Pakistan dam dealt funding blow by
India By Syed Fazl-e-Haider
KARACHI - Objections by India to the
construction of the US$12 billion Diamer-Bhasha
dam in Gilgit-Baltistan, a disputed area in north
Pakistan, have blocked funding for the project
from international donors.
This was
disclosed in a meeting this week at the Ministry
of Water and Power and chaired by Water and Power
Minister Ahmed Mukhtar. Shakil Durrani, chairman
of the Water and Power Development Authority
(Wapda) told the meeting that the World Bank, the
Asian Development Bank (ADB) and other
multilateral donors backed out of their commitment
to finance the project and linked their funding to
a no-objection certificate (NOC) being signed by
India.
The award of a contract for the
mega dam project may now fall
into Chinese hands, as
Islamabad is reluctant to get an NOC for the
project from India.
Gilgit-Baltistan is
seen by both India and Pakistan as part of the
larger issue concerning the contested area of
Jammu and Kashmir.
Wapda chief has sent
three communications to the Ministry of Water and
Power mentioning that Manila-based ADB has
reversed its commitment to finance the project.
The communication said that Durrani was of the
opinion that the ADB was playing games and veering
to the World Bank position on the project, and
requested the government to approach China for
financing the project.
China already has
interests in Gilgit-Baltistan, which connects
Pakistan to China's western province of Xinjiang.
Pakistan in July 2010 signed memoranda of
understanding with the China Three Gorges
International Corp (TGIC) for construction of the
seven,100MW Bunji and 1,100MW Kohala hydropower
projects in Gilgit-Baltistan.
"Why should
we seek an Indian NoC now when all documentation
for the project has been finalized in line with
the ADB's safeguard guidelines and we have even
got the project approved from the Council of
Common Interests to meet a demand of the
Manila-based organization," Dawn reported Durrani
as saying. "All settlement and environmental
issues have also been taken care of in accordance
with the ADB parameters."
Last year, then
prime minister Yousaf Raza Gilani laid the
foundation stone of the Diamer Bhasha dam and
termed the project a "life-line" for the national
economy. The dam is being built about 40
kilometers from Chilas on the Indus River in
Gilgit-Baltistan.
Islamabad, faced with
Pakistan's dismal shortage of power, is determined
to construct the dam and in the shortest possible
time. The project has already been delayed by more
than five years and its cost has escalated to $12
billion from $6.4 billion estimated by the
government of former president Pervez Musharraf.
Water and Power Minister Mukhtar has asked
Wapda to submit a report with all options to
finance the project.
"Besides China,
Russia is also ready to finance the dam in case
the contract is awarded without bidding," The
Express Tribune reported a senior official of the
Ministry of Water and Power as saying.
Last year, the TGIC demanded the Pakistani
government to remove legal bottlenecks in the
award of contracts for mega hydropower projects -
Bhasha, Bunji, Kohala and Karot. The Chinese firm
is not interested in following the Public
Procurement Regulatory Agency (PPRA) rules or
participating in international competitive bidding
(ICB), preferring to secure the projects on a
single-bid basis.
The company is already
involved in building a run-of-the-river hydro
project at the Sukkur Barrage of 120MW in Sindh
province. It also plans to install 2,000MW wind
power and 300MW solar power projects in Punjab and
Sindh.
Islamabad could look to the United
States for funding - the US has conditionally
offered financial assistance for the Bhasha dam
project - but it would have to shelve the $7.5
billion Iran-Pakistan (IP) gas pipeline project,
which is strongly opposed by Washington. US
participation in the dam project is crucial if
Pakistan wishes to secure finance from
multilateral financial institutions
The
government is contemplating a plan-B to arrange
funding for the dam project through bilateral
institutions, according to Dawn. Under this plan,
the country will persuade the ADB to provide
funding only for civil works that would not relate
to environmental and resettlement issues. Pakistan
would then meet the remaining part of the project
through local financing and other sources.
Critics say that the country would not
need to seek financial help from the international
lenders for construction of dam if the government
took effective measures to check widespread
corruption that costs billions of dollars to the
national exchequer each year. The government,
according to Transparency International Pakistan,
could raise additional revenues equal to $10
billion every year by curbing corruption in
government departments and through honest
collection of taxes.
With a height of 281
meters, the Diamer-Bhasha Dam will be the world's
highest dam, compared to the 196 meter high Itaipu
Dam in Brazil/Paraguay and the 185 meter Three
Gorges Dam in China.
Pakistan at present
suffers an electricity shortfall of as much as
5,500MW a day, leaving users facing long
electricity blackouts in summer while paying more
for electricity following government increases in
power tariffs. The main reason for the shortage is
that past governments have failed to anticipate
growth in demand and have delayed implementing
power and dam projects that would have boosted
output.
Pakistan has hydropower potential
of more than 40,000MW, and has so far tapped only
6,500MW. TGIC plans to add 8,920MW of electricity
to the national grid by making investments in
Kohala, Bunji and 720MW Karot hydropower projects.
The Bhasha dam will have an estimated generation
capacity of 4500MW, which will also go some way to
meeting the shortfall.
The project is
however fraught with many risks. India has also
raised concerns about the environmental impact,
while independent experts believe that Bhasha is
not a natural site for a large storage reservoir
with a little scope for side-channel storage
because it is located in the seismic zone. The
inability of the dam structure to control
devastating floods in the event of an earthquake
also raises concerns about damage to the Indus
River bed, which may cause huge losses to the
country.
Local experts suggest that the
country needs to shift towards greater use of its
renewable sources, such as water, wind and
sunlight, and reduce dependency on conventional
thermal-based power generation, whose supply is
affected by movements in global prices and supply
of oil and gas.
Syed
Fazl-e-Haider
(http://www.syedfazlehaider.com) is a
development analyst in Pakistan. He is the author
of many books, including The Economic
Development of Balochistan (2004). He can be
contacted at sfazlehaider05@yahoo.com.
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