The American envoy said funds will be provided through the USAID and will be used to finance the due diligence of feasibility studies. PHOTO: PID
ISLAMABAD:
The United States has approved a grant for verifying feasibility and geological studies of $14-billion Diamer Bhasha Dam, marking the first concrete support from Washington for the much-delayed project.
While speaking to Finance Minister Ishaq Dar, US Ambassador to Pakistan Richard Olson apprised the finance minister of the sanction of funds by the US Congress with regards to due diligence of the dam. Olson also discussed wide range of issues with Dar including the ongoing US civilian assistance and upcoming visit of Secretary of State John Kerry.
The American envoy said funds will be provided through the United States Agency for International Development (USAID) and will be used to finance the due diligence of feasibility studies. He said the US will support construction of the project so that donors and international financial institutions can gain confidence.
The US will provide $20 million for due diligence, which will be done by international consultants, said Shakil Durani, the government’s adviser on Diamer Bhasha Dam, while talking to The Express Tribune.
The experts are terming the development very significant, as the US support for the dam will matter more than the amount it puts in the project. They say after the US assistance, other international lending agencies will also come forward.
“Pakistan welcomes the interest shown by the US for supporting Pakistan’s flagship storage project,” said Finance Minister Ishaq Dar.
Durani said Pakistan has already done detailed engineering design, feasibility studies, technical, geological and physical studies for the construction of the dam. The international consultants will now verify and analyse all the work done by the Pakistani authorities, which was a pre-condition for arranging finances for the dam, he added.
Durani said international consultants will take four to six months for due diligence after which Pakistan will approach international lenders seeking funds for constructing the project.
International lenders like the Asian Development Bank and the World Bank have so far remained reluctant to finance the project. The ADB’s Country Director for Pakistan Werner Liepach, last week, hinted at working with Pakistan to find a workable financing model.
Pakistan is seeking a loan of $500 million per annum from the ADB over a ten-year period for construction – principal amount of $5 billion. However, the ADB has in the past refused to provide such a big amount while arguing it may affect financing for other projects.
The World Bank too remained reluctant to come forward, but according to the Water and Power Development Authority (Wapda) officials, with the change in management at the bank’s South Asia wing, hopes for acquiring funding have been revived. Philippe Le Houerou has joined as the new vice president of the World Bank for South Asia, and is believed to be in favour of pro-green energy projects.
In the coming years, Pakistan is also seeking $200 million per annum assistance from the US for the construction of the dam, while up to $2 billion is expected as suppliers’ credits, said the officials.
Both, the US ambassador and the finance minister also discussed the outstanding issue of bilateral investment treaty (BIT) between the two countries, according to the finance ministry. However, the minister sought time to seek input from all the stakeholders, it added.
The military establishment is said to have reservations over inclusion of security related clauses in the treaty that may have implications for the country’s nuclear and defence programmes, according to the Board of Investment officials.
Both the sides also discussed the agenda of the meeting between Secretary of State John Kerry and the finance minister. Kerry is scheduled to visit Islamabad soon.
The International Monetary Fund loan programme to Pakistan was also discussed during the meeting, where US envoy Olson said, “US supports the programme.”
Published in The Express Tribune, July 25th, 2013.
Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.
COMMENTS (27)
Comments are moderated and generally will be posted if they are on-topic and not abusive.
For more information, please see our Comments FAQ
@kaleem: "India could not take an inch of siachen despite deploying heavy army there"
India is the sole occupant of Siachen since 1982. Despite trying to reverse this situation 3 separate times, Pakistan has not succeeded. Pakistan does not occupy a single square inch of Siachen. Pakistan has been relegated to the Gyari sector
@kaleem: Which inch of Siachen are we talking about here?
As for GB - Talk is cheap (East Pakistan was also a very vast area), Ground facts are what matters. Pakistan is right now in control and we know that very well.
Again how come you forget higher than mountain and deeper than ocean friend? Only in words or in action ?
@Vectra: youre a funny guy. definitely deluded but funny, in a crazy way :)
@vectra, that sounds funny. India could not take an inch of siachen despite deploying heavy army there, GB is VAST area. Regarding electoral votes, PPP is in power there.
Americans are great delay masters and now they will spoil Chinese working in that region, they are doing through by sending TTP elements in neighboring Chinese muslim province and they will do more from Challas.
USA is now becoming active after Chinese shown their interest to build dam during the recent visit of our PM.To cause delay and to interfere in other matter is a bad and real way of Americans working in Pakistan-double gaming.
@Vectra: "" India knows that though it can get the GB by force "" O really, What are you smoking man ????? Please tell me ???????
"The military establishment is said to have reservations over inclusion of security related clauses in the treaty that may have implications for the country’s nuclear and defence programmes, according to the Board of Investment officials." Read these lines again.. what you understand. Why US supporting?? serious security concerns..regarding Nuclear Assets..
@Vectra: 'in its territory'. Oh really, so its its their territory? Then why are they not in control of it?
@Vectra " NOC from India is a must for such project which India will never approve for such project in its territory."
Would you mind telling us how GB falls in Indian territory? Also, ADB had put this condition of Indian NOC first, but in power games such as these, US is godfather of India.
Feasibility?? The purpose seem to be to put the project in a circular debt situation even before it starts
Good to see Pakistan getting over of dead-horse of Kalabagh Dam.
Here we go begging again.
"The experts are terming the development very significant, as the US support for the dam will matter more than the amount it puts in the project." ++++++++++++++++++++++++++++++++++++++++++++++ Dil ke behlane ko yeh khyaal achaa hai. Mirza Ghallib
The entire delay is due to US ++++++++++++++++++++++++ If only they had made the 20 Mn contribution earlier!
If feasibility is yet to be carried out I wonder how had they inaugurated the construction work twice? And this will put an official end to Iran Pakistan gas pipeline. Mr Nawaz Sharif will take us down to the level we might never come up?
Hey! What happened to the higher than mountain,deeper than ocean... blah, blah friendship? And what happened to the Ummah for whose support Pakistanis are so keen to take the lives of others? How come Pakistan has to always end up with the kashkol at the gates of Washington?
@Pankaj.: Not more than contents of Char-Lottay
Than maybe a public "thank you" is in order?
"Thank you masterr, kind generous master. We are indebted to you master, your wish is my command (for your dirty work)"
Is it bitter than .. And shllower than ... ?
Feasibility studies and due diligence is yet to commence though this dam has been inaugurated at lease two times, once by Musharraf and again by former Prime Minister Gillani. At this rate of progress, this dam will never be constructed, same as KB Dam. For the last 15-20 years, every government has been claiming that they are very serious about this dam and yet even preliminary work is yet to commence.
So here is the financing: US 2 BN ADB 5 BN Japan 4 BN Miscl 2 BN Total 13 BN
So what are we waiting for?