According to a section of the press, multilateral donor agencies have recommended to the government to give greater priority to building smaller hydel dams which would be less costly with a shorter construction period relative to large hydel projects. In other words, focus on Dasu rather than on Diamer Bhasha dam with the understanding that both need to be completed to ensure a loadshedding-free energy future of Pakistan. Dasu is a 5.26 billion dollar run of river dam located upstream of Dasu village with the capacity to produce 4320 MW; the date of commencement was in April 2010 with an expected completion date of 2019.
However, within projected five years Dasu would be able to produce 1080 MW and over 8000 Gwhs at an estimated cost of 3.6 billion dollars; in the second construction phase comprising of an additional one to two years Dasu would produce another 1080 MW or a total of 12000 Gwhs; and phase III and IV would add a combined total of 2016 MW. By March this year, major preparatory work was already completed and the World Bank indicated that it would provide 800 million dollars for the project as well as assist in formation a consortium which would enable the Bank to generate a total of 2 billion dollars for the Dasu dam. Analysts argue that with the World Bank involvement the contractor will have to ensure financial closure of the project and that it is built on time. In contrast Diamer Bhasha dam with an installed capacity of 4500 MW, or only 180 MW more than Dasu, would cost 12 to 15 billion rupees to complete in 12 to 14 years. Given the present state of the economy it is unlikely that the government would be able to generate the required start-up finances to begin preparatory work on the dam. The USAID has however, offered to finance Bhasha dam feasibility. The Asian Development Bank (ADB) too has indicated that it would consider funding the project, yet there is many a slip between the initial offer and final approval by the Board of Directors with regard to supporting hydel projects.
The PML (N) government considers hydel energy as the way forward for two reasons. First and foremost, it is the cheapest source of energy and costs around one rupee per unit to produce. This is in marked contrast to the 20 to 21 rupee per unit cost of Independent Power Producers reliant on expensive furnace oil fuel imports. Pakistan does have a looming water scarcity problem linked to India's construction of dams including Kishanganga and Baglihar on the western rivers that, according to the World Bank brokered Indus Water Treaty, were to be for Pakistan's exclusive use namely Jhelum, Chenab and Indus. India's water hegemony is also evident in its dispute with Bangladesh over Farrakha barrage and with Nepal over Mahaklli river.
However, the answer to Indian recalcitrance must be through a two-pronged strategy: (i) to remain engaged with India at the diplomatic level and Prime Minister Nawaz Sharif has already indicated that resolution of all outstanding issues, and water is certainly gaining more importance with time, will be through dialogue; and (ii) a team of legal experts needs to be on hand to proactively engage in litigation in international fora as and when India violates the Indus treaty. In the past, India won the day as our government was too slow in taking up the matter as allowed under the treaty and India was allowed to proceed as roll back on the construction of the dam was not considered feasible. Secondly and equally importantly today, Pakistan's energy sector relies heavily on furnace oil (70 percent of total energy supplies) relative to hydel (30 percent) which is having serious repercussions on the ability of our exports to compete internationally. This in turn has had negative repercussions on the country's growth rate and balance of payment position. Therefore the PML (N) strategy to change the energy mix from furnace oil dependent to hydel dependent must be fully supported.
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