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ISLAMABAD: In a massive blow, the leading donor for the Bhasha Dam, the Manila-based Asian Development Bank (ADB) has informally reversed its commitment to finance the project, top officials in EAD, Wapda, finance and water and power ministries told The News.
This has left Pakistan in the lurch and now the authorities concerned are going to put their heads together to find out alternatives to raise funds for the most important water and power project of Pakistan.
A Wapda spokesman confirmed that the critical funding issue had emerged as a stumbling block in the project and alternative options would soon be considered to raise a massive $12 billion for the dam.
An official said that the ADB Director General for Central and West Asia Klaus Gerhaeusser held separate meetings with the Federal Water and Power Minister Chaudhry Ahmed Mukhtar, Wapda Chairman Shakil Durrani and other officers concerned in June 2012. The issue discussed in the meetings was none other than the lead financing role that the ADB had committed to play for Bhasha Dam Project.
It was evident from the tone of Mr Klaus that there was a change in the ADBs stance and that for now the bank was not ready to support the construction of the dam, the official disclosed.
ADB President Harihiku Kuroda early this year also expressed reservations on providing funds for the project until a broader donors coalition which included the World Bank was formed and the so-called safeguards were adhered to.
As a matter of fact, both the ADBs president and the director general for central and west Asia appeared to be unsympathetic towards financing the project, the sources revealed.
To this effect, a brain-storming session under the chairmanship of Minister of Water and Power Ch Mukhtar Ahmad may be held on August 13. Another crucial meeting is also scheduled in the Planning Commission on August 15 where top officials of all the ministries and departments concerned would participate.
The sources said that the proposals would be under consideration to securitise the assets of Wapda such as Ghazi Barotha Hydropower project or other vital assets to raise the needed funds.
However, if this proposal is implemented, the cost of hydel electricity would increase manifold, but the nation needs to be ready for this sacrifice for the huge objective to continue building Diamer-Bhahsa Dam.
The project is located on Indus River in Gilgit-Baltistan (GB) and Khyber-Pakhtunkhwa (KP) province. It is a multi-purpose project that will store water for agriculture, mitigate floods and provide low-cost hydel electricity. On completion, the project will store 8.1 million acre feet of water and generate 4,500MW electricity, contributing about 19 billion units to the national grid per annum. The annual benefits of the project have been estimated at Rs2 billion.
In the present context, Diamer-Bhasha Dam has become an issue of life and death for 180 million people of Pakistan. Earlier, the World Bank (WB) had also brazenly refused to fund the project saying the site of the proposed project is in the disputed territory of Gilgit-Baltistan (GB).
The bank later linked its willingness to fund the project in case Pakistan gets a no objection certificate from India.
The ADB has let Pakistan down and wasted crucial four years of the country in implementation of the project. Though the ADB has yet to convey its refusal officially, the dillydallying tactics on the part of the bank have not only caused an escalation in the project cost by another whopping $2 billion (at the rate of $500 million per annum), but also deprived Pakistan of $8 billion in terms of annual benefits of the project (at the rate of $2 billion per annum) over a period of the last four years.
Chairman of the executing agency of Diamer-Basha Dam Project, Wapda, Shakil Durrani in a latest communication to the Ministry of Water and Power opined that the ADB was playing games and moving close to the World Bank position on the project, and had requested the government to approach the time-tested friend China for financing the project.
The sources privy to the development have disclosed to The News that Mr Durrani discussed the matters relating to the financing of Diamer-Basha Dam Project with the three leading Chinese firms during his recent visit to China the last week of July 2012. The firms expressed their willingness to arrange funds for the project.
In addition to the formation of a broader donors coalition, the alleged un-resolved issue raised by the ADB mainly includes getting of an NOC from India, the reported absence of the budgetary space with the government of Pakistan for financing the land acquisition and resettlement cost of the dam, the likely financial stress due to the start of projects other than Diamer-Basha Dam, the reported need for national consensus on the dam as the so-called reservations carry no weight, as those are either illogical or merely lame excuses to finally refuse the funding already committed by the ADB for the project.
It may not be out of place to mention that the ADBs senior officials have committed support for the project at least four times during last four years. In December 2011, the ADB agreed to provide grant for technical assistance for conducting due diligent studies of the project.
Pakistan left with no option but to pledge Wapda assets - thenews.com.pk
WB wants Bhasha dam delayed
ISLAMABAD, Aug 10: The World Bank has reportedly offered funding to induce Pakistan to take up the Dasu power project in Khyber Pakhtunkhwa and delay for 10 years the strategically more important Diamer-Bhasha dam in Gilgit-Baltistan.
