Loan deal signed: ADB backs Bhasha dam with caveats

Cautions govt to be mindful of resource crunch.

ISLAMABAD:

A top Asian Development Bank official on Wednesday backed Pakistan’s bid to construct the Diamer Bhasha dam and shift from expensive furnace oil to cheap coal-fired power generation but cautioned that Islamabad must plan mega projects while keeping in mind the scarcity of resources.

The ADB was in agreement with the government’s policy of moving away from expensive to cheap fuel mix, said Wencai Zhang, the ADB Vice President, after witnessing a signing ceremony for the provision of a $900 million loan aimed at converting 1,325 megawatts Jamshoro Power Plant from furnace oil to coal-based power.

The signing ceremony was also witnessed by Director General of the Central and West Asia Department of ADB Klaus Gerhaeusser
and Pakistan’s Finance Minister Ishaq Dar. The ceremony was held at Prime Minister’s Office.

Diversifying to coal will help the country cut down its electricity generation cost and reduce its oil import bill, Zhang said. He said Pakistan’s bid to diversify the fuel mix made sense to the ADB, adding that the Jamshoro Project will save $500 million per annum on account of fuel cost. The Jamshoro project will pioneer the technology which will address concerns about the impact of the project on the environment, he added.



On issue of Diamer Bhasha dam, the visiting vice president said the ADB was supportive of the project. The dam project was very critical for Pakistan, said Zhang. The ADB was carrying out a peer review of the feasibility studies of the Diamer Bhasha dam that the United States was financing, said the vice president. He said the ADB was trying to make the project bankable.

This is a $12-13 billion project and will require contribution from the government and other international financial institutions, said Zhang while indicating the limited financing that the Manila-based lending agency could offer. “Our message to the government of Pakistan is that the government is trying to undertake a lot of big projects and needs to prioritize them as the ADB have limited financing available,” he added.

Dar hailed the ADB’s contribution towards the development of Pakistan and said the vice president was visiting Pakistan at a time when the country was trying to deal with an energy crisis and working to shift to cheap electricity generation.

“Pakistan now produces three-fourth of its total electricity by using expensive furnace oil and in next four years the government desires to reverse this ratio,” said Dar. All future power projects will be based on cheap fuel mainly on coal, nuclear and alternative fuel, he added. Dar said after Jamshoro project the next project was Gaddani where ten projects having a generation of 6,600MW will be installed and fuelled by coal. He said the government wanted to reduce the cost of generation from over 20 cents to 7-8 cents per unit.

Published in The Express Tribune, February 13^th, 2014.