World Bank lowers rating of Dasu hydel project

Project retains ‘satisfactory’ rating in terms of expanding Pakistan’s hydropower supply .

ISLAMABAD: A World Bank report lowered on Saturday the progress rating of the first phase of 2,160MW Dasu hydropower project, moving it down to ‘moderately satisfactory’ from its previous ‘satisfactory’ status.

The federal government failed to resolve a host of land related issues, including ones on land acquisition and payment of service charges with the Khyber-Pakhtunkhwa government.

The latest implementation status report of the WB-funded project also raised the specter of unwanted delays.



Lingering land-related issues highlighted the flawed government policy of starting major development projects without doing adequate spadework.

The government preferred 4,320MW Dasu hydropower project over Diamer-Bhasha dam and Prime Minister Nawaz Sharif was initially keen to inaugurate its first phase before the end of his five-year term in 2018.

The Dasu project is one of the projects expected to produce 31,000MW of power that the federal government claimed it would complete in next five years to address power outages, on a permanent basis.

Its newest deadline for ending power outages is March 2018.

The current overall implementation progress on phase-I of the Dasu hydropower project is ‘moderately satisfactory’, a notch down from the previous rating, the WB report showed.

The project, however, retained ‘satisfactory’ rating in terms of expanding the hydropower supply in Pakistan.

WB financing is critical for the timely completion of the project’s first phase that has a total cost of $4.3 billion. The bank has already approved $588.4 million for the scheme. It has also given guarantees of $460 million to raise about $2.5 billion in commercial loans from domestic and foreign lenders.

This would be achieved by installing a 2,160MW hydropower unit on the Indus River, which can be expanded to cheaply produce 4,320MW in future. WB called the project a ‘high-risk, high-reward’ operation.

The federal government took over 15 months to determine property rates for acquiring land for the project. In November last year, the Executive Committee of National Economic Council (Ecnec) approved the land rates.

However, officials said that an issue related to payment of service charges to the K-P government still remained unresolved.

Due to the lingering dispute, work on the project remains far below the pace needed for its timely completion. The contracts to start work on the main site of the project have not yet been awarded. This has led to delays in the construction of the main hydraulic structure, construction of intakes, waterways and powerhouses.



The WB loan would primarily be used for project supervision, implementation of social and environmental management plans, and preparatory works such as relocation of Karakoram Highway (KKH), access roads, offices and colonies.

Financing for the civil works on main structures, powerhouses and diversion tunnels, as well as mechanical and electrical equipment would be raised commercially on the balance sheet of WAPDA with credit enhancement provided by the government and WB.

The authorities concerned are negotiating loans worth $800 million with foreign creditors and another $1.4 billion with domestic commercial banks, but the agreements have not yet been finalised.

Published in The Express Tribune, June 26^th, 2016.