Cold feet: Setbacks in Diamer-Bhasha funding

Foreign donors more keen to finance Dasu hydropower project.

ISLAMABAD: In a major setback for the $11.5 billion Diamer-Bhasha Dam project, all foreign lenders have expressed reluctance to provide finances and have, instead, offered to fund the 4,320-megawatt Dasu hydropower project.

According to reports, the Indian lobby in Washington is vigorously working against the funding of the Diamer-Bhasha Dam, forcing the US and other donors to link its assistance for the Pakistani project with a No Objection Certificate (NoC) from New Delhi – given India’s claims that the Dam is located in the disputed territory of Gilgit-Baltistan. Washington had earlier agreed to fund the project on the condition of approval from the US Congress.

The World Bank, on the other hand, already refused to extend finances for the Diamer-Bhasha Dam, linking the financing of the multi-billion dollar project with Indian concurrence.

Meanwhile, Pakistan and India have also been locked in a legal battle over the Baglihar Dam since several years, while a case over the Kishanganga Dam is ongoing in an international court.

Dasu Hydropower project

The Dasu hydropower project is located in Kohistan district, Khyber-Pakhtunkhwa, and is situated seven kilometres upstream of Dasu village on the Indus River and 74km downstream of the Diamer-Bhasha.

According to officials, a recent meeting, held with all international donors including the Asian Development Bank (ADB), had discussed whether donors should provide funding for the Diamer-Bhasha Dam or the Dasu hydropower project first.

Officials of the water and power ministry have said the Diamer-Bhasha is at an advance stage, with land being acquired for construction.

“Work on Dasu Dam is not at the same stage; therefore, the government wants donors to extend financing for the 4,500-megawatt Diamer-Bhasha Dam,” sources quoted water and power ministry officials as saying.

When contacted, the spokesperson for the water and power ministry failed to respond, saying the issue was related to the water wing.

Developing consensus

Earlier, the ADB had pledged it would act as the government’s investment banker in raising money from international capital markets.

However, it had asked the government of Pakistan to pass a resolution in the National Assembly in favour of constructing the Diamer-Bhasha Dam so that it would not meet the fate of the Kalabagh Dam.

The government had even received the approval of the Council of Common Interest (CCI), represented by all provinces, to develop a consensus on the project.

Published in The Express Tribune, August 3^rd, 2012.