WASHINGTON: The United States and Pakistan have agreed to explore innovative financing for the Diamer Bhasha Dam, says a statement issued by the Pakistan Embassy.

The statement said that various options for financing the project were discussed at a meeting between Finance Minister Ishaq Dar and USAID Administrator Rajiv Shah.

The United States opposes major hydro projects due to environmental concerns but appears willing to make an exemption for Pakistan because of its acute energy needs which, if not fulfilled, can de-stabilise the entire region.

The two sides noted that the three equity funds which had been given $20 each under Pakistan Private Investment Initiative were now in the process of raising matching capital and would soon begin lending funds to the small and medium enterprises.They agreed that since the mood of the investors and lenders towards Pakistan was positive; it was an opportune moment to have conferences on Diamer Bhasha Dam in which major construction firms might be invited.

Dr Shah informed the Pakistani delegation that US firms would be interested in financing the dam and might also supply machinery for the project through the US EXIM Bank when it reached the construction phase, the statement said.

The finance minister said that holding of potential investors’ conferences on Diamer Bhasha Dam and approval of the Dasu Hydropower Project were aligned with the stated policy of the PML-N government.

He complained that while the US EXIM Bank was offering finances to other countries in the region for a period of 20 years without sovereign guarantee. In case of Pakistan, the period of financing was 7 years and for that a sovereign guarantee was required.“This treatment was denying a level playing field and discouraging investments in Pakistan,” Mr Dar said.

Dr Shah promised to look into the matter and also to hold conferences on Diamer Bhasha Dam after the approval of the Dasu Hydro Project by the World Bank as this would send strong signals about the improved health of Energy Sector in Pakistan.

Diamer Bhasha Dam is a gravity dam, in the preliminary stages of construction, on the River Indus in Gilgit-Baltistan. Former prime minister Yousuf Raza Gilani laid its foundation stone on Oct 18, 2011.

Upon completion, the dam would be the highest RCC dam in the world and would produce 4,500 megawatts of electricity.

It would also extend the life of Tarbela Dam located downstream by 35 years; and control flood damage in the Indus valley.

It will have a height of 272 metres spillway with 14 gates each 11.5 m x 16.24 m. The gross capacity of the reservoir will be 8,100,000 acre feet, with a live storage of 6,400,000 acre feet.

Pakistan is working on both medium and long-term power projects to meet its acute energy shortages and Pakistani officials believe that projects like Diamer-Bhasha and Dasu will go a long way in enhancing power supply to both domestic and industrial users.

The Pakistani media reported last week that the electricity shortage had now shot up to 6,000MW, forcing authorities to resort to 12 to 18 hours of load-shedding.The governments feels that continued energy shortages could do an irreparable damage to its reputation and can also cause it to lose the next elections, as it did to the previous government.