ADB refuses to fund mega dam project

[Clutch]

ISLAMABAD: The Asian Development Bank (ADB) on Wednesday declined to commit funds for the $14 billion Diamer-Bhasha dam project and called for governance reforms to encourage private investment and equitable growth for all Pakistanis.

“We did not really make any commitment. This is a very big project,” ADB president Takehiko Nakao said on Wednesday at a joint news conference with Finance Minister Ishaq Dar on the conclusion of the 15th ministerial meeting of the Central Asia Regional Economic Cooperation (CAREC) programme.

He said the United States Agency for International Development (USAID) was conducting a feasibility study on the Diamer-Bhasha dam, adding that while it was a very important project for Pakistan’s energy and irrigation requirements, it called for the formation of more partnerships that could provide funding for the project.

Read: Marketing Diamer-Bhasha dam

“We haven’t decided [whether to fund] this project yet because it needs big money,” he said, adding that the ADB might consider joining the financing of this project at a later date.

Bank’s chief says it may join the Diamer-Bhasha dam project at a later date
The ADB was originally seen by Pakistan as the lead financier of the strategic project, which would have a water storage capacity of over six million acre feet and a power output of 4,500MW. Repeated efforts to rope the World Bank in as a co-lender failed two years ago when the government declined to seek an NoC from India for the project.

Instead, Finance Minister Ishaq Dar accepted a funding offer from the World Bank to start the Dasu Hydropower project, downstream of Diamer-Bhasha, saying the government would simultaneously go ahead with both projects.

The ADB has been advising the government to adopt a professional approach towards the construction of the big dam that cannot be funded by a single institution, country or group given its mammoth financial requirements and the risks involved.

As a way out, the ADB had advised Islamabad to restructure the Diamer-Bhasha dam project by separating power generation, land acquisition and main dam structures and their various modes of financing.

To do that, the government engaged USAID for a feasibility study and is seeking investment from US investors to develop it as an independent power project (IPP). The government is providing funds for the land acquisition of the project through Public Sector Development Programme (PSDP) funds.

The ADB president said Pakistan’s successful completion of a multi-year IMF programme was encouraging, but added that the country still faced several challenges in maintaining its hard-earned gains. He said that deeper structural reforms in the energy sector should continue where smart metering was possible and public sector enterprises should be made more efficient so that private investors — both domestic and foreign — could be encouraged to come forward and contribute.

Mr Nakao stressed that it was very important for Pakistan to continue fighting against corruption, tax avoidance and money laundering, saying that the government should make efforts to minimise these menaces. He said the signing of a tax avoidance treaty with the Organisation of Economic Cooperation and Development (OECD) would greatly help in this regard.

Responding to a question, he said good governance was critical for improving spending on the safety and security of people and raising their living standards. The government should take corrective steps; the sooner, the better, he said.

Responding to another question on start-up problems in ADB-funded projects, he said the bank was currently providing on average $1.5 billion to Pakistan per year, but admitted that it was important to improve implementation standards for accelerated disbursement, timely construction and completion so that the benefits of these projects could reach the people.

He also asked Pakistan to wisely implement projects under the China-Pakistan Economic Corridor (CPEC) and utilise their funds well so as to avoid debt or repayment problems. He said the ADB supported regional integration efforts such as the CPEC because they ensured shared development.

Finance Minister Dar and the ADB chief also witnessed the signing of a $250 million loan-agreement on the ‘Regional Improvement of Border Services’ between Pakistan and ADB to improve border management facilities at Torkham, Chaman and Wagah under the auspices of CAREC.

The projects aims at the modernisation of the physical infrastructure at border crossing points, provision of equipment such as scanners, weighing bridges etc, IT hardware & software support for the transition to a one-window system, and streamlining cross border procedures and capacity development.

The minister said the CAREC ministerial meeting had formally adopted Georgia as its 11th member. Existing members include Afghanistan, Azerbaijan, China, Kazakhstan, Kyrgyz Republic, Mongolia, Tajikistan, Turkmenistan, Uzbekistan and Pakistan.

Multilateral and International development agencies including International Monetary Fund, World Bank, Islamic Development Bank, Asian Development Bank, UNDP, Japanese International Cooperation Agency (JICA), USAID, DFID of UK, European Bank for Reconstruction and Development and the World Trade Organisation also participated in the meeting.