That appeared to be the crux of the proceedings of Senate Standing Committee on Water and Power here on Friday, even though top bureaucrats tried to satisfy the committee that Pakistans sovereign decision on the matter maintained focus on the multipurpose Diamer-Bhasha project.
The World Bank has so far been reluctant to commit funds for the $12 billion Diamer-Bhasha project apparently because of behind-the-scenes opposition from India. The project promises 4,500MW of cheap electricity and 8.5 million acre feet (MAF) of water.
Senator Zahid Khan of Awami National Party who presided over the meeting provided the information about the WB offer and seemed inclined to support it apparently because it promised royalty on power generation and water use charges for Khyber Pakhtunkhwa unlike Diamer-Bhasha which required sharing revenues with Gilgit-Baltistan.
He said the World Bank had offered funding for 4,320MW run-of-the-river Dasu hydropower project instead of Diamer-Bhasha which would be delayed for 10 years. He said that according to his information the bank is ready to extend funding for the Dasu project instead of Diamer Bhasha dam.
Governments priority is Bhasha dam, and not Dasu project, and the World Bank is not responsible for making policies in Pakistan. We have made it clear to all donors that Pakistan will not give preference to Dasu over Bhasha, retorted Wapda chairman Shakil Durrani who also belongs to Khyber Pakhtunkhwa and is close to the Khans of Charsadda.
The site of the Dasu hydropower project is 7km upstream of Dasu village on the Indus and 74km downstream of Diamer-Basha dam. It is located in Kohistan district of Khyber Pakhtunkhwa.
Senator Zahid, who had specially invited officials of the economic affairs division for a briefing on the funding issue, asked if Bhasha was getting delayed why the government was not starting work on Dasu which was equally important.
The Wapda chairman said that Dasu was a run-of-the-river project while Bhasha dam would offer water storage which was a bigger challenge for the country.
He said Tarbela dams storage capacity was diminishing with 5,000 tons of silt filling its reservoir daily. If Wapda starts work on the Dasu project, Diamer-Bhasha dam will be delayed for 10 years as we can construct one dam at any given time, he said.
In the ensuing heated debate, Water and Power Secretary Zafar Mahmood tried to pacify both sides by saying that with adequate funding there should be no problem in undertaking both projects.
The committee decided to get a briefing on the prospects of funding from the economic affairs division at the next meeting.
The meeting was informed that the cost of 969MW Neelum-Jhelum hydroelectric project had increased from Rs130 billion in 2007 to Rs275 billion in 2012. The project was estimated to provide a guaranteed annual revenue of Rs45 billion to the government after its completion in 2016, project director Lt-Gen (retd) Mohammad Zubair said. At present prices, he added, the generation cost would be less than two rupees per unit after paying back interest.
He said a refusal by Norconsult of Norway to work in Pakistan had led to mobilisation of new consultant NJC a joint venture led by MWH of the United States on Aug 1, 2008. It completed review of earlier basic design made by Norconsult in 1998 which was not developed in detail.
Lt-Gen Zubair said review and modification of the projects design after the 2005 earthquake had led to the increase in cost. In case of an earthquake of 7.6 magnitude one part of the project would remain safe, he said, adding that Rs24.843 billion had been spent on the project up to June 30 this year.
Answering a question, he said Wapda faced Rs90 billion funding shortfall which was now being bridged through a surcharge of 10 paisa per unit, Sukuk bonds and other measures.
Lt-Gen Zubair said redesigning of the project after the 2005 earthquake, two to three years delay in arranging land by the AJK government and six to eight months delay due to 2010 floods were key reasons for late start of the project.
He informed the committee that Exim Bank of China would soon approve $448 million for the Neelum-Jhelum project and in case of a delay Wapda would face funding problems. Abu Dhabi had promised $100 million for the project but it was not interested anymore, he said, adding that he would not disclose the reasons because these were beyond his purview.
Shakil Durrani said Norconsult had not conducted a detailed geological survey, adding that no international consultant was ready to work on the Neelum-Jhelum project because of its close proximity with the Line of Control.
He said Wapda had changed construction methodology from drill and blast to tunnel boring machine (TBM) because progress was slow and behind schedule. He said TBM had faster excavation rate of up to 16 metres a day, implying that the tunnels would be completed in 30 months which would lead to completion of the project in 2016 instead of 2018.
Responding to a question about excessive use of Chinese machinery despite its inferior quality, the Wapda chairman said it was not possible for the authority to buy equipment from other countries with funding from China. How can we set our conditions when we are borrowing money from other countries? If China gives funding we are bound to buy Chinese equipment, he added.
WB wants Bhasha dam delayed | DAWN.COM
