Chinese investments in water projects

No other countr­y has the kind of experi­ence with large water projec­ts that China has accumu­lated over decade­s.

Shahid Javed Burki June 12, 2011

There is news in the western press that the Chinese may be getting ready to make large investments in developing Pakistan's water resources. These investments will be made to increase the amount of water available for irrigation and using water to generate electricity. According to an item in a recent issue of the Financial Times, the contemplated amount of investment is of the order of $15 billion. This amount has been proposed by the Three Gorges Project Corporation, the entity that built and operates the largest water control project in the world.

The Chinese company would like to write a new master plan for using the available flows in the Indus River. A total of $50 million would be spent on the plan and would draw upon the studies carried out several decades ago by the World Bank and the United Nations Development Programme. The earlier plans had also identified a number of potential sites for the development of the enormous hydroelectricity potential of the rivers of the Indus basin.

But the plans remained just that, plans. No action was taken either for political reasons or for the reason that the various administrations that held the reins of power at various times did not pay attention to the development of the sources of energy supply. Now as energy shortages are taking heavy economic and social tolls, Islamabad has begun to look around for help. China is one direction in which it is heading.

In 2010, China and Pakistan agreed on an investment deal to build the Bunji dam on the Indus. In additions to this investment, the new plan that China is offering to develop will include large projects at sites such as Kohala and Dashu. If these investments materialise, China will bring to Pakistan its expertise in building large water projects. It is ironic that some of the knowledge China will bring to Pakistan was learnt initially from Pakistan itself. In the 1970s, Pakistan was recognised as the leader in the developing world on the management of large river projects. China then looked to Pakistan to learn what it needed to know when it turned its attention to harness its many rivers.

The dam on the Yangtze at Three Gorges has provided China unparalleled experience in managing large projects. The country has replaced Canada, Italy, Germany and the United States in terms of hands-on experience with water investments. When Pakistan built the lndus Water Replacement Works in the 1960s, it engaged several western companies to design, build and supervise the construction of the projects on the three western rivers in the Indus system. The Indus, the Jhelum and the Chenab had come to Pakistan's share after the signing of the Indus Water Treaty with India in 1960. China was then absent from the scene. Now no other country has the kind of experience with large water projects that China has accumulated in three decades.

It is interesting to note how China developed this expertise. My own involvement with the Three Gorges project exposed me to the way China does large water investments. In 1987, I was appointed to head the department responsible for the Bank's operations in China. One of my early responsibilities in the new job was to chair the three-man Three Gorges Committee. The other two members were from China and Canada. The staff work for the committee was done by the Yangtze Valley Authority and the World Bank. At our very first meeting, the Chinese made it clear that their interest in turning to the Bank was not to obtain financial support from the institution. They were much more interested in getting the Bank to use its knowledge of large water projects to help them with the design of the Three Gorges development program. By that time the Bank had acquired worldwide reputation in the area of water management. Much of this rested on the Bank's work in Pakistan and some of the engineers who worked on the various Bank-funded and supervised projects were from Pakistan.

The Bank's technical staff - many of them from Pakistan - told me to press the Chinese on three issues: To satisfy the global community that the project would not be an environmental disaster, that the large number of people it would displace would be properly settled and that water shortages would not result downstream of the project. At the first meeting of the committee under my chairmanship, I made it clear that the feasibility report would not be approved unless the committee was satisfied on these three counts. The effect of this was to postpone the decision on the project by several months.  I had expected that the Chinese would be unhappy at this decision since they were keen to proceed with implementation. That did not turn out to be the case. In fact, they were pleased that I was able to bring to the table some of the knowledge the Bank had accumulated in the area. It was the Canadians who were unhappy with the delay. They were anxious to have the project go forward. They hoped to pick up a number of contracts once Beijing started to build the massive dam.

We hired a number of consultants to look at the three aspects of the project with the result that a great deal of additional work got done on environmental and settlement issues. A year later, the committee approved the project and once that was done the Chinese told me that they would not ask the Bank for financial support nor would they engage foreign consulting companies for implementing the project. Given this experience, what would be my recommendation to Islamabad for managing the Chinese involvement in water management in Pakistan? I recommend bringing in the World Bank and the Asian Development Bank as advisers, once the Chinese have done the spade work.