Published in Dawn October 27th, 2016

 

[HAIDER]

This is the word " governance reforms". These two words means alot for PMLn.

 

[Kaniska]

14b is a big money to be loaned for..But is there any plan of action about how the return will recovered out of that investment?

 

[Clutch]

This maybe a signal that CPEC may be coming to a halt till their is some stability or change of pak government ...

 

[maximuswarrior]

Pakistan cannot become hostage of politically motivated tussles. Where billions have already been spent a few hundred million to initiate the project won't make much of a difference. Pakistan should directly approach China and skip the ADB. This mega dam is a vital part to meet our energy requirements. All these banks and other institutes are controlled by outside powers and they won't let anything become a success inside Pakistan. The past history is enough proof. Such projects have been held hostage by banks and outside powers for decades.

He said the United States Agency for International Development (USAID) was conducting a feasibility study on the Diamer-Bhasha dam

You just know how fvcked up things are when you have to rely on USAID for everything including a feasibility study for a mega dam! That is really sad. PML-N owes its very existence to the Americans and this is becoming very clear.

 

[Devil Soul]

‘ADB alone cannot fund Diamer-Bhasha dam’
By Our Correspondent
Published: October 27, 2016
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ISLAMABAD: Just a day after the International Monetary Fund (IMF) chief urged Islamabad to address the corruption issue, Asian Development Bank (ADB) President Takehiko Nakao also said that Pakistan needs to address issues of corruption, tax avoidance and money-laundering to improve governance.

Nakao was addressing a press conference at the conclusion of his two-day visit to Pakistan alongside Finance Minister Ishaq Dar. The ADB president was here to attend the 15th Central Asia Regional Economic Cooperation (CAREC) Ministerial Conference.

Pakistan asks AIIB to fund Diamer Bhasha dam

“The governance issue is very important and it means addressing issues of corruption, tax avoidance and money laundering,” said the ADB president while responding to a question. He, however, maintained that these issues were not only specific to Pakistan, as these were general issues. Nakao said that his bank was making serious efforts to make sure that there is no corruption in ADB-financed projects.

Nakao is the second global personality after IMF Chief Christine Lagarde who advised Pakistan to take the corruption issue head on.

The president said that ADB alone cannot fund the mega Diamer-Bhasha dam project unless other partners joined hands. The cost of the project is around $15 billion, which the ADB president said was “beyond its capacity”. He said that the project was very important for improving the supply of energy and the agriculture sector.

ADB, Pakistan ink deal

Both Pakistan and ADB also signed loan agreements for $250 million to boost cross-border trade activity with neighbouring countries. The Regional Improving Border Services (RIBS) Project will improve border crossing procedures and time for cargo and passengers at three key land border crossing points of Chaman, Torkham and Wagha, according to the ADB.

ADB’s Country Director Werner Liepach and Tariq Bajwa, Secretary, Economic Affairs Division, signed the agreement. “The project will address trade and transport bottlenecks caused by poor infrastructure, facilities and improve procedures at land border crossings with Afghanistan and India,” said Liepach.

Completion of Diamer-Bhasha dam stressed

The project will construct modern border crossing point infrastructure and facilities, compliant with internationally accepted standards in Chaman and Torkham-the two main transit stations for cross-border trade with Afghanistan-as well as in Wagha, the only open land route connecting South Asia to Central Asia. The works will include construction of the border crossing point infrastructure, deployment of security trade facilitation equipment and ICT equipment to link each border crossing point with the central customs and security databases.

Responding to a question, the president expressed hope that the tension between India and Pakistan would not affect Turkmenistan, Afghanistan, Pakistan and India (TAPI) gas pipeline projects, which is expected to export up to 33 billion cubic meters of natural gas per year. He said the project was at detailed feasibility stage and parties should now work to start arranging finances. Nakao said that the ADB may also lend money for this project.

The ADB president advised Pakistan to stay focused and consolidate economic gains that the country made during the past three years under the IMF programme. He said that ADB would increase its lending to Pakistan aimed at supporting its infrastructure and budget financing needs.

