleared the project, caretaker Prime Minister Mohammedmian Soomro said the “strategically important” project will help secure Pakistan’s rights over Neelum-Jhelum waters and go a long way in bridging the energy gap in the country by generating 969MW of electricity.

Under the terms of the Indus Waters Treaty of 1960 between India and Pakistan, the country which finishes its project first on the Neelum would get “priority rights” to the use of the river’s waters. Pakistan plans to divert the Neelum’s waters at Nauseri, about 40 km from the PoK capital of Muzaffarabad.

The project envisages the construction of a 47-km tunnel to divert the water from Nauseri to the power station. It also involves a foreign exchange component of 46.5 billion Pakistani rupees. Neelum-Jhelum Hydroelectric Project Company will execute the project.

It would also “go a long way in bridging the energy gap in the country,” Soomro said. A 47-kilometre tunnel would be built for diversion of the water of Neelum river to the power station, he added in his statement.