US-Pakistan agreed to explore financing for Diamir Bhasha Dam

[HRK]

PR No. 92:
PRESS RELEASE ​

FINANCE MINISTER’S MEETING WITH ADMINISTRATOR USAID DR. RAJIV SHAH
Washington: April 13, 2014​

In a meeting between Finance Minister Ishaq Dar and Dr. Rajiv Shah, Administrator USAID on Friday here it was agreed that, with positive mood on the turnaround in the economy and successful launch of Euro bond, it is an opportune moment to explore innovative financing for the Diamir Bhasha Dam.

Dr Rajiv Shah along with his team, called on the Finance Minister at the ED Office World Bank and discussed program portfolio and future priorities. Finance Minister was assisted by Ambassador Jalil Abbas Jilani, Secretary Finance Dr Waqar Masood Khan, Secretary EAD Ms Nargis Sethi, Acting Governor State Bank Mr. Ashraf Mehmood Wathra and Additional Secretary (EF) Mr. Shahid Mahmood.

At the outset Dr Shah congratulated Finance Minister on the successful 2ndreview of EFF Program and the successful launching of Euro Bonds. Furthermore, he appreciated that the efforts of the government bore fruit and Dasu Hydropower Project was going to the World Bank Board on 29thMay 2014. He reiterated his commitment to increase the “on budget” portion of USAID disbursement to 35% in the current calendar year. He informed that the three equity funds which had been given $20 million each under Pakistan Private Investment Initiative were now in the process of raising matching capital and will soon begin lending funds to the small and medium enterprises. He stated that since the mood of the investors and lenders was very positive towards Pakistan therefore it was an opportune moment to have a conference on Diamir Bhasha Dam in which major construction firms may be invited. These firms, in his opinion, would be interested to finance Diamir Bhasha Dam through supply of machinery through EXIM Bank when the project would reach construction phase.

Finance Minister thanked Dr Shah for his positive comments on the turnaround of Pakistan economy. Finance Minister briefly informed him about the macro indicators like Economic Growth, the fiscal deficit and debt to GDP ratio, inflation, Current Account Deficit, Exchange rate and stabilization of Rupee, revenue generation and the outstanding performance of Karachi Stock Market all of which were pointing towards resurgence of Pakistan economy. Finance Minister stated that the months of March, April and May were important for Pakistan as during this period World Bank had approved the CASA 1000 project while it was also taking the two Development Policy Credits and Dasu Hydropower Project (DHP) to its board. Moreover during this period Pakistan had second successful review of the EFF and was all set for the 3rdreview for the period which ended on 31stMarch.

Finance Minister said that holding of potential investors’ conference on Diamir Bhasha Dam and approval of the Dasu Hydropower project are aligned with the stated policy of the PML (N) Government. He stated that according to his information US EXIM Bank was offering finances to other countries in the region for a period of 20 years without the requirement of sovereign guarantee while in case of Pakistan the period of financing was 7 years and for that too sovereign guarantee was required. Finance Minister observed that this treatment was denying a level playing field and discouraging investments in Pakistan.

Dr. Shah promised to intervene in the matter and also to hold conferences on Diamir Bhasha Dam after the approval of DHP by the World Bank as this would send strong signals about the improved health of Energy Sector in Pakistan.

 

[Luftwaffe]

How nonsense, explore finances for the dam, what about the free money that goes to israelis and egyptians every years why not switch that egyptian money to Pakistan since US is at bad terms with them. Nothing is going to happen US is going to give you a little few million and rest would come from WB and IMF.

 

[HRK]

How nonsense, explore finances for the dam, what about the free money that goes to israelis and egyptians every years why not switch that egyptian money to Pakistan since US is at bad terms with them. Nothing is going to happen US is going to give you a little few million and rest would come from WB and IMF.

My dear that 'few million' will worth billion as previously WB was hesitant to provide funds for Diamir Basha Dam ..... so the diplomatic value of this agreement is more than its financial value....

 

[Fahad Khan 2]

Hope it happens....

 

[Luftwaffe]

My dear that 'few million' will worth billion as previously WB was hesitant to provide funds for Diamir Basha Dam ..... so the diplomatic value of this agreement is more than its financial value....

By few millions I meant 8-10 million which is nothing don't put your trust in that US would fund 200-$600m on such a project. So you people are ready to get billion dollars or so for the project and who is going to pack it back to them when the economy is in shambles and government has nothing to pay back businesses are down with 8-18 hours load shedding and gas shedding to factories you think you can make enough to return it to WB or IMF so easily.

