Diamer Bhasha Dam: New developments made

[AZADPAKISTAN2009]

With the Cheap labour force in Pakistan and lot of unemployed I would imagine the cost to build DAM would be less

 

[khanasifm]

There is enough black market and tax evader in the country even
If 50% are
Made of pay 10 dams could be built

But the big question is “if”

 

[SSGPA1]

Pakistan doesn’t really have problem with electricity generation at this time and more capacity is being constantly added, there has been an extraordinary increase in the last 5 years or so. Pakistan’s problem is that your electricity companies that run the distribution end are bankrupt and in an ever increasing cycle of massive debt . It ( the dam) will probably help in 10 years if it does get completed but Pakistan’s power issues are elsewhere, not at the generating end.

Pakistan need reservoirs, this dam will serve that purpose as well.

Most cost -

1. Management
2. Engineering and technical expertise
3. Machinery. Drilling, boring, dynamite, trucks, cranes etc
4. Matariels
5. Labour comes last

Most of 1,2,3, some of 4 will come from abroad. This is where instead of having our children in schools, universities learning technical subjects smacks us in the face. Instead we have good chunk of them not at school and another chunk in madaris learning about. Well what they definitely don't learn anything about how to build dam!

I agree. If we had the unity, organisational and discipline of Japanese or Ancient Egyptians who built the pyramids this could be done. But Pakistan does not have that discipline. stand at crossroads in Pakistan and see the chaos.

Good point but we can get these services/ professionals from China. They have experience of building Longtan dam that is the same type of dam.

 

[SSGPA1]

The cost of this dam is estimated at $8 billion US by the Ahsan Iqbal from PMLN. After Nandipur and Solar Park experiences, can we trust cost estimates from PMLN and PPP? No.

Here is my article on exaggerated cost of Diamer-Bhasha Dam and proposal on a commercial fundraising model - https://www.commandeleven.com/the-exaggerated-cost-of-diamer-bhasha-dam/

The exaggerated cost of Diamer Bhasha dam!

As per many local and international experts, Pakistan is facing an existential security risk because Pakistan is on path of becoming one of the most water-stressed country in the world. This crisis will only worsen because glaciers are melting at a faster rate, threatening Pakistan’s agricultural land that is one of the lifelines of Pakistan.

The main reason behind the waste of water is lack of reservoirs and proper management of water. This crisis has resulted in another major issue - shortage of power.

The Diamer Bhasha dam fulfills both requirements of storage and power generation (3).

The honourable Mr. Justice Mian Saqib Nisar, Chief Justice of Pakistan, has launched a campaign to raise money to build this dam (4). The Prime Minister in waiting, Mr. Imran Khan, has also stated that Bhasha dam project is a top priority (5). building a dam is not a social cause, it is a commercial endeavor and must be treated as such.

Let’s take a look at the concern that may delay this project:

The biggest concern is the cost of Diamer Bhasha dam – Dams don’t come cheap but the estimated cost of Diamer Bhasha dam is grossly exaggerated at a range of US $12 - $14 billion (6)(7). China has built a much larger dam, the Longtan dam, at a cost of US $4.2 billion dollars. The Longtan dam is a RCC dam (same as proposed Bhasha dam) with a capacity of almost 17 million acre ft and a power station with 6400 MW capacity (8).

Solution: Immediate validation of proposed cost and timelines

• Step 1A – Form a cross-functional, qualified project team with team members from WAPDA, Parliament, bureaucracy, judiciary, civil society and overseas Pakistani community. The expertise offered by the overseas Pakistani community is unmatched therefore Pakistan need to utilize their expertise. In order to keep to avoid corrupt practices, this team must be compensated as per international standards.
  • The mandate of project team will be to validate:
    • construction timelines,
      
      
    • cost of construction,
      
      
    • fund raising for the project,
      
      
    • procurement and awarding of all tenders/ contracts.

The price breakdown will need to be reviewed by procurement experts to properly estimate the cost by means of checking the market. The project team will send their recommendations that will need review and approval of the GoP.

• Step 1B – timeline and technical validation need to take place in parallel to cost validation. Such projects are often delayed and, in many cases, projects go over the budgeted amount. These delays and cost increases are due to lack of proper planning, corrupt practices and poor management. The purpose of timeline validation is to remove delays and find efficiencies in timelines.

Do we need a RCC (Roller Compacted Concrete) dam? Yes, because the project has gone through multiple reviews in the last 16 years and project has been approved by experts. A RCC dam is considered a cost effective design. China and US have built similar dams in mountainous/ high altitude regions.

Below is pic of the Willow Creek RCC dam in the USA (9):

Funds for Diamer Bhasha dam project:


As stated above, is a commercial endeavor and must be treated as such. At this point, no international investor, including China is wiling to fund the project.


A funding method that will raise funds is Equity Crowdfunding. In an Equity Crowdfunding, a company’s securities/ shares are offered to people in exchange of investment in a commercial opportunity. Pakistan will need to customize the methodology to meet the funding requirements for this project. Here is a possible structure:

Sell 2 million shares at $2,000 each and 2 million shares at $1,000 each (difference is payment of dividend etc.)

Total investment is US $6 billion.

Some of the open items that need to be looked at:

1. Total cost of project.
   
2. Actual time of completion.
   
3. Percentage of total cost that need to be fulfilled by selling of shares.
   
   1. If total cost is US $6 billion and 49% is to be invested by shareholders then total investment required will be approx. US $2.9 billion.
      
4. When does the dividend or investment start?
   
5. Can GoP offer tax exemption on capital gains and dividends?
   
6. What is the maximum number of shares that an individual can purchase?
   
7. Large investors i.e. banks, individuals, etc.
   
   1. Does the project need large investors?
      
   2. What percentage of total cost can be provided by large investors?
      
   3. What is the cap for such investors?
      
   4. Do they only get interest? Can they get mix of low interests and dividends?
      
8. When do the project offer buy back options? WAPDA, GoP or Gilgit-Baltistan (GB) may plan to buy back shares from shareholders after a certain number of years from project completion date.
   
9. How much can be earned from renewable energy/ carbon credits?
   
10. What percentage of revenue will go to the govt of Gilgit-Baltistan?
    

Possible revenue from the project:

The net profit from power generation of the project can be paid back as dividends to shareholders. For clarity, the net profit will be achieved after expenses and payment of royalty (if any) to the govt of GB.

Here are some previous estimates:

• Annual generation 19,028 GWh or 19 million MWh (3)
  
  
• Operation cost 20% (10)
  
  
• Cost pay-off in seven years (11)
  
  
• Generate electricity worth $1.5 billion and supply irrigation water worth $600 million per year (11)

Let’s assume that estimates about revenue from electricity are valid and shareholders have invested $6 billion then dividend will be $300 per share. This is after subtracting 20% in OpEx cost and there is no royalty for GB for the first few years.

It will not be as simple as shown above and the estimates and proposed dividend plan will need to be validated by experts.

Conclusion:


Prime Minister Imran Khan, has stated that Bhasha dam project is a top priority (5). This is a good omen for the Bhasha dam project, as the govt, the opposition, the judiciary, the military and all relevant stakeholders are aligned on the need of building the Diamer Bhasha dam.


Nandipur, Quaid-e-Azam solar park, Orange Train etc. end up costing 2-3 times more than they should have cost, a safe expectation is that the incoming govt will make all efforts to start the project after validating the costs provided by the previous regime. Pakistan needs the Diamer Bhasha dam to be a success for its future generations and with all stakeholders aligned, success is entirely possible.

References are available at - https://www.commandeleven.com/the-exaggerated-cost-of-diamer-bhasha-dam/