Diamer-Bhasha project: Pakistan considers slapping surcharge to finance dam

Rejects stipulation of international donors to obtain NOC from India.

ISLAMABAD:

Rejecting the stipulation set by the World Bank and other multilateral donors to obtain a no-objection certificate from India for the construction of Diamer-Bhasha Dam, Pakistan is considering other proposals including placing a surcharge on power consumers to generate the funds.

Pakistan was earlier asked to obtain an NOC from India to build the 4,500 megawatt hydropower plant, which the donors were offering to finance along with the Dasu hydropower project. However, authorities rejected the idea and are now considering other ways to generate money for the construction of the said dam.

A meeting was held by the Planning Commission on Friday to deliberate over the same issue, sources told The Express Tribune. Participants of the meeting were informed that the cost of the dam has escalated to $13 billion.

The earlier cost approved by the Executive Committee of National Economic Council (ECNEC) on August 20, 2009 was $8.5, but continuous delays and increased disparity between the rupee and dollar has increased its cost considerably.

Participants of the meeting were told that construction of the dam will be taken up regardless of monetary constraints and a number of proposals were put forward to cover the financial vacuum.

“Rs6 billion will be generated per annum if the government imposes 10 paisa per unit surcharge on power consumers, whereas Rs60 billion will be generated if a surcharge of Re1 per unit is imposed,” sources said, quoting a presentation given by the Ministry of Water and Power.

Many participants voiced concerns, saying power prices were already high and raising them further was not a feasible option.

Officials of the Water and Power Development Authority (Wapda) tabled a proposal to engage China in the construction of the dam. “China is already funding the Neelum-Jhelum hydropower project in Azad Jammu and Kashmir,” said one Wapda official, adding that China had offered to finance this project too.

Sources maintained most participants were in favour of China’s involvement in the project.

Another proposal put forward by Wapda was to mortgage the Tarbela, Mangla and Ghazi Barotha power turbines to raise $3 billion for the Diamer Bhasha project.

Approaching Friends of Democratic Pakistan (FoDP) for financial assistance was also discussed. Since WB and ADB have refused to provide the aid, a proposal would be put forward before financial experts to move other donors.

Meanwhile, China, ADB, WB and the Islamic Development Bank (IDB) have offered to provide financial assistance for the Dasu hydropower project which is said to have a capacity of 4,320 megawatts.

The project site, situated in Kohistan district of Khyber Pakhtunkhwa, is about 7 kilometres upstream of Dasu village on the Indus River and 74 kilometres downstream of Diamer Bhasha Dam.

Published in The Express Tribune, August 20^th, 2012.