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US, ADB agree to finance Diamer-Bhasha Dam

United States and Asian Development Bank (ADB) have agreed to jointly finance the validation exercise of technical and financial feasibility and safeguard mechanism related to environment, social and displacements of people for construction of much-awaited $11.2 billion Diamer-Bhasha Dam, it was learnt.

“The estimated cost of $11.2 billion for Basha dam will be escalated keeping in view depreciation of rupee against dollar and efforts are underway to convince the World Bank to become part of consortium led by ADB,” top official of economic team confided to The News here on Wednesday.

Water and Power Development Authority (WAPDA) Chairman Shakeel Durrani held important meetings with top economic and planning managers here in the federal capital on Wednesday afternoon to accelerate the process of accomplishing compensation package for displaced people in Northern Areas as donors’ community asked the government to accomplish this process without hue and cry of local community.

After surfacing complaints of compensations extended to wrong people, a joint probe team of donors and WAPDA had visited the northern area and suspended a patwari who found involved for giving compensation money to non-eligible people.

In order to validate feasibility studies of this important project, the United States would extend grant of $7.5 million while ADB would provide technical loan of another $7.5 million, totaling this cost up to $15 million.

The ADB’s high-powered mission on energy sector led by Rune Storem is expected to visit Islamabad within next few weeks to review progress on feasibility studies prepared by the Water and Power Development Authority.

“The ADB is going to play leading role for making this project as bankable for other donors and the Manila based bank is expected to provide financing of $4 billion out of total $10 billion required from the donors.

We are making efforts to convince the World Bank to become part of consortium for Basha dam as it will help Pakistan to get money from other European donors,” said the official. He said that the suppliers’ credit would also play a crucial role to ensure external financing of this important project.

About cost of the project, he said that the escalation would be occurred in the case of this project because first the compensation money had already gone on higher side. The cost of the project will go up from initial assessment of $11.2 billion by adding few billion dollars more and the major cause of this escalation would be rampant depreciation of rupee against dollar.

“USA has also agreed to provide $200 million for Basha dam in first phase through Kerry Lugar Law (KLL) money,” said the official, but was clueless when asked when this money would actually be disbursed.

The lead syndicate established for Diamer-Bhasha dam under Asian Development Bank had already asked Pakistan to fill gaps by focusing more on social aspects of the displaced population and placing dispute resolution mechanism for making this project ‘bankable’ for international investors.

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