The lenders have asked the government to “review the constitutional clause” that profits from hydropower generation will go to the province in which a hydropower station is located. - File photo

ISLAMABAD: International lenders have asked the government to ‘reconsider Kalabagh dam’ as a priority water sector project and introduce constitutional amendments in parliament for cost- and benefit-sharing of new reservoirs among relevant stakeholders.

According to a report of the water task force of the Friends of Democratic Pakistan (FoDP), lending agencies and bilateral development partners have also advised the government to impose a surcharge of about one US cent per kwh of electricity and $5 on each irrigated acre to raise $1.7 billion (Rs150 billion) to fund a key component of a host of infrastructure projects for irrigation, flood control and hydropower generation.

The report, a copy of which is available with Dawn, says that when Tarbela and Mangla dams were built about 50 years ago it was expected that a new reservoir of the size of Tarbela would need to be built every ten years to meet the challenge of water and increase the production of hydel power.

“To the eternal shame of all involved, 50 years later only two minor additions have been made -- some additional hydroelectricity capacity at Ghazi Barotha and the recent raising of Mangla dam. For decades a deadly combination of internal dissension and external prevarication precluded the building of new large dams.”

The report praised a decision of the Council of Common Interests to develop a consensus on Diamer-Bhasha dam following differences over Kalabagh dam, but insisted that “it is important for Pakistan to reconsider Kalabagh”.

The task force’s recommendations imply a total investment of about $5.5 billion in five years — $3.5 billion federal and $2 billion provincial investments. It has strongly recommended to the governments of participating countries and lending agencies to support such investments, including for Bhasha dam.

“This is important because the stream of costs and direct benefits yields a net present value of $97 billion and an internal rate of return of about 16 per cent, in addition to large indirect benefits,” the report says.

The estimates are based on ongoing projects of Bhasha, Dasu, Munda, Kurram Tangi, Bunji and Kohala hydropower which will increase the country’s hydropower capacity from 6,400MW to 26,000MW and provide an additional water storage capacity of about 10 million acre feet.

The government has also been asked to address at least four fundamental issues relating to Bhasha dam to get maximum funding from lenders, particularly the World Bank. These include standard international competitive bidding for the project, equitable sharing of profits among the affected provinces and “early attention to the resettled and affected people to make sure that they are the first beneficiaries of the project and welcome it”.

The lenders have asked the government to “review the constitutional clause” that profits from hydropower generation will go to the province in which a hydropower station is located. Three per cent of hydropower revenues should be assigned to the affected provinces and three per cent to the affected municipalities. Shares of the amount should be calculated on the basis of areas and the number of people affected, the report suggests.

This is based on the past experience of Tarbela where there was a dispute over numbers. Wapda considered that the issue of resettled people was dealt with by payments to the revenue department of Khyber Pakhtunkhwa. However, there is no mechanism to ensure that the payments reach the affected people.

The results have been decades of hardship for the resettled people, lingering injustice and a general sense that local people will inevitably be collateral damage from such projects.