Pakistan desperately needs to reduce the weighted average cost of power generation and, by far, the best way to do that is to install more hydroelectric capacity. Of all the major projects under consideration, Dasu is the cheapest option. ILLUSTRATION: JAMAL KHURSHID
Let us examine some of the facts. The water and power minister is estimating that the project to build the Dasu Dam will cost around Rs735 billion, or about $6.9 billion. In other words, the installation cost of the hydroelectric power generation capacity at Dasu comes to about $1.5 million per megawatt, which is very cheap by both global and local standards. For the sake of comparison, a run-of-the-river dam set up by Hub Power Company in Punjab cost about $2.5 million a megawatt of installed capacity. Indeed, if anything, we believe the water and power ministry’s estimates are still too low.
We would remind Mr Iqbal of what his former professors at Wharton would no doubt have taught him about capital budgeting: the longer one waits to execute a project, the higher its cost. Pakistan desperately needs to reduce the weighted average cost of power generation and, by far, the best way to do that is to install more hydroelectric capacity. Of all the major projects under consideration, Dasu is the cheapest option.
In fairness to Mr Iqbal, the water and power ministry did itself no favours, first by using incorrect numbers for the exchange rate with the US dollar, and then by going directly to the Executive Committee of the National Economic Council rather than first sorting out the matter with the planning ministry. But Mr Iqbal should not throw the baby out with the bathwater. Yes, the power ministry made an error. But that error should be corrected, not compounded.
Published in The Express Tribune, February 15th, 2014.
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I agree with you that the Dasu Dam Project should not be shelved but Basha Dam is the question of life and death for our country. Dasu will generate 4600MW only when the Basha Dam will be constructed otherwise its generation capacity will be 2300M, as Dasu will use the Basha Dam reservoir. So what i request the government is to construct the Basha Dam first and then the Dasu..Basha and Dasu cannot be constructed simultaneously because of construction cost which add up to USD 21Billion
In India and Pakistan, we build may beautiful Taj Mahal on papers of Planning Commission. However, there is no money to fructify them on ground .... :-(