Donors back out: Govt may award Diamer-Bhasha Dam contract to China

Country also decides to seek financing from FODP countries.

Zafar Bhutta August 13, 2012


The government may utilise an option of direct award of contract for the $12 billion Diamer-Bhasha Dam with power generation capacity of 4,500 megawatts and select China for the purpose as multilateral donors have backed out and linked the project with a no-objection certificate from India.

In a meeting held at the Ministry of Water and Power and chaired by Water and Power Minister Ahmed Mukhtar on Monday, participants said international donors had refused to provide funds for Diamer-Bhasha Dam due to Indian objections over its construction.

The Water and Power Development Authority (Wapda) was asked to submit a report with all options and commitment from the donors to finance the project. The report will be discussed after taking the views of the Economic Affairs Division and Planning Commission in the next meeting to be held in a couple of days.

“Besides China, Russia is also ready to finance the dam in case the contract is awarded without bidding,” a senior official of the Ministry of Water and Power said.

China and Russia have also offered the same proposal for the Iran-Pakistan (IP) gas pipeline project.

Sources told The Express Tribune that the government had also decided to seek assistance from the Friends of Democratic Pakistan (FODP) – a group comprising friendly and donor countries which was formed to support social and economic development in Pakistan.

This comes following refusal of the World Bank, Asian Development Bank (ADB) and other multilateral donors to provide funds for the dam in the wake of fears expressed by India over the environmental impact of the dam’s construction.

When approached for comments, the Wapda chairman did not respond to the call.

Pakistan has been negotiating with China, ADB, World Bank and Islamic Development Bank (IDB) for financial assistance for the dam. However, the donors have shifted focus and are now offering funds for the 4,320-megawatt Dasu hydropower project.

The Dasu project is situated seven kilometers (km) upstream of Dasu village on the Indus River, 74 km downstream of Diamer-Bhasha Dam and 350 km from Islamabad. The project is located in Kohistan District of Khyber-Pakhtunkhwa.

In the meeting, Water and Power Minister Ahmed Mukhtar said the government was determined to construct mega water and power projects and all financing options were being considered to complete them within shortest possible time.

He said the execution of mega water projects, aimed at enhancing water supply and producing cheaper electricity, was the top priority of the government.

Earlier, Wapda Chairman Shakil Durrani briefed the meeting on the current status of Diamer-Bhasha project, its benefits, land acquisition, infrastructure development, compensation package for the displaced, allocation by the government and other related issues.

Published in The Express Tribune, August 14th, 2012.