Wooing investors: Roadshow in US to raise money for Diamer Bhasha Dam

Project drags on as top financial institutions reluctant to offer loans.

Our Correspondent July 09, 2014

ISLAMABAD: The government has decided to hold a roadshow in Washington in October this year to raise funds for construction of Diamer Bhasha Dam, a move that analysts say may backfire if the country could not convince a multilateral lending agency to become a lead-financier.

US Ambassador to Pakistan Richard Olson, in a meeting with Finance Minister Ishaq Dar on Wednesday, spoke about his government’s decision to co-host an international investor conference on Diamer Bhasha Dam in Washington.

The conference will be jointly organised by Pakistan and the United States Agency for International Development (USAID), according to a handout issued by the Ministry of Finance.

Last year, the US and Pakistan had agreed to organise an international conference to woo the private sector to finance the dam which was facing delays as world’s leading financial institutions – the World Bank and Asian Development Bank – were reluctant to provide credit for the project. The estimated cost of the dam comes in the range of $12 to $14 billion.

The decision on holding the roadshow came in the wake of reports that the dam may be delayed by another 17 years until 2037 because of lack of financing.

On Tuesday, Water and Power Development Authority Chairman Zafar Mahmood too briefed the finance minister about the status of the project.

Mahmood said past experiences showed that private investors shortlisted for hydroelectric power projects could not achieve financial close according to the schedule due to lengthy procedures.

In order to fast-track implementation of projects under the public-private partnership mode, the government may share some responsibilities with the private sector at the development and execution stage, he suggested.

According to experts, the roadshow without certified safeguard studies, feasibility studies, resettlement and financing plans will not encourage the private sector. Huge projects like Diamer Bhasha are never funded by the private sector without active involvement of any of the two big international lenders, they say.

According to a statement issued by the finance ministry, the finance minister said energy was one of the highest priorities of the government. In this connection, it was working at a fast pace to utilise domestic resources to lessen dependence on imported and expensive energy sources.

Dar discussed details of the investor conference with the US ambassador. He also praised US support for the internally displaced persons (IDPs) and hoped that the international community would come forward in providing relief to the IDPs.

The envoy said the US was working with the United Nations to provide relief to the IDPs, who had been displaced because of the military operation in North Waziristan Agency.

He revealed that the US had already provided $8 million to the World Food Programme for the milling of wheat provided for the IDPs by Pakistan.

He also pointed out that the US considered Kurram Tangi hydropower project an important scheme, which could benefit the people of Fata. Besides the US, Italy and the Islamic Development Bank were also interested in financing the project.

Olson assured the finance minister that the US would continue to maintain partnership with Pakistan and would work for peace and stability in the region. “We are looking forward to deepening our existing relations in all areas of mutual interest,” he remarked.

Published in The Express Tribune, July 10th, 2014.

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karachi | 7 years ago | Reply

Raza buddy chill man i am just saying to keep 2.5% as witholding and the government will have to pay the amount after one year it does not mean that it will be tax you can just make governement have some running finance. I know my self people of Pakistan origin in middle east sending money home majority of them are from lower to middle class. You gave your point of view on remittances what about the PDF fund. When you provide your views it does not mean you have to jump on other, share your views do not force them on other. Sorry to say we say to leaders what are we self doing for our country.

Raza | 7 years ago | Reply

@Karachi: You suggestion is ridiculous. Putting a 2.5 tax on that money would reduce remittances substantially. Some would prefer to keep their investment in the country where they live and those who do have to send it to support their family might resort to hawala system... All in all, the money would not flow through official channels, which was the case in past and State Bank worked really hard to correct.

Also, why put taxes on poor labor working in the Middle East and elsewhere trying to support their families.. Already they pay taxes on telephone calls made by them to their loved ones (introduced during Zardari government)... It would inhumane! You should suggesting, why don't we levy income tax on agriculturists, who make millions yet pay no taxes while using all the privileges of being the citizen of the state!

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