 

[VCheng]

How nonsense, explore finances for the dam, what about the free money that goes to israelis and egyptians every years why not switch that egyptian money to Pakistan since US is at bad terms with them. Nothing is going to happen US is going to give you a little few million and rest would come from WB and IMF.

US money serves US interests, there is nothing nonsensical about that.

 

[Luftwaffe]

US money serves US interests, there is nothing nonsensical about that.

Hi, What I am trying to tell them US has no special interest in helping out Pakistan in power sector thus at the most US would pay few million 10-$30m that's it rest Pakistan would have to go somewhere else to beg for the project, it is highly unlikely US paying a large sum.

 

[VCheng]

Hi, What I am trying to tell them US has no special interest in helping out Pakistan in power sector thus at the most US would pay few million 10-$30m that's it rest Pakistan would have to go somewhere else to beg for the project, it is highly unlikely US paying a large sum.

US can influence WB and IMF too. US national interests do require stability in Pakistan and helping the power sector will aid that.

 

[Luftwaffe]

US can influence WB and IMF too. US national interests do require stability in Pakistan and helping the power sector will aid that.

If That was the case, Pakistan would have received similar treatment just like hindustan got civil nuclear deal, it didn't go well in return Pakistan was snubbed...

It's not about IMF and WB being forced by US to pay lend to Pakistan, the problem is Pakistan can't return not in a long time it is going to be a bad deal.

 

[VCheng]

If That was the case, Pakistan would have received similar treatment just like hindustan got civil nuclear deal, it didn't go well in return Pakistan was snubbed...

It's not about IMF and WB being forced by US to pay lend to Pakistan, the problem is Pakistan can't return not in a long time it is going to be a bad deal.

Pakistan was not snubbed. The turn down was due to illegal selling of nuclear technology. India has never done such a thing.

Pakistan's finances are known to be bad investments by everyone, but national interests require a certain level of commitments anyway.

 

[Drebin]

@Luftwaffe, that $10-20 million may actually be blessing in disguise as it'll mean attaining self sufficiency instead of relying on foreign aid for our each and every need. Besides, its not the money that U.S via USAID program is offering. Its actually the influence which promulgates positive word for Pakistan thus, bringing in more FDI or as in above case "level playing field." We, as nation, shouldn't accept handouts anyway. Period!

And its also wrong on our part to spread half truth about USA with claims like,"US has no special interest in helping out Pakistan in power sector" when our own media is advertising everyday of US via USAID program adding 1400 MW to national grid.

And a little positive outlook of our economy will help motivate a lot of morale as things are looking up, GDP is improving (I believe its 4% now vs 2.5% a year and half ago), macroeconomic indicators are +ve, rupee is appreciating against dollar (its 96.42 as of an hour ago), Government borrowing has lessened by 75% thus keeping inflation in check, National Reserve are inflating, successful launch of euro bonds, exceptional performance of KSE, and so on and so forth. So, a little +ve outlook will help a lot .

 

[xyxmt]

In think this is the 5th time US agreeing to finance, lets see when would they Agree again

 

[HRK]

By few millions I meant 8-10 million which is nothing don't put your trust in that US would fund 200-$600m on such a project. So you people are ready to get billion dollars or so for the project and who is going to pack it back to them when the economy is in shambles and government has nothing to pay back businesses are down with 8-18 hours load shedding and gas shedding to factories you think you can make enough to return it to WB or IMF so easily.

You are debating over what .... ??

WB loan for Diamir Basha Dam ..... ??

USAID agreement to consider its contribution in the financing of the project .... ???

or over Load shedding .... ??

First clear up yourself buddy .... nor I am saying US will contribute billions .... neither it is required .... this development indicates some progress regarding the project, which were at halt more of political reasons than financial reasons.

therefore, I said earlier 'this agreement' has more political & diplomatic value than financial value.

 

[Cheetah786]

Money can be raised without begging but its the Art most pakistani finance ministers are Good At. Minister can easily issue Basha Dam Bonds at attractive return rates with in pakistan and return could be based on profits generated by the Dam. Or Dam could be contracted out to private corporations for own operate profit and return to GOP.

Million ways to fix this problem only issue is all require politicians to shut out of this and thats why this issue will not resolve as they will not explore any alternative.

 

[IceCold]

Dr. Rajiv Shah.......is he Indian?

On topic i agree with Drebin that not all is bad. As for US it will look after its interest foremost, that is what any nation will do however seeing the mood, US does not want to abdomen of alienate Pakistan completely and we can use that to our advantage if we play smart and stop this anti US rhetoric nonsense.

For us overcoming our energy needs to be the top priority, by any means necessary and countries like US and China can play a vital/active role in that.