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ADB’s refusal forces govt explore alternative funding for Bhasha Dam

The government will construct the Bhasha Dam at any cost on a priority basis and will explore alternative options, including help from China, after the Asian Development Bank (ADB) refused to fund the project, a high-powered meeting attended by the top officials decided on Monday.

The $12 billion project has suffered a setback after the ADB reversed its commitment to fund it, as was done by the World Bank, which argues that the project site is located in the disputed territory of Gilgit-Baltistan and needs an NOC from India to qualify for funding, a senior official who was part of the meeting told The News.

The meeting was chaired by Chaudhry Mukhtar Ahmad, minister of water and power and was attended by secretary Economic Affairs Division (EAD), top officials of the finance, water and power ministries and the Planning Commission. “Minister for Water and Power Chaudhry Ahmed Mukhtar has said that the government is determined to construct mega water and power sector projects and all options are being considered for their financing to complete them within the shortest possible timeframe,” an official press release issued after the meeting said.

The minister said that the construction of mega water projects remains vital to overcoming water shortages and producing cheaper electricity, the press release said. An official requesting anonymity said that the meeting decided to explore all options for the construction of the dam, including handing over the project to China, under government-to-government arrangement. “Secretary EAD Javed Iqbal said that there is need to mobilise other donor countries and some multilateral institutions to arrange funding.”

A task force of the Friends of Pakistan Development Forum (FoDP), which prepared a report about the water situation in Pakistan, recommended building a big reservoir, he added. The task force has not yet released the report, but has reportedly recommended construction of large dams in Pakistan keeping in view the increasing population and fast dwindling water resources.

Wapda chairman Shakeel Ahmad Durrani updated the meeting on the status of funding of the project, its land acquisition efforts, infrastructure development, compensation package, allocations and other issues.

Durrani said that many other agencies and countries are willing to fund the project.

It was decided that in the next meeting, scheduled on August 17, a modus operandi would be carved out as to how to proceed on the Bhasha dam funding. Durrani briefed the meeting on how the ADB wasted four crucial years inflicting huge loss to the country, officials said. The meeting was told that the ADB’s senior officials committed support for the project at least four times during the last four years. Also in December 2011, the ADB agreed to provide a grant for due diligence studies of Diamer Bhasha Dam Project.

Durrani said that he discussed matters relating to the financing of the project with three leading Chinese firms during a recent visit to China in July 2012. “These firms expressed willingness to arrange funds for the project,” the official said quoting the Wapda chief.

Though the ADB has yet to officially convey its refusal, the dilly dallying tactics on its part have caused an escalation in the project cost by another $2 billion (at the rate of US $500 million per annum). It also deprived Pakistan of $8.0 billion in terms of the annual benefits of the project (at the rate of US $2 billion per annum) over a period of the last four years. The Wapda chairman said that the ADB director general for Central and West Asia, Klaus Gerhaeusser, held separate meetings with the federal water and power minister and other top officials in June 2012, and the issue discussed in the meetings was none other than the lead financing role that the ADB committed to play for the project, the official said.

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