Pakistan and the Asian Development Bank (ADB) have agreed to sign a memorandum of understanding (MoU) for technical and financial cooperation in the construction of multi-billion-dollar Diamer-Bhasha Dam.
The MoU will be inked next week, said the Ministry of Water and Power after a meeting between Water and Power Minister Naveed Qamar and the Manila-based lending agency’s Director of Energy Wing Rune Stroem on Friday.
Stroem is leading a delegation to assess detailed engineering design of the dam, which will store 8.5 million acre feet of water for irrigation purposes and generate 4,500 megawatts of electricity.
The delegation, the first formal mission on Diamer-Bhasha Dam, will also review the cost component and consider options to make it a bankable project, as the ADB alone cannot finance the full cost estimated at $11.2 billion.
The government and the ADB also agreed to organise roadshows in three different countries with the assistance of international lenders, equipment suppliers and others concerned for seeking co-financiers for the project, said the water and power ministry.
An official of the Economic Affairs Division said the ADB has not yet formally conveyed the exact size of the loan but there are indications that the agency may extend up to $4.5 billion that will meet 40 per cent of financing needs.
After a refusal in 2008, the World Bank also recently expressed its willingness to finance the project, said the official. The US has also committed to financing the project under the Kerry-Lugar Act, but it also has not given the exact size of its share in the financing.
Stroem said the mission was giving highest priority to Diamer-Bhasha Dam and looking for its early execution. Praising the progress made so far on the project and the efforts to resolve related matters, he said the project would help improve socio-economic life of people and bring prosperity in the country.
Naveed Qamar said the ADB’s role as lead financier of the project would help attract other donors and sponsors to fund mega projects in Pakistan. He said the project would be a milestone for the country’s economy and meet water and power needs.
The government is attaching high priority to the project and has completed all formalities for its construction, hinting at its approval at the Council of Common Interests, the highest constitutional body on inter-provincial matters.
Qamar said most of the land for the project had been acquired and the resettlement package was being implemented. The ADB mission also discussed the energy efficiency programme and matters relating to other mega water and power projects being executed by the government with the cooperation of the bank.
Stroem said the bank was also considering various other projects for financial and technical assistance in the water and power sector.
Matters relating to power sector reforms and rehabilitation of electricity generation companies were also discussed. The mission was told that rehabilitation of power companies was under way, which would be completed at the earliest.
Published in The Express Tribune, December 10th, 2011.