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Construction of Diamer-Bhasha Dam: US says ready to give $200 million annually




  • The United States on Friday expressed its willingness to extend $200 million per year for Diamer-Bhasha Dam and financial assistance for international consultancy for import of Liquefied Natural Gas (LNG) but criticised Islamabad for not implementing power sector reform ageenda in letter and in spirit. This was the crux of a one-day Pakistan-US Energy Working Group meeting held in Islamabad. 

    The US Special Envoy and Co-ordinator for International Energy Affairs, Ambassador Carlos Pascual, led the US delegation whereas Secretary of Water and Power Nargis Sethi and Secretary of Petroleum and Natural Resources Dr Waqar Masood Khan led the Pakistan side at the annual Energy Working Group meeting. 

    Well informed sources told Business Recorder that Petroleum Ministry informed the meeting that energy- hungry Pakistan is floating tenders for import of LNG on Saturday (today). According to the Ministry 700 mmcfd natural gas is also being injected in the system in the next four to five months. The Petroleum Ministry also revealed that the government is discussing ways and means of phasing out Compressed Natural Gas (CNG) stations as usage of gas in transport sector is a wastage of the national asset. 

    The sources said the event was highly mismanaged and the team of Ministry of Water and Power headed by Secretary Water and Power did not present any plans to implement power sector reforms. “The outcome was zero as no concrete action plan was discussed,” commented one of the participants. According to sources the representative of Asian Development Bank (ADB) made no commitment with regarding to funding of Diamer-Bhasha Dam. 

    The Energy Working Group meeting is part of an ongoing bilateral dialogue to help address Pakistan”s energy sector challenges, including power generation, fuel, gas, and reform priorities. US side argued that power sector enterprises are not financially viable and governance and management are poor. Degrading physical infrastructure, growing unplanned load shedding/poor load management, significant non-technical losses especially in four DISCOs and unmanaged circular debt hovering around Rs 800 billion were key concerns of US side. 

    An official statement notes that at the conclusion of the meeting, an announcement that the United States government would fund an international consultancy to assist Pakistan acquire LNG was made. Secretary of Water and Power Sethi highlighted the need for an improved and sustained governance structure as a key element for a sustainable power sector and the steps taken so far. Special envoy Pascual welcomed the Pakistani government”s commitment to the reform process, improving governance, improving the financial viability and efficiency of the power sector and energy sector in general, and attracting private sector investment in energy production and distribution. The Secretary of Water and Power expressed her appreciation for US assistance under the power distribution improvement project and the energy efficiency programs, the statement added. 

    Special Envoy Pascual also welcomed Pakistan”s adoption of the 2012 Petroleum Exploration & Production Policy, noting that it has the potential to spur investment in exploration throughout Pakistan. Secretary Khan pointed out the imminent Pakistani oil and gas delegation meetings in Houston and London to promote the auction of licenses for 60 blocks (or exploration zones). 

    “Today, the United States government and the Government of Pakistan launched a new initiative to help Pakistan acquire liquefied natural gas more efficiently,” said Ambassador Pascual at the working group. This initiative shows the United States and Pakistan working together on concrete actions to relieve Pakistan”s chronic shortage of electricity. It will accelerate the liquefied natural gas procurement process and offer a cheaper alternative to Pakistan”s current fuel oil imports.” 

    The LNG consultancy, which will commence work before the end of the year, will assist the Government of Pakistan in the terms and assessment of liquefied natural gas supply and delivery from international suppliers. The effort will speed the procurement process, saving the government the expense of fuel oil imports that are currently used to generate much of the nation”s electricity. The consultancy will also provide market analysis and technical assistance to the government”s implementer of LNG imports. 

    Beyond today”s agreement, the United States and Pakistan together are carrying out large-scale energy projects, that will add 900 megawatts of capacity to the power grid by the end of next year – enough to supply electricity to an estimated 2 million households. These projects include renovating the power plant at the Tarbela Dam; modernising the generators at the Mangla Dam; upgrading the Guddu, Jamshoro and Muzaffargarh power plants; and building the Satpara and Gomal Zam dams. US technical assistance is also supporting crucial policy and management reforms underway in the Ministry of Water and Power. These reforms are focused both on reducing the power grid”s technical losses and on increasing collections, the statement concluded. 

    Copyright Business Recorder, 2012

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