ISLAMABAD, Dec 17: The government has decided to immediately prepare and negotiate a $17 biillion, 15-year business plan with four leading international lenders for the construction of three major dams in the country, Dawn has learnt.

The decision on the financing of the construction of the Kalabagh, Diamer-Bhasha and Akhori dams was taken at a meeting of the task force on mega dams led by Adviser to the Prime Minister on Finance Dr Salman Shah on Dec 11.

The task force comprises federal secretaries of the ministries of finance, water and power, the economic affairs division and the planning commission. The adviser on water and power, members of the Water and Power Development Authority and other officials of various government agencies are also on the task force.

A senior government official told Dawn on Sunday that the task force was constituted at a recent meeting of the president and the prime minister and was entrusted with the task of starting formal financial preparations for the dams. He added that the announcement of the task force constitution was not made to keep the professional and technical work in a low profile.

The task force decided to create special cells in three federal divisions -- finance, economic affairs and water and power led by respective secretaries -- to become focal points for interaction with foreign lenders.

Water and Power Secretary Ashfaq Mehmood suggested to the task force to create a Special Purpose Vehicle (SPV) to finance and construct the Diamer-Bhasha dam following the international practice of creation of offshore companies for investment and tax purposes.

“This will also enable the government to take up the project along market-based, commercial lines without recourse to normal audit issues and bureaucratic approvals and may encourage even the local private sector to be part of it under the new public-private partnership scheme,” the official said. The task force was informed that initial contacts with the World Bank, Asian Development Bank, Islamic Development Bank and Saudi Fund for Development had already been made and the response was very encouraging.

Some of the lenders, the meeting was informed, needed a broad-based resettlement policy, risk mitigation measures and a long-term business plan along with a repayment mechanism to meet their standards, policy concerns and board approvals.

The World Bank -- because of its experience of resettlement issues of the Tarbela and Mangla dams where many displaced persons are still homeless -- was insisting on a national resettlement policy to satisfy its legal requirements. The bank’s own poor performance in the implementation of the Left-Bank Outfall Drain has caused it to be more vigilant on environment and livelihood issues of the people likely to be affected by the dams construction.

The water and power ministry cell was directed to prepare a national resettlement policy, land acquisition and resettlement mechanism specifically for the three dams, environmental aspects, tender documents, bidding process and prequalification criteria besides financial needs on an annual basis. It would be assisted by Wapda, Nespak and Chief Engineering Organisation, Indus River System Authority, etc.

The ministry of finance will prepare, with input from the water and power ministry, the overall financing requirement for each project on an annual basis, examine terms and conditions of the foreign financing and put in place the repayment schedule. The cell in the economic affairs division, in consultation with the finance and the water and power ministries cell, will act as a one-window operation to hold formal negotiations with the lenders.

The sources said an inter-provincial committee led by Secretary Ashfaq Mehmood and appointed by the Executive Committee of the National Economic Council a couple of months ago approved early this month a land acquisition mechanism for the Diamer-Bhasha dam.

The committee, however, asked the provincial governments to submit their views on construction priorities and related issues of the two other dams, promising that they would be analysed by Wapda which would come up with a plan for consensus within two months. Till such time, Wapda was directed to start an awareness campaign throughout the country in January about the merits and demerits of various dams.

According to the water and power ministry, the total cost of three dams was expected to be about Rs1.027 trillion ($17.1 billion), including a foreign exchange component of Rs433 billion ($7.22 billion). The cost of the Diamer-Bhasha, Kalabagh and Akhori dams were estimated at $6.51 billion, $6.2 billion and $4.44 billion, respectively.

The government plans to seek foreign financing of $2.964 billion for the Diamer-Bhasha, $2.84 billion for the Kalabagh dam and $1.42 billion for the Akhori dam. These three dams are part of the five big dams project President Pervez Musharraf announced in January. The other two daws -- Munda and Kurram Tangi - are in the process of being given to the private sector for construction. The construction of none of the five projects has taken off yet.