Energy vows: ECNEC clears 2,160MW Dasu hydropower project

The dam is expected to cost Rs486.1b including Rs218.6b foreign loan.

ISLAMABAD:

The Executive Committee of National Economic Council (ECNEC) on Friday approved the first stage of Dasu dam but linked the second phase with the completion of Diamer Basha dam.

In a meeting chaired by Finance Minister Ishaq Dar, ECNEC gave its nod to stage-I of Dasu Hydropower Project at a rationalised cost of Rs486.1 billion, including foreign loan equivalent to Rs218.6 billion, according to a handout issued by the finance ministry. It is expected to generate 2,160 megawatts of electricity.

Marred by deferrals, the project’s approval by ECNEC is said to pave way for the World Bank to sanction a $700 million loan in May this year.

Initially, the government had planned to construct Dasu Hydropower Project to generate 4,320MW of electricity. However, after advice by consultants who said that Dasu was not viable without the construction of Diamer Basha dam, the PML-N government decided to divide the main project into two phases.

For stage-II, a new summary will be presented to ECNEC but it will require a minimum of 10 years provided the government arranges finances for $12-13 billion Diamer Basha dam. Subsequently, the ministry of water and power told ECNEC that work on stage-II can be started only after availability of water from Diamer Basha dam.

According to the ministry of water and power, the first stage of Dasu project will require five years to complete, whereas Diamer Basha dam will need another five years after completion of the first phase.

Stage I of the project also includes acquisition of land, including resettlement, construction of offices, colonies, project access roads and pre-construction activities. Once completed, Dasu project will generate electricity at Rs.2.14 per unit.

Project documents reveal, that the cost of land acquisition has been reduced from Rs17 billion to Rs12 billion. However the cost of other components has gone up. The cost of relocation has been increased to Rs13.5 billion from Rs12 billion. The internal roads will be completed at an inflated cost of Rs10.5 billion. The cost of main dam is approved at Rs101 billion while an underground powerhouse will cost Rs60 billion.

Similarly, ECNEC has decided to separate transmission lines from the main Dasu dam project and asked the ministry of water and power to table a separate proposal. The cost of transmission lines has been assessed at Rs48 billion.

The original proposed cost of stage-I was Rs514 billion including transmission cost. The revised cost of Rs486 billion excluding transmission lines suggest that the stage-I cost has actually increased by another Rs20 billion.

ECNEC also constituted a committee to monitor issues relating to land acquisition, ensuring propriety of the land cost.

Published in The Express Tribune, March 29^th, 2014.