Diamer Bhasha Dam: Turned away from elsewhere, government to now knock on China’s doors

After failing to secure funds from multilateral donors, govt hopes old ally will come to its aid.

ISLAMABAD:

After failing to secure funds for the multibillion dollar Diamer Bhasha Dam from multilateral donors – allegedly due to Indian lobbying – the government has now decided to seek a major portion of the project’s financing from China.

“China may not be able to provide our entire financing needs: however, it can contribute a major portion of funds needed for the Diamer Bhasha dam,” Ministry of Water and Power’s Special Secretary Himayatullah Khan informed a parliamentary panel here on Friday.

The National Assembly’s Standing Committee on Water and Power which met with Syed Ghulam Mustafa Shah in the chair to discuss the project’s financing was also treated to a shocking disclosure: amid periodic delays, the cost of constructing the Diamer Bhasha dam has now shot up to $14.4 billion, against earlier projections of $11.5 billion.

The special secretary also pointed out that the country will have to depend on expensive power from thermal generation plants due to a decline in hydroelectric power generation in the coming month because of canal closures.

“The decline in current power generation is mainly because of a decline in hydel generation, which has dropped to 30% of the total energy mix, against 70% a few years ago,” he said. He noted that power generation cost using furnace oil is Rs17 per unit, hydel Rs1.5 per unit, while gas-based generation costs Rs4 per unit.

“After December 20, the country will be left with no option but to go for expensive power generation through furnace oil and diesel,” Khan said; adding that power generation through diesel will cost a staggering Rs22-27 per unit to the government. He also reminded the panel that power consumers are paying Rs8.88 per unit, whereas Rs3.50 per unit in subsidy is borne by the government.

Committee member Chaudhry Abid Sher Ali alleged that 650 megawatts of power was being exported from Punjab to Karachi, despite a severe energy shortfall in the industrial city of Faisalabad. He also raised the issue of delays in the Nandipur Power Project, which he said had additionally resulted in the shortage of power for industrial consumers in Faisalabad. In response, the special secretary acknowledged the delay, but pointed out that the matter is currently pending in the Supreme Court of Pakistan.

Other members of the committee, including Pir Aslam Bodla and Bilal Yasin, demanded lifting of the ban on collecting power bills in instalments in order to facilitate the poor, who they claimed had “lost their capacity” to pay “huge power bills”. The special secretary agreed to consider this proposal, but said that instalments would be allowed in exceptional cases only, and that current outstanding bills would need to be paid within the due date.

Published in The Express Tribune, December 1^st, 2012.