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Bhasha Dam no longer top priority, says official

While the cost of the Diamer-Bhasha dam project has risen from $11.8 billion to $13.6 billion because of the inordinate delay in securing funding, a senior official in the finance ministry says that the project is no longer the government’s top priority.

“The government was earlier pitching the Bhasha Dam as its top priority project before the IFIs, donor agencies and development partners and refusing credit lines being extended for other projects because of the dam’s potential to produce cheaper hydel power and its huge capacity for water storage,” said the official.

The World Bank had earlier offered a credit line of $5 billion for the Dasu hydropower project but the government asked for the funds to be diverted to Diamer-Bhasha instead. “But the World Bank reiterated its stance that it could not give funds for the Bhasha Dam as it was to be situated in disputed territory,” said the official. “It also said that in order to receive funding for the project, Pakistan would require an NoC from India.”

“Meanwhile, since the Asian Development Fund had also made its funding contingent on sizeable funding from the World Bank or other donors, they also refused to pay for Diamer-Bhasha,” said the official. “Now, the ADB says it may be willing to fund the project but only after strict implementation of reforms in the power sector.”

Consequently, said the official, top functionaries in finance, the economic affairs division and the Ministry of Water and Power have been forced to admit that beggars can’t be choosers. “Now the government has decided to initiate the project that gets credit lines from donors.”

Accordingly, at a recently held meeting of the Senate Committee on Water and Power, Additional Secretary Ministry of Water and Power Naimatullah Khan said that the government was ready to initiate the 4,320MW Dasu project for which the World Bank is ready to pay $500 million upfront.

However, at the time, Khan had insisted that the decision did not imply that Diamer-Bhasha was no longer a priority.

“We are still pitching the Bhasha Dam as a priority project before donor agencies and the EAD is in touch with the Asian Development Fund but the project for which funding is available will be started first so that the country’s hydel power generation capacity can be enhanced,” he had said.

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