Islamabad may also consider establishing a new authority committed entirely to the implementation of the Chinese plan. And, special emphasis should be given to addressing the types of issues we examined when the feasibility report of the Three Gorges Project was being looked at.


Muhammad Nawaz | 10 years ago | Reply Water management is key for food and energy security in Pakistan as our economy is basically a hydro-economy. We need big dams, there should be no doubt. Tarbela and Mangla fed us the most cheapest power for last forty years (less than one Pakistani rupee per unit). However, we could not build large dams since 1976 while the storage of existing dropped by 28%, the fallout of which has appeared in steep rise in electricity rates. We can not afford bills of IPPs-run coal, oil and gas plants (Rs.10-15 per unit). Lets start rational thinking. Every project will have negative impacts, however, projects could not be abandoned solely on cost aspect. We need to assess both benefits and costs for a longer period (more than 25 years). This benefit-cost ratio shall lead the decisions rather than emotions, opinions, guesswork and wishful thinking. This is 21st century which is based upon science and technologym why not use these two fundamental pillars of modern world's development. I comment Mr. Barki for his deep insight in macro-economic issues in Pakistan. I think we have sufficient technical manpower in hydrology. What we lack is clearly identified future (2050 and 2100) and political will to reach there. Small dams is an option but not a replecement. Lets see the numbers. The ready-to-start 12 numbers of small dams will cost Rs.100 billion for providing a total of 21 MW electricity and gross storage of 2.5 MAF. On the other hand, the mega Basha dam will provide 4500 MW electricty and 6.4 MAF live storage at a cost of Rs.946 billion. In addition, the life of small dam is generally low compared to large reservoirs. Also large reservoirs could give us protection against floods and droughts. Pakistan has the lowest per capita water storage of 150 cubic meters per person per year (China 2200). We can store only 30 days of our annual average river flows aginst India's 120-220 and Egypt 1000 days. We store only 8% of rivers annual flows, the world average is 40%. It is not because we have no water to store but that we lack reservoirs to store water. Last year, we lost 53 MAF water to sea, besides inflicting US$10 billion demage to our economy on its way to sea. Had we built large reservoirs, not only the devastation would have been minimized to more than half but also huge water for agriculture and power purposes would have been stored. Pakistan is blessed with natural slope of about 2000 meters especially in the north which provides us excellent opportunity to build large reservoirs. We also have no liberty to compensate loss in one place by gain at another due to our dependane on a single indus basin. Other countries have several independant basins and a crises at one could be offset at another basin. The downstream environmental impacts are not due to dams but mismanagement and poor governance. Dams could be used to improve environment by storing extra flood waters for subsequent use (agriculture, industry, domestic, delta, ecosystems and for keeping the rivers systems alive) when river flows diminishes in winter or drought periods. Very importantly, one of greatest achievemnt of Pakistan water sector is food security. Thanks to our irrigation system (90% production comes from irrigated agriculture) which kept feeding the world's 6th most populous country. We need large reservoirs to feed us, especially in future where the glaciers melting (60-80% of our river flows are fed by glaciers melting) has been predicted to accelerate. In such gloomy situation, lartge dams would provide us protection against floods and droughts. Lastly, Pakistan lacks funds but it should not be an issue. If we reduce military spendings by half for next 10-15 years (to be resumed again after achieving economic growth), improve tax collection, reduce corruption, privatize loss-making public assets (PIA, railway etc) and improve relations with neigbouring countries, there is no reason we can not fund large reservoirs from our own resources. It is time to think that we have no other land but this Pakistan as our motherland. We need water and energy for our socio-economic development and security. A nuclear Pakistan can be a leading water sector country as we had been in the 60s only if we will so and start act so.
Shehryar | 10 years ago | Reply @ MAX, Well said sir. It is about time that we should realize that nations are never friends, they have interest.
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