No funds for Diamer Basha Dam

ISLAMABAD: Official documents have revealed that Diamer Basha Dam and Chasma 3 and 4 nuclear power plants will only get half the required funding during the new financial year due to lack of resources as well as vision.

The working paper of the Annual Plan Coordination Committee (APCC) states that “owing to insufficient fiscal space” the ministry of water and power could not allocate funds for Diamer Basha Dam for the financial year 2010-11. The ministry has demanded Rs51 billion for the next fiscal year. The Planning Commission (PC) estimates that at least Rs20 billion is required for land acquisition.

The dam, if construction starts on time, is scheduled to be completed in 2020 and will generate 4500MW of electricity. The APCC met on Friday under Deputy Chairman Planning Commission, Dr Nadeem Ul Haq to approve the overall development budget. The priorities committee has recommended a Rs660 billion development budget. The PC has said that this amount is not sufficient and has sought Rs721 billion. This is the second major energy sector project that has been affected by insufficient resources.

Despite the completion of the raising of Mangla Dam, the power ministry could not start the 1000MW electricity generation due to lack of funds. Funds allocated to development projects next year reflect that the government has not allocated sufficient resources to the energy sector. “For power sector projects the indicated foreign aid of about Rs40 billion cannot be budgeted fully because of nonavailability of fiscal space”, the PC said. Similarly, insufficient funds have been allocated to the Water and National Trade Corridor Projects. “Critical transport sector projects including Karachi Circular Railways cannot be funded”, PACC’s working paper reveals.

“Strategic vision comes from the Prime Minister Secretariat, which is only interested in the Multan package just as the presidency is pushing for the Larkana package”, said a senior finance ministry official involved in the budget making process. The official adds that the finance ministry had indicated to other ministries of available funds, if other ministries did not give preference to their strategic projects, it was due to political compulsions or lack of vision.

Chasma 3 and Chasma 4 nuclear power plants are estimated to have a total generation capacity of 640MW. The priorities committee has proposed Rs12.6 billion funds against the demand of Rs24.2 billion, states the official document. The total cost of these strategic projects is Rs190 billion. The government has obtained a loan of Rs136 billion from China at a 2.5 per cent interest rate. Any delay in the completion of the projects will result in a cost overrun. The Planning Commission has requested the APCC to increase the federal government development budget to Rs400 billion from Rs328.3 billion.

Published in the Express Tribune, May 21st, 2010.