ISLAMABAD: Prime Minister Nawaz Sharif has ‘approved in principle’ the financing plan for the Rs1.45 trillion Diamer-Bhasha dam and hydropower project with a directive to start physical work on it before the end of next year.

According to a statement issued by the Prime Minister Office on Monday, the innovative plan proposing the project financing on a self-reliance basis was presented by Water and Power Secretary Mohammad Younas Dagha.

Informed sources said the government had now made up its mind for a segregated approach to the project financing implementation in view of difficulties in taking on board major multilateral agencies, particularly the World Bank which was reluctant to finance it due to Indian pressure. As a consequence, the Asian Development Bank also had not committed to funding the project as confirmed by its president Takehiko Nakao at a news conference here in October this year.

According to the sources, the presentation on the project financing was made to the prime minister a few days ago. Under the new plan, originally floated by the Water and Power Development Authority (Wapda) in May this year, the project has been divided into two parts to reduce the size of the project and financing requirements.

The PM Office said the dam portion of the project would be funded through Public Sector Development Programme (PSDP) allocations and Wapda-generated resources while the financing for the power generation portion would be arranged on a commercial basis by the water and power ministry either through Wapda or through leasing its existing projects.

The water and power secretary told Dawn that the power generation portion would be funded commercially either by Wapda or by offering it to the private sector.

He said the tentative cost of the project was estimated at around Rs1.450 trillion, including the dam’s cost of Rs550 billion, over a period of seven years starting from 2017-18. It also includes Rs80bn already allocated for land acquisition and other activities.

Mr Dagha said that most of the land for the project had already been acquired two months ago.

Interestingly, the water and power ministry informed the Senate on Nov 24 that 28,247 acres out of 37,419 acres of land required for construction of the project had so far been acquired.

The water and power secretary said the prime minister had ordered finalisation of cost estimates and annual allocation by involving an international consortium of consultants to review the project’s design and cost. “The project’s groundbreaking is planned for end-2017,” he added.

An official said the project would get about Rs60-70bn annually under the PSDP. The prime minister also constituted a committee comprising secretaries of water and power, planning and finance to expedite the process of completing the financial proposal. He asked the water and power secretary to start preparations so that physical work on the dam could start before the end of 2017, the PM Office statement said.

Published in Dawn December 6th, 2016