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The Federal Minister for Finance Ishaq Dar, currently in the United States to attend the World Bank/International Monetary Fund annual meeting, took the opportunity to address a day-long seminar with a view to garnering support for the construction of the Diamer-Bhasha dam. The panelists included the Pakistani Finance and Water and Power ministers as well as USAID administrator, US Special Representative and the US Ambassador to Pakistan as well as his Pakistani counterpart in Washington.

The price tag of Diamer-Bhasha is a whopping 14 billion dollars, estimated in 2013 (though earlier the estimated cost had been 8.5 billion dollars reflecting the steady rise in costs as the project continues to be delayed); and its foundation stone was laid by the then Prime Minister, Yousuf Raza Gilani, on 18th October 2011. The project was first envisaged in 2006 and the then Musharraf-led government had committed to its construction in the first phase of developing water storage capacity in the country. It is designed to (i) produce 4500 MW of electricity, (ii) store an additional 8,500,000 acre feet (10.5 km3) of water to be used for irrigation and drinking, (iii) extend the life of Tarbela dam located downstream by 35 years, and (iv) control flood damage by the River Indus downstream during high floods. In short, it would be an extremely useful dam on several counts acknowledged by all political parties which is reflected in support for it by three successive governments. And yet project construction remains preliminary and delays are attributed to a profound lack of financing.

Be that as it may, there is some conflicting information that has been released by the government during the past 14 months which requires to be taken into account if the reports emanating from government sources in Washington with respect to the success of the seminar are accepted as credible. In August 2012, the PPP-led government faced serious setbacks due to major sponsors' withdrawal from an earlier commitment to finance the project including the World Bank and the Asian Development Bank (ADB) who requested Pakistan to first get a No-Objection Certificate from India, a requirement as per multilaterals' policies for financing a project located in a disputed territory. Inexplicably by 20th August 2013 Ishaq Dar claimed to have convinced the World Bank and ADB to finance the project - claims that have never been supported by senior management of either of the two multilaterals.

In November 2013, Ahsan Iqbal, the Federal Minister for Planning, while addressing experts from Washington, highlighted the criticality of the dam and announced it as a part of PML-N government's Vision 2025 programme. He also appealed for broader international financial support to set up a consortium to push the project and stated "we will complete this project at all costs, even if we do not get much international support - just as we advanced our nuclear programme - our future economy depends on this project". This commitment, however, was not likely to be met given the woeful state of government's finances that has been exacerbated by the 2014 floods, the IDPs due to the ongoing operation Zarb-e-Azb and the dharnas which have negatively impacted on exports as well as compromised the government's capacity to raise electricity tariffs as agreed with multilateral and bilateral donors. On 7th November, 2013 Chairman Wapda, Syed Raghib Abbas Shah, claimed that Wapda had received 17,000 acres of land valued at 5.5 billion rupees from Government of Gilgit-Baltistan for the construction of the project.

Seen within this historical context, it is difficult to get excited about the US government's pledge, with no indication of the amount involved. While the associated conditions, no doubt, would support existing pressure by donors, multilateral and bilateral, to reform the power sector and raise tariffs to achieve full cost recovery yet given the failure of the government to deliver on either count 16 months after it took over power may at best delay financial releases and at worst deter the releases.

Copyright Business Recorder, 2014


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