ISLAMABAD: As the World Bank and Asian Development Bank (ADB) have conveyed their refusal to fund the $14-billion Diamer-Bhasha dam project, the government is planning to lease the Ghazi-Barotha hydroelectric power project to raise financing.
Earlier, the World Bank had declined to provide funds for the project following Pakistan’s refusal to get a no-objection certificate from India for construction of the dam in what the bank believes the disputed territory of Gilgit-Baltistan.
In October, the ADB also refused to commit funds to the dam planned to be built on the Indus River.
“We did not really make any commitment. This is a very big project,” ADB President Takehiko Nakao said at a joint press conference with Finance Minister Ishaq Dar at the conclusion of 15th ministerial meeting of the Central Asia Regional Economic Cooperation (CAREC) programme at the end of October.
During the Musharraf government, the ADB had called for developing political consensus before extending funds for the project. In response to that, the government sought approval of the inter-provincial Council of Common Interests (CCI).
However, a senior official of the Ministry of Water and Power said Prime Minister Nawaz Sharif was informed in a high-level meeting on November 29, 2016 that the World Bank and ADB were approached for financing the mega project.
Both multilateral donors did not show interest in investing in the project and argued that the return on investment would take a long time, therefore, they could not extend financing.
According to the official, the Ministry of Finance has refused to allocate funds through the Public Sector Development Programme (PSDP), saying it would be difficult for the government to provide financing for such a massive project.
The ministry proposed that Wapda may mull over arranging funds for the Diamer-Bhasha dam through leasing the Ghazi-Barotha power project for 15 to 20 years.
Owing to Ghazi-Barotha’s excellent performance and financing record, Wapda may get a substantial amount through lease, the ministry said.
The prime minister noted that keeping in view the importance of Diamer-Bhasha project, budgetary allocation could be made in the PSDP.
Since funding from the PSDP would not be sufficient to meet requirements of the entire project, the Ministry of Water and Power should simultaneously work for arranging funds through leasing the Ghazi-Barotha dam, the premier said.
The Ministry of Water and Power had suggested that Wapda should build power units of the Diamer-Bhasha project on a commercial basis through its own resources amounting to Rs905 billion and the government could finance the water reservoir, which needed over Rs500 billion.
It had also proposed that financing for the reservoir could be arranged from the PSDP with an annual increase of 15%.
Published in The Express Tribune, December 24th, 2016.