Raising finance: Govt firms up financing plan for Diamer Bhasha Dam

Published: May 14, 2013

The Indian lobby in Washington has been actively campaigning against Diamer Bhasha Dam, asking the US and other lenders to link their assistance for the project with a no-objection certificate from New Delhi. PHOTO: FILE


The Pakistan government has prepared a $12.5 billion funding programme for Diamer Bhasha Dam with resources coming from internal and external sources including the Asian Development Bank, the United States and Islamic Development Bank, seemingly dealing a blow to India’s attempts to block foreign financing for what it calls a controversial project.

According to reports, the Indian lobby in Washington has been actively campaigning against Diamer Bhasha Dam, asking the US and other lenders to link their assistance for the project with a no-objection certificate from New Delhi, which claims that the dam is located in the disputed territory of Gilgit-Baltistan.

Unfurling the financing plan, sources told The Express Tribune that the government had finalised an arrangement with the ADB that will result in a loan of $4 billion for Diamer Bhasha Dam. The ADB has also given the assurance that it will provide more if the need arises.

The other major donor will be the US Agency for International Development (USAID) that has pledged $2 billion over eight years – $250 million per year. “This financing is part of US strategy to cooperate with Pakistan to overcome the energy crisis,” an official of the Ministry of Water and Power said.

Japan and EU countries have also consented to giving $1.5 billion for the dam under the supplier credit programme. In the programme, they will provide equipment and machinery for constructing the dam against financing of $1.5 billion. Repayment of these loans would start after 10 years, the ministry official said.

Islamic Development Bank (IDB) and other Middle Eastern lenders will lend $1.5 billion.

Besides tapping these foreign sources of financing, the Pakistan government will generate $1.5 billion by securitising assets of existing dams like Tarbela, Mangla and Ghazi Barotha.

The United States and other lenders have backed this financing plan, underlining the need for securitising assets of different dams in an effort to secure funds from the international community.

The government is also banking on the recovery of huge unpaid bills by the Water and Power Development Authority (Wapda) from power consumers as the collected amount will go for building the dam. In this programme, Wapda is expected to generate $1 billion.

The central government will also release $1 billion from the Public Sector Development Programme (PSDP) to implement the project.

“The government has already provided Rs15 billion from the PSDP and 12 contracts of different nature have been awarded for completing the dam,” the water and power ministry official said, adding more money would also be provided.

German firm Lemhyer put the cost of the dam at $8.5 billion in 2008 compared to estimates of $6.5 billion in 2005. The cost has gone further up and estimates suggest that it now stands at $14 billion following years of delay as according to the plan construction should have started in 2009.

Published in The Express Tribune, May 14th, 2013.

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Reader Comments (10)

  • Khurram The Muhajir
    May 14, 2013 - 3:09AM

    And this is called leadership! It’s been only a few days since NS became PM and they’re already arranging financing for Diamer Bhasha Dam


  • Zeeshan Ahmad
    May 14, 2013 - 5:07AM

    Who they want to deceive with this type of unrealistic and irrational information. Diamer Basha is never going to get finance from any sensible donor. It is going to be another Kalabagh. Why some sections in the government are obsessed with Diamer Basha Dam? So far they wasted time on Kalabagh dam without thinking of any other mega project – despite the fact there are no consensus among the provinces. Now they are going to waste few more years
    until they realise they don’t have money to built or no financier will come forward with such huge amount required for Diamer Basha. Now with the new government coming up, it is time to think beyond Kalabadh and Diamer Basha dam; and scrap the Diamer Basha project. There are many more feasible projects than Kalabagh and Diamer Basha on Indus which can be started immediately and IFIs are coming forward to finance


  • Raj - USA
    May 14, 2013 - 8:00AM

    There is enough money to build three DM dams with the $45 billion Malik Riaz is bringing in as FDI’s.


  • May 14, 2013 - 9:04AM

    @Khurram The Muhajir:
    LOL the caretaker govt. is in power not Nawaz. And anyway this is all speculation. As it says above the project was first proposed in 2005 but it has yet to be built. In the current environment it is highly unlikely any country will be giving Pakistan loans to build this thing.


  • Usman
    May 14, 2013 - 9:38AM

    This article doesn’t make any sense. If India is lobbying against Diamer Basha in USA, then how they can vote for the same in ADB? India is a key member of ADB and Duamer Basha cannot be approved by ADB board if India chooses to vote against it.


  • citizen
    May 14, 2013 - 11:35AM

    Yea right . Indians can built as many dams as they deem consider important without obtaining any NOC from Pakistan and now they expect us to request them to issue NOC certificate . is this justice ?


  • Weird
    May 14, 2013 - 4:25PM

    @citizen: India does not have to depend on external financiers, Pakistan does.


  • Mudassar
    May 14, 2013 - 6:35PM


    Probably the writer of this article is not aware that USAID chief Rajiv Sha is an Indian


  • Gp65
    May 14, 2013 - 11:18PM

    @citizen: India was taken to an international tribunal by Pakistan. India won all cases.


  • Chaudry
    May 15, 2013 - 12:36AM

    Full of lies. I visited websites of all the funding organisations mentioned in this news article and searched for ‘Diamer Basha’. All of them gave zero results – indicating that they have no information on Diamer Basha Project.


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