ISLAMABAD: Pakistan on Monday approved the construction of

Diamer-Basha Dam at an initial estimated cost of Rs625 billion. It will

mostly be funded through local resources after international financial
institutions and China showed reluctance to help the country build the
reservoir.

The Central Development Working Party (CDWP) cleared the project

for the final approval of Executive Committee of National Economic
Council (ECNEC), according to the Ministry of Planning and
Development. Headed by Planning Commission Deputy Chairman
Sartaj Aziz, the CDWP also cleared the Rs303 billion Mohmand Dam
Hydropower Project for the final approval of the ECNEC.

With a cumulative cost of Rs928 billion, these projects will help the
country address two serious issues – water shortage and power
generation. The Mohmand Dam project will have power generation
capacity of 800 megawatts. Diamer-Basha Dam project is only being
built as a water reservoir for now, as the government initially excluded
the power generation component, which would cost another Rs744
billion.

The total cumulative cost of Diamer-Basha Dam will be minimum Rs1.4

trillion once power generation facilities are accounted for.

This is very big decision and the government will fund the dam by
providing money from the budget, while the Water and Power
Development Authority will arrange commercial financing, Aziz
told The Express Tribune. He said that under the new Water Policy,
the Planning Commission has recommended enhancing the water
sector allocations and the funds required for the construction of the
dam can easily be provided.
The government will be required to provide around Rs48 billion per
annum for the construction of the dam.

The federal government will provide Rs370.2 billion from the budget in
a grant, which will cover 57% of the cost. Wapda will raise Rs115.9
billion from its own sources as an equity investment, and the
authorities will borrow Rs163.3 billion in commercial loans, according
to the project document.

Pakistan stops bid to include Diamer-Bhasha Dam in CPEC

In past 17 years, almost every head of state and the government has
performed the groundbreaking ceremony of the project but civil work
could not begin due to lack of financial resources.

Out of the total Rs625 billion total cost, which includes interest during
construction, the local rupee component is Rs472 billion and Rs153.2
billion is the foreign exchange component to be arranged from abroad.
The project will be completed in five years.

An amount of Rs138 billion has been separately approved for land

acquisition and resettlement. Most of this work has already been done
and the government has spent Rs58.3 billion on land acquisition. An
amount of Rs53.5 billion has additionally been approved for
resettlement.

An amount of Rs269 billion has been approved for civil works. The
Karakorum Highway (KKH) relocation will cost Rs56.9 billion.

The Council of Common Interests –the highest constitutional body

dealing with Centre and provinces issues, unanimously approved the
Diamer-Basha Dam project in July 2010.
The project has been divided into two parts to reduce the size of the
project and financing requirements after World Bank, Asian
Development Bank and China refused to fund the project. Pakistan has
been struggling to raise money from international institutions amid
Indian opposition to the project.

Pakistan had withdrawn its request to include the Rs1.4 trillion Diamer-
Bhasha Dam in the China-Pakistan Economic Corridor (CPEC)
framework after Beijing placed strict conditions including ownership of
the project, according to Wapda Chairman Muzammil Hussain on
Tuesday. “Chinese conditions for financing Diamer-Bhasha Dam were
not doable and against our interests,” said Hussain while briefing the
Public Accounts Committee (PAC) in November.

In order to facilitate early implementation of the project, WAPDA has

been entrusted to have overall control and implementation
responsibility of the project. The WAPDA will be responsible for dam
construction and the National Highway Authority has been tasked to
relocate parts of the Karakoram Highway that will submerge in the
water.

The project will contribute to the alleviation of acute water shortages in

the Indus Basin Irrigation System caused by progressive siltation of
existing reserves. After the completion of the dam, the storage
capability of Pakistan will increase from 30 days to 48 days.

The powerhouse, when completed, is expected to add 4,500 megawatts

of electricity generation capacity.

Pakistan has not built any major water reservoir since Tarbela Dam and
Mangla Dam were built in the 1960s.