The government is considering pledging Tarbela dam's machinery to generate approximately $8.25 billion for Diamir-Bhasha dam as finances from external sources, particularly from international financial institutions, do not seem to be forthcoming for the purpose, official sources told Business Recorder here on Tuesday.
Representatives from Pakistan and India, sitting on the Board of Directors of the World Bank and Asian Development Bank (ADB), have dealt with interventions in the disputed territory of indian held Kashmir by expressing strong reservations about extending any assistance to this area. The exception was in 2004 when ADB Board of Directors approved two loans-one for the Indian held Kashmir and the other in AJK.
Sources said that despite promises by ADB Director General in 2006 that assistance would be considered for five dams proposed by Pakistan government, including Diamer-Bhasha, no assistance is expected.
The World Bank and ADB had declined to extend financing for 969 mw Neelum-Jhehlum hydropower project, being set up in Azad Kashmir. However, the government successfully raised $1.2 billion from different sources, including 10-paisa project-specific tariff increase.
"As the WB and ADB did not agree to finance Diamir-Basha Dam, we are considering hedging turbines of Tarbela Dam to arrange funds from other international financial institutions," sources said. They said that detailed engineering design and tender documents of the project would be ready within a couple of weeks after which it would be ready for international tendering.
The Cabinet in April took a decision that fresh approval for small and large dams must be sought from the Prime Minister, which has not been taken so far. They said that the issue of compensation for the displaced population of Diamir-Bhasha dam was creating some misunderstanding among the possible donors as they have expressed reservations about financing the project.
Sources said that if all things went as planned, construction work on the 4,500 mw Diamer-Bhasha Dam would commence in June next year. Likewise, Kohala Hydropower Project (1,200 mw) and Bunji Hydropower Project (5,400 mw) are expected to start in 2010 and 2011, respectively.
The cost of Diamer-Bhahsa dam with storage capacity of 6.34 million acre-feet (MAF) with power generation capacity of 4,500 mw, has increased from $6.5 billion to $8.52 billion because of the revision of seismic design, displacement of axis by one kilometre required for the foundation of the dam, and strengthening of the weathered rock of the dam.
Another official said that 35 MAF water is wasted every year, equivalent to the capacity of six Bhasha dams, despite the fact that the country is currently facing a 9 MAF shortage which would grow to 15-20 MAF by 2020. It is pertinent to mention here that the present government has scrapped one of the most controversial dams of all times, namely Kala Bagh dam.