The government is facing difficulty to arrange $12 billion cost for construction of Basha Dam as donors are not forthcoming to lend the money. Senior officials of Economic Affairs Division (EAD) during a briefing to the Senate Standing Committee on Finance, which met with Senator Nasreen Jalil in the chair Wednesday, informed the committee about the funding problems for construction of Basha Dam.
The meeting was informed that the government was facing problem in arranging funds after the World Bank termed the investment in Basha Dam as unsafe. They said that the US and Asian Development Bank (ADB) have promised to provide $220 million and $2.5 billion respectively. We have been unable to arrange $9 billion so far and therefore, no progress on construction of Basha Dam has been made.
The EAD also informed the committee that it has suggested to the government to either float bonds in the international market or impose surcharge on electricity bills in case of Neelum Jhelum to generate funds for the Basha Dam. High ups of EAD said that the government was not ready to impose surcharge for construction of dam because of election year and the international market is not viable for issuance of bonds. According to EAD no one is ready to take the risk. However, they claimed that the ADB has not totally refused to provide funds for the dam and negotiations in this regard are going on with them. We are engaged with the ADB but the bank has not committed to provide funds.
About funding Karachi Circular Railway, official of EAD said that an agreement is expected with the government of Japan by December 2012. The loan would be provided at 0.25 percent interest if the agreement was reached. The official expressed the hope that agreement would be reached with the government of Japan on provision of funds for early completion of the KCR project.
The EAD also made a presentation to the committee about funding provided by the World Bank and multi donors trust for various projects as well as Islamic Development Bank, China, IDB, IFAD, and Opec. The meeting was also given a briefing by the officials of EAD on Pakistan China five-year development programme, Japanese Assistance as well as Tokyo pledges by Friends of Democratic Pakistan (FoDP).