Dasu dam: Absence of bank account stalls project

Delayed by eight months over a simple file

ISLAMABAD:

The $4.3 billion project to build the Dasu dam, which upon completion will be able to produce 2,160 megawatts of hydroelectric power, had been stuck in limbo for eight months for a peculiar reason: the bureaucrats in charge of the project had been unable to open a bank account to manage the funds already allocated towards construction.

In June 2014, Prime Minister Nawaz Sharif performed the groundbreaking ceremony for the first phase of the project, for which the World Bank has already approved a $588 million loan. The Water and Power Development Authority approved the formalities need for the project to open a bank account late last year, yet the bank account to manage the funds that have already been approved and allocated was opened only earlier this month, a full eight months after work on the project was supposed to have begun.

According to a Wapda official, the delay can be attributed to bureaucrats sending the file for the project’s bank account from one minister to another without taking any action and without regard for the delays they were causing.

While addressing a cabinet meeting, the prime minister on Monday vowed that action would be taken against all those responsible for any delay in energy projects.

As a result of this bureaucratic bungling, the timeline for the project has been set back, likely to be a blow to the prime minister, who had promised the nation that the dam would be completed in three years. “The government has asked Wapda to complete the first phase of Dasu in three years but our realistic assessment is that it cannot be completed at least before four and half years,” said Farooq Ahmed, the project director.

After grappling with the small issue of opening a bank account, the government needs to address the much bigger challenges of arranging the rest of the funds for the project and settling the compensation for the land owned by the affected local population, who will have to move as a result of the dam’s construction.

Funds

The Wapda official said that the financial close could be achieved by first week of June. Only after the financial close, can the contractor be mobilised to the main site of the dam. The project director maintained the project was moving ahead as per plan, which envisages that the first phase will be completed five years after the contractor is mobilised.

The only secured available financing is $588 million loan from the World Bank. The Washington-based lender also gave guarantees for another $460 million. The federal government also intends to provide sovereign guarantees against $1 billion lending. Talks are under way with investors from Turkey, China and South Korea, said the official.

Project authorities sent the first request to the World Bank last week, and a $50 million disbursement is expected next month.

Land acquisition

Deputy commissioner of the region informed the government that the locals were demanding exorbitant rates for their land. However, the government asked him to purchase the land at the approved rates, which may cause further delays in construction.

Published in The Express Tribune, February 24^th, 2015.