ISLAMABAD: The government is contemplating a plan-B to arrange funding for the $12 billion Diamer-Bhasha dam project through bilateral institutions after declining an Asian Development Bank suggestion that Pakistan should secure a no-objection certificate from India to seek multilateral funding for the project.
The decision in principle was taken at a meeting presided over by Minister for Water and Power Chaudhry Ahmad Mukhtar on Monday and attended by representatives of the ministries of finance, water and power, and economic affairs, Wapda and the Planning Commission, an official told Dawn.
Wapda was asked to submit a status report along with details of its plan-B by Wednesday so that it could be discussed with the finance minister and the deputy chairman of Planning Commission in a meeting slated for Friday to review the overall financing problems being faced by water sector projects.
Wapda Chairman Shakil Durrani told the meeting that ADB had been supportive of the dam project all along in doing the paper work in line with its safeguard guidelines and on at least three occasions had committed to providing up to $4 billion.
Of late, however, it had started to show reluctance and desired that Pakistan should get an NoC from India for the project because it was located in a disputed territory.
Mr Durrani told the meeting that the ADB’s request had been rejected.
“Why should we seek an Indian NoC now when all documentation for the project has been finalised in line with the ADB’s safeguard guidelines and we have even got the project approved from the Council of Common Interests to meet a demand of the Manila-based organisation. All settlement and environmental issues have also been taken care of in accordance with the ADB parameters,” he said.
In Mr Durrani’s assessment, the lending agency is reluctant to commit its higher portfolio of such a size ($12 billion) while the World Bank is not committing anything.
According to sources, the United States had also discussed a lot of things and taken away data with an initial commitment to provide up to $1 billion in annual instalments of $200 million, but this had remained short of becoming a reality.
Dilating upon the plan-B, Mr Durrani said an option was to persuade the ADB to provide funding only for the civil works that would not relate to environmental and resettlement issues and meet the need for the remaining part of the project through local financing and other friendly sources.
The options included pledging some of the remaining water sector projects to raise Islamic and conventional bonds for the dam but most of these assets had already been pledged against international loans, an official said.
He said the Islamic Development Bank and China were ready to provide partial funding and support to the project but none of them was ready to fund the entire project.
The Economic Affairs Division told the meeting that a Middle Eastern group was also interested in the project because it offered more than 18 per cent rate of return on equity that meant 100 per cent recovery of investment in five years.
The minister said the government was determined to constructing the project and all options were being considered to complete it in the shortest possible time.
The meeting asked Wapda to furnish the report with all the options and commitments from donors.