Arranging finances for the $15-billion Diamer-Basha project is a challenging job under the present economic conditions.
For want of enough resources, the nation has to rely on multilateral and bilateral funding.
The US had recently indicated to provide one billion dollars over a period of five years under the USAID programme.
However, Wapda’s request for an initial amount of $50 million for the current fiscal year is still pending with the USAID whereas release of $200 million on an annual basis was indicated. The US support seems uncertain under the present strained Pakistan-American relations.
The ADB has provisionally committed $5 billion but no major progress has been made as yet. Its Reconnaissance Mission reviewed the project in April 2009 but the Loan Appraisal Mission has yet to visit Pakistan. Prime Minister Gilani and Finance Minister Dr. Hafeez Shaikh have recently urged the ADB to expedite the process.
World Bank assistance is not forthcoming for Diamer-Basha. The bank is concerned about issues pertaining to compliance and governance associated with the dams. Its current policy, procedures, guidelines and standards for planning, design, appraisal, construction, operation and monitoring of large dams are stringent. It may not be financially feasible for Pakistan to conform to these criteria.
These include guidelines on involuntary resettlement, on safeguards for indigenous people, on environmental aspects of dams/reservoirs and environmental assessment.
The World Commission on Dams (WCD) had carried out an independent analytical review of some 50 WB-funded dams. Its report released in November 2000 recommended a set of standards and guidelines to ensure that “dams are built and operated safely, efficiently, economically, and are environmentally sustainable and socially equitable.”
The report has been adopted by international donor agencies as well as the UN Environment Programme (UNEP). The standard criterion of cost/benefit seems to be no more valid for constructing large dams.
Diamer-Basha has drawbacks in meeting the WB standards due to its nature and magnitude, such as impacts on people, river basins and ecosystems. It is estimated that construction of dam would affect over 35,000 persons living in 31 villages, necessitating their resettlement. These people would lose 2,660 acres of agricultural land to dam construction and thus their livelihood. In the past, resettlement and land-related compensation have been inadequately managed, such as in case of Mangla, Tarbela, Ghazi Barotha and Mangla Dam Raising projects.
As many as 280 villages and towns were submerged due to Mangla displacing some 110,000 people. Their rehabilitation was not addressed adequately as dam affectees were not settled properly. A case study of Tarbela revealed that 96,000 persons in 120 villages were displaced but only two-third affected people were qualified for replacement and the government did not release all the land allocated to them.
Likewise, the resettlement in case of Ghazi Barotha, though limited to 900 persons involving land compensation of Rs4.5 billion, has not yet been settled. Displaced population due to construction of Mangla Dam Raising had practically no involvement in resettlement issue— an aspect ignored at planning stage.
Ironically, the Environmental Impact Assessment (EIA) study has not yet been finalised for Diamer-Basha that endangers some 33,000 pre-historic carvings too.
The total land to be acquired is 37,419 acres and resettlement scheme will cost Rs30 billion. Wapda has spent Rs3.3 billion. The government has allocated Rs15 billion under the 2010-11 PSDP, having released Rs2.5 billion so far. Wapda has to raise funds of Rs20 billion from the market.
The 200-sq km reservoir will flood 100-km of KKH requiring relocation of 140-km highway. To meet power requirements during construction a 15-MW hydropower project at Tangir River (30-km downstream of Diamer-Basha Dam) is proposed.
Located in a mountainous, earthquake-prone area, Diamer-Basha is largest and most costly project currently planned in the South Asia. Nonetheless, a multi-purpose project for efficient development and management of water and hydropower resources, like Diamer-Basha, is of crucial importance for Pakistan. Moreover, this would be first mega reservoir project in three decades.
The fact remains that Tarbela and Mangla have made substantial contribution to socioeconomic development. There have been increasing crop intensity and better yield of major food crops; direct benefits from irrigation estimated to be $260 million annually. Hydropower stations at these projects generate more than 20 per cent of national electricity.