US to provide $3.5 billion for Diamer Bhasha Dam

Multilateral donors hold back financing for the $14b project.

ISLAMABAD: As multilateral donors do not take keen interest in financing Diamer Bhasha Dam, the United States has agreed to lend support and provide $3.5 billion for the critical project, which will cost $14 billion and ease growing water and power shortage in the country.

Giving a briefing to the National Assembly Standing Committee on Water and Power here on Wednesday, Water and Power Development Authority (Wapda) Chairman Syed Raghib Ali Shah said the Asian Development Bank (ADB) refused to extend any financial assistance for the project. This came despite the fact that Pakistan has met all conditions including reforms in power sector and reaching consensus on the project.

“ADB is following in the footsteps of the World Bank, considering northern areas of Pakistan a disputed territory. Owing to this reason, it has held back financing for the dam, which will generate 4,500 megawatts of electricity,” he said.

“Financing is the main problem and we are trying to convince ADB and the World Bank to lend assistance.”

Shah pointed out that the shortage of funds prompted the government to also contact its friends in a bid to swiftly complete the project. “China, South Korea and Turkey have been approached for financial assistance.”

In the past three years, Wapda has conducted feasibility studies and prepared reports on the project. All stakeholders had reached consensus on the construction of the dam, Shah said.

The government has started work on the dam and, according to Shah, Rs9 billion has so far been spent on laying infrastructure and paying compensation to land owners.

Highlighting the efforts made to increase power supply, he said 402 megawatts would be added to the grid by June this year, adding the Tarbela extension project, scheduled to be completed in 2016, would increase power supply by 1,400MW.

In addition to these, 40% work has been completed on the Neelum Jhelum hydropower project.

Discussing the issue of unpaid power bills, Shah said government departments owed a massive Rs15.56 billion to the Islamabad Electric Supply Company (IESCO). The panel decided to invite the Capital Development Authority (CDA) chairman in the next meeting for comments on the dues CDA had to pay IESCO.

Committee member Sajjadul Hassan, while expressing dismay over the reluctance of donors to provide funds, said no donor would be ready to extend assistance for the dam because of it being in a disputed territory. “This project may turn out to be another Kalabagh Dam,” he remarked.

The panel meeting, presided over by Syed Ghulam Mustafa Shah, also discussed the Electricity (Amendment) Bill 2012. It provided time to its members to study the bill and come back with useful feedback in the next meeting.

The panel took serious note of the absence of minister and secretary of the Ministry of Water and Power and issued directives that they must attend the next meeting.

Published in The Express Tribune, January 3^rd, 2013.                

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