World Bank warns Pakistan of rise in Dasu project cost

Says project can face delay due to country’s inability to resolve land disputes

ISLAMABAD: As Pakistan struggles to generate resources to build dams, the World Bank has warned that the cost of $4.3-billion Dasu hydroelectric power project may increase and it can face delays due to the country’s inability to resolve disputes over land acquisition.

World Bank Country Director to Pakistan Patchamuthu Illango met Minister for Planning Khusro Bakhtiar on Wednesday, seeking intervention of his office in order to prevent the 2,160-megawatt clean energy project from complete derailment.

Usual bureaucratic inefficiencies and procedural hurdles are at the heart of the problem, according to people engaged in the construction of the project.

The Washington-based lender approved a loan of $588.4 million for the construction of the run-of-the-river project in June 2014. It has also extended a partial credit guarantee of $460 million to pave the way for arranging commercial loans to meet the remaining financing requirements.

Owing to slow physical progress, the World Bank released only $176 million or nearly 30% of its loan component by April this year, according to a project progress report of the lender.

The bank cautioned Pakistani authorities that civil works may not be completed by the June 2021 deadline, sources told The Express Tribune.

The project, which is critical for improving the country’s energy mix, faces problems despite the top priority accorded to construction of hydroelectric power schemes by the government and the judiciary.

The military has also recently contributed over Rs1 billion to the Diamer-Bhasha and Mohmand Dam Fund.

However, it seems that no one will be penalised for creating hurdles in the way of completing the foreign-funded Dasu project.

Due to the poor pace of work, the World Bank has kept progress rating of the first phase of the project unchanged at ‘moderately satisfactory’ for the last two years. The project, however, has enjoyed ‘satisfactory’ rating in terms of expanding the hydroelectric power supply in Pakistan.

The latest progress report of the international lender also mentioned that “further expansion of main works is currently being limited by delays in land acquisition for the construction area”.

The June 2018 report added that acquisition of land close to the dam’s site area over the next six months was crucial to not cause cost overrun and delay in project implementation.

The office of Deputy Commissioner Upper Kohistan and Project Management Unit of the Water and Power Development Authority (Wapda) are handling land acquisition for the project.

Despite taking services of the provincial Land Revenue Department, the people concerned have failed to finish paperwork for land acquisition from the locals.

The Executive Committee of National Economic Council had approved land acquisition rates in mid-2015.

The last PML-N government gave preference to the Dasu hydroelectric power project over the Diamer-Bhasha dam. Despite that, Wapda could not take appropriate measures to put the project on fast track.

Last progress review report showed that work on transmission lines of the scheme has been finalised by only 35%. Main civil work is focused on finalising temporary work areas such as camps, batching plant and construction of a bridge across the Indus River.

It is a “high-risk high-reward” project aimed at providing low-cost, non-carbon renewable energy.

The World Bank has now described the overall risk in completion of the project as high.

Illango is said to have raised the issue of delay in approval of project documents by the Planning Commission. Sponsoring ministries and project approval authorities take up to two years in just giving necessary approvals, which also affect business operations of the lender, officials said.

Published in The Express Tribune, September 20^th, 2018.

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