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India is allowed to construct hydroelectric power facilities on tributaries of the Jhelum and Chenab rivers with certain restrictions under the 1960 Indus Waters Treaty (IWT), the World Bank has said.
The World Bank's comments came as officials from India, Pakistan concluded the secretary-level talks over the IWT.
Noting that the two countries disagree over whether the technical design features of the two hydroelectric plants contravene the treaty, the World Bank said the IWT designates these two rivers as well as the Indus as the "Western Rivers" to which Pakistan has unrestricted use.
It noted that the talks on the technical issues of the IWT took place this week "in a spirit of goodwill and cooperation".
The parties have agreed to continue discussions and reconvene in September in Washington DC, it said in a separate statement.
In the lengthy fact sheet, the World Bank said Pakistan asked it to facilitate the setting up of a Court of Arbitration to look into its concerns about the designs of the two hydroelectric power projects.
On the other hand, India had asked for the appointment of a neutral expert to look into the issues, contending the concerns Pakistan raised were "technical" ones.
The IWT was signed in 1960 after nine years of negotiations between India and Pakistan with the help of the World Bank, which is also a signatory.
Earlier, in a letter dated 25 July, the World Bank had assured Indian Ambassador to the US Navtej Sarna its "continued neutrality and impartiality in helping the parties to find and amicable way forward."
The two countries last held talks over the two projects in March 2017 during the meeting of the Permanent Indus Commission (PIC) in Pakistan.
Pakistan had approached the World Bank in 2016, raising concerns over the designs of two hydroelectricity projects located in Jammu and Kashmir.
The international lender had in November 2016 initiated two simultaneous processes for appointing neutral expert and establishing of a court of arbitration to look into technical differences between the two countries in connection with the projects.
The simultaneous processes, however, were halted after India objected to it. After that, representatives of the World Bank held talks with India and Pakistan to find a way out separately.
The talks between the two nations over the treaty come amid tensions between them after a number of terror attacks in India by Pakistan-based terror groups.
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