Diamer-Bhasha Dam: Construction to begin next year

This year the ADB will lend $1.46 billion to Pakistan including $300 million, another loan for energy sector reforms, said Nakao, adding that the country needs to improve its project implementation mechanisms, as numbers will not make a difference until people start getting benefit from them.

At the Ministerial Conference, CAREC Ministers agreed to formulate a new long-term strategy for CAREC to enhance its relevance in the context of changing economic and development conditions. The CAREC Secretariat will initiate work on CAREC 2025 immediately with a view to completing it by 2018.

The CAREC members comprise Afghanistan, Azerbaijan, the People’s Republic of China (PRC), Georgia, Kazakhstan, Kyrgyz Republic, Mongolia, Pakistan, Tajikistan, Turkmenistan and Uzbekistan.

In a joint statement, the CAREC Ministers noted progress on transport, having reached 93% of their road building or upgrading target to 2020 and adopting a road safety strategy for 2017-2030 that aims to at least halve road fatalities in CAREC by 2030 compared to 2010 levels. This will save an estimated 23,000 lives.

Along the six CAREC transport corridors, 7,230 kilometres of road and more than 4,500 kilometres of rail have been built or rehabilitated. The ministers also adopted a railway strategy to 2030, prioritising six railway corridors aligned with trade routes.

They also noted progress on major energy projects coming on stream. 3,835 kilometres of power transmission lines have been constructed during 2013-2015.

Published in The Express Tribune, October 27th, 2016.

 

[Qutb-ud-din Aybak]

we should finance this project over selves. orange train is not as important. 1 billion dollars every year should be kept for the project. it will take 7,8 years as economy will also improve for more investment.

 

[ziaulislam]

govt needs to stop f***ing around and simply float a mix of foreign expensive bonds(3-4billion dollars), local bonds/banks, use supplier credit and mix of own resources, every country poorer than us have done this successfully

yes this would make the electricity from dam expenisve than coal for first 15 years but thing is project is important for saving down stream tarbela and would increase irrigation and production of down stream electrical resources by 20% which is massive in wake of tarbela expansion and dasu project

 

[ali_raza]

bloody noora.what else bank will do

 

[Hyde]

This maybe a signal that CPEC may be coming to a halt till their is some stability or change of pak government ...

Its got nothing much to do with CPEC my friend

CPEC is just a foundation of infrastructure required for major development. if you start counting foreign investment from China alone thats worth over 100 billion dollars already. For example looks at the existing dams being built by China, Chashma Nuclear power plants and 2x 1000mw power plants in Karachi alone costs around 20 billion dollars or so.

So I wouldn't be surprised if after 1-2 years Diamer Bhasha dam is eventually taken up for construction under the partnership of GoP, China, some middle east countries and World Bank. Our top most priority is large dams but we are too busy in building existing ones that mega projects like Diamer Bhasha comes to hault from time again n again.

Tarbela extension project, Dasu Hydropower project, Neelum Jhelum hydropower project and smaller run of the river projects will ease the pressure of energy demand whilst we look for better and more reliable partner for Diamer Bhasha. Diamer bhasha dam is a reality and sooner or later it will happen Insha'Allah

 

[Blue Marlin]

Its got nothing much to do with CPEC my friend

CPEC is just a foundation of infrastructure required for major development. if you start counting foreign investment from China alone thats worth over 100 billion dollars already. For example looks at the existing dams being built by China, Chashma Nuclear power plants and 2x 1000mw power plants in Karachi alone costs around 20 billion dollars or so.

So I wouldn't be surprised if after 1-2 years Diamer Bhasha dam is eventually built under the partnership of GoP, China, some middle east countries and World Bank. Our top most priority is large dams but we are too busy in building existing ones that mega projects like Diamer Bhasha comes to hault from time again n again.

Tarbela extension project, Dasu Hydropower project, Neelum Jhelum hydropower project and smaller run of the river projects will ease the pressure of energy demand whilst we look for better and more reliable partner for Diamer Bhasha. Diamer bhasha dam is a reality and sooner or later it will happen Insha'Allah

what about hydo projects such as
bunji at 7100mw and kalabagh at 3600mw? are these two being constructed?

https://en.wikipedia.org/wiki/List_of_power_stations_in_Pakistan#Hydroelectric

 

[Hyde]

what about hydo projects such as
bunji at 7100mw and kalabagh at 3600mw? are these two being constructed?

https://en.wikipedia.org/wiki/List_of_power_stations_in_Pakistan#Hydroelectric

Kalabagh is pending since 1980s and will not be constructed due to internal conflict between the provinces. It may eventually be completed after design change and when rest of the major projects have been completed.

