Financial constraints: government likely to shelve Diamer-Bhasha dam

The government is likely to shelve high priority Diamer-Bhasha dam at least for the time being due to uncertain financial assistance from international financial institutions and Friends of Democratic Pakistan (FoDP) including Japan and will commence civil work on the project by utilising its own resources as well as establish power house as Independent Power Producer (IPP), well informed sources told Business Recorder.

World Bank and Asian Development Bank (ADB) have already conveyed diplomatically ”no financing” to the multi-purpose dollars 12 billion project, which will also generate 4500MW electricity at very cheap rates. “We are considering putting off construction of Diamer-Bhasha dam due to financial constraints, but starting civil work and power house as run of the river project will be treated as IPP,” the sources added.

For civil work, the government will consider to impose 10-15 paisa per unit surcharge on the pattern of Neelum Jhelum hydropower project despite the fact that Shaukat Aziz cabinet slapped ban on such surcharges in future. Wadpa requires about 2.5 billion dollars to complete civil work on the Diamer-Bhasha dam. According to sources, high level consultations at different forums are in progress in this regard and the entire plan will be ready prior to the visit of Prime Minister Raja Pervez Ashraf to China. “The Prime Minister will invite his Chinese counterpart to construct run of the river project as an IPP,” the sources continued.

The sources said Foreign Minister Hina Rabbani Khar had also sought Japanese assistance in mega projects like Diamer-Bhasha and Mangla dam survey. However, Wapda is of the view that if Japan is unwilling to extend assistance for Diamer Bhasha, no assistance is needed for Mangla dam survey. When contacted, Chairman Wapda Shakil Durrani said that no plan was under consideration putting off Diamer-Bhasha dam. “Neither we have decided to shelve the project nor it will be treated as IPP,” he clarified.

In reply to a question, Wapda Chairman said Pakistan would construct the high priority project without the help of ADB, adding that the issue of financing would be resolved. “We have not discontinued talks with the ADB however, the ADB is urging Pakistan to take World Bank on-board, which is apparently impossible,” Durrani maintained.

Answering to a question, Durrani said Pakistan was also holding discussion with China on supplier”s credit in case Wapda purchases electro-mechanical equipment for the project. Presently, China is working on 10 projects in Pakistan. Exim Bank of China is expected to extend two billion dollars as supplier”s credit for purchase of electro-mechanical equipment.

Answering to another question, Wapda Chairman said all the government stakeholders were supporting Wapda, adding that position of financing would be clear after one month. “We have acquired 1500 acres of land for the project and awarded 13 contracts for different categories of works,” he continued. At a recent meeting of Senate”s Standing Committee on Water and Power it was felt that Diamer-Bhash dam will be delayed for 10 years if government accepts WB funding for 4320MW Dasu hydropower project.

Copyright Business Recorder, 2012

Muhammad Ramzan Rafique
Muhammad Ramzan Rafique

I am from a small town Chichawatni, Sahiwal, Punjab , Pakistan, studied from University of Agriculture Faisalabad, on my mission to explore world I am in Denmark these days..

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