The Asian Development Bank (ADB) has refused to provide lending for the multi-billion dollars Diamer Bhasha dam project during the current calendar year despite Pakistan government''s assurance of eliminating subsidy to the power sector, Business Recorder has learnt.
The ADB has requested a financing plan that would eliminate subsidy along with the issue of circular debt. "We will be in a position to provide financing in coming the calendar year 2012," sources said, quoting ADB''s Deputy Director-General, Central West Asia Department, who recently held meetings with different ministry officials on January 24-28 2011. Sources said that government officials had urged the ADB delegation during negotiations to provide financing during the current calendar year 2011.
"We will take up the proposed lending plan to our Board of Directors after the project is ready to kick off," ADB delegation said. Sources said that ADB had assured that it would lead a consortium of lending agencies/countries for Diamer Bhasha dam project.
Sources said that during the meeting, Pakistani side had said that the project cost had been estimated at $11 billion. Planning Commission officials say that the cost would exceed $15 billion due to delay in project and on account of rupee depreciation against dollar. "The ADB has requested assurances on the commitments made by other donors to finance the dam as ADB intends to provide $2-3 billion for Diamer Bhasha dam", sources added.
ADB had sought firm commitment from the government on the ownership of the dam by passing a resolution in the National Assembly to develop political consensus. "ADB delegation has been informed that the Council of Common Interests (CCI) has approved Diamer Bhasha dam and, therefore, the government has fulfilled the requirement to develop a consensus among provinces," sources added.
ADB has also been informed that the federal government and affectees of Diamer Bhasha dam had reached an agreement under which the latter would be provided Rs 40 billion compensation. As many as 31 villages will be affected due to construction of the dam and the government will build nine model villages for the affectees, near the dam.
"The government is to fulfil the last condition of ADB, namely to satisfy its environmental condition" sources said, adding that the ADB has been informed that power sector reform had been initiated to improve efficiency of power and distribution companies. "Secretary, Finance, has assured the ADB delegation that power tariff would be increased, and no more subsidy would be given to Pakistan Electric Power Company (Pepco)," sources added.
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