Bunji was committed and partially funded by China before some technical issues delaying the project. It will eventually be completed but the highest prorioty of Government seems to be

• Neelum Jhelum Hydropower project (due to be completed next year)
• Tarbela IV Extension Project (due to be completed next year and will add another 20-30 years of life into Tarbela dam)
• Dasu Hydropower project funded by World Bank, ADB, Government of Pakistan, China and Germany. The first phase is likely to be completed in 5-6 years
• Several small run of the river projects such as Golen Gol

We are already talking about multi billion dollars worth of investment so Bunji Hydropower project will come to the fore when some of these projects have been completed. I am hoping after 5-6 years the government will be in much better position to take up some of these projects by their own and that will mean partially funded by the government itself. Right now we have been seeking loans for completion of all hydropower projects and not in position to share the cost of project.

 

[Blue Marlin]

Kalabagh is pending since 1980s and will not be constructed due to internal conflict between the provinces. It may eventually be completed after design change and when rest of the major projects have been completed.

Bunji was committed and partially funded by China before some technical issues delaying the project. It will eventually be completed but the highest prorioty of Government seems to be

• Neelum Jhelum (due to be completed next year)
• Tarbela IV Extension Project (due to be completed next year and will add another 20-30 years of life into Tarbela dam)
• Dasu Hydropower project funded by World Bank, ADB, Government of Pakistan, China and Germany. The first phase is likely to be completed in 5-6 years
• Several small run of the river projects such as Golen Gol

We are already talking about multi billion dollars worth of investment so Bunji Hydropower project will come to the fore when some of these projects have been completed. I am hoping after 5-6 years the government will be in much better position to take up some of these projects by their own and that will mean partially funded by the government itself. Right now we have been seeking loans for completion of all hydropower projects and not in position to share the cost of project.

what is the internal conflict with kalabagh?
any recent news on it.
im more interested in this dam as it has the most potential to produce more power 7100mw

 

[Hyde]

what is the internal conflict with kalabagh?
any recent news on it.
im more interested in this dam as it has the most potential to produce more power 7100mw

7100mw is for Bunji Hydropower project. It's technically not a dam, just a reservoir but not anything like Diamer-Bhasha Dam or Kalabagh dam with capacity to irrigate millions of acres of land for agricultural purposes.

Well the people of KPK and Sindh had reservations about Kalabagh Dam.

The KPK government particularly (ANP Party) believes that KPK will suffer the most after construction of Kalabagh Dam. Some of their cities will have to be submerged, around 100,000 people will be relocated and there will be a lot of havoc in the province. Then the design is such that it ends up generating electricity in the region of Punjab so KPK will not be able to collect adequate financial benefits from it.

The Sindh Government (PPP Government) maintained a stance that the water will be stored in Punjab and Sindh is already suffering from water crisis and it is likely that their due share of water may not be given to them if it is stored by Punjab. It is just a misconception created for political reasons as the water will obviously flow through the indus river and being a same country, they wouldn't want to block the water anyway.

The bottom line is, their reservations could have been addressed after providing adequate share in the project but I believe ANP and PPP made it more like a political issue and the situation has been such from where it is almost impossible for them to backtrack from their original stance. So the incumbent government since 1980s have been trying to explore alternatives in order to avoid any genuine tussle amongst the provinces and have been postponing the project despite being the cheapest and most convenient Hydropower project with potential to irrigate millions of acres of land. The Diamer-Bhasha dam is much bigger project compared to Kalabagh but the problem it has is, Its situated in parts of Kashmir and upon immense pressure from the Indian government, It has not been able to secure funds from International community. Also, we have explored alternatives as the first priority so the government wants to build those projects first which can be completed with least of headache and provide similar results for the national economy. The Diamer-Bhasha dam is likely to be built after finding adequate funds which is not going to be far considering the GDP of Pakistan has also been growing respectively and they will be in much better position to partially fund the project by their own.

 

[Rashid Mahmood]

Simply,
they don't trust the corrupt leadership with the funds.