ISLAMABAD, Sept 23: The World Bank and the Asian Development Bank have expressed willingness to become investment partners in mega water-sector projects on pure commercial terms against sovereign guarantees instead of providing soft-term developmental loans to the government, it is learnt.

Informed sources told Dawn on Sunday that the government would meet almost half of the project cost through the public sector development programme and the remaining 50 per cent would be arranged through external sources.

For this purpose, the concept of public-private partnership would be promoted so that the private sector, including the international lending agencies could participate as equity partners on the basis of rate of return at market conditions. Even in the case of public-private partnership, the government would have to extend sovereign guarantees for uninterrupted payouts to investors.

This would practically increase the project cost but the problem was that the lending agencies were reluctant to extend developmental loans to the government in the absence of a political consensus on many of the mega water-sector projects.