Munda Dam project: US firm's refusal compels government to seek local funding

The government has suffered a serious setback in speeding up the documentation process of Munda Dam, as a US company, which has been issued letter of intent (LoI), has refused to take ahead the project's implementation process.
Sources told Business Recorder on Tuesday that the American firm's refusal had prompted the government to execute the project through local funding. The government will involve the local banks for project's financing, according to the sources.
In a high level meeting held recently in the Planning Commission, matters relating to the project were discussed at length. The meeting was informed that the company gave no response to offers Pakistan made last month, the sources added.
This development came as surprise for the government, which is keen to go ahead with project swiftly amid the energy crisis the country is facing, according to the sources. They said that this development had dented the government bid to involve the private sector companies in Pakistan and abroad in mega development projects.
The Water and Power Development Authority (Wapda) has recently taken up with other stakeholders the issue of prolonged delay in finalising the Munda dam action plan. Wapda, according to the sources, had realised that the prolonged delay in the project implementation would be harmful.
To be built on the River Swat in NWFP at a cost of over Rs 71 billion, Munda dam is one of the important schemes, and according to the government, it has to be completed by 2016 along with other four major dams. The dam would have storage of 0.67 MAF and generate 740 MW hydel electric power.
The construction of the dam is also essential for controlling floods in the Peshawar valley. It is also stated that the construction of Munda dam could soften the NWFP anti-Kalabagh Dam (KBD) stance and the latter could be constructed if the Federal government makes strenuous efforts for developing national consensus.
Some officials are of the view that Wapda and the Water and Power Division did not come out of their paradox that the KBD construction should be the top priority. The Munda dam should be constructed only if NWFP is agreed on the construction of KBD, some official circles are of the view.
The Munda Dam on River Swat will alleviate Nowshera flooding and back water of Kalabagh full reservoir only goes up to Akora Khattak. It also says that installation of 4,800 tube-wells in Sindh would address Sindh's apprehension that its lands would go out of production due to control over river because it would affect only 7,000 acres of mangrove forest.
The Munda Dam would contribute to overall economic growth and generate Rs 361 million as "water-user charge" annually for the NWFP government. The Munda Dam, on completion, would help improve equity in water allocation, reduce flood risks in Nowshehra and irrigate 29,000 acres, besides benefiting 30,000 acres of already irrigated areas.
Sources said that the government should not have issued the LoI to a firm, which lacked the expertise in planning the water and energy projects. There are a lot of other experienced firms, which could have been involved in the construction of the dam.
The Private Power and Infrastructure Board (PPIB), on the alleged instructions of the President Pervez Musharraf, had issued the LoI to a newly formed unlisted US company. The LoI was aimed at upgrading the feasibility study for constructing the 1.2 billion-dollar Munda dam.
Japanese consultants, who worked on the project, had suggested about 10 cents per unit electricity generation cost. These consultants had originally conducted the feasibility study, the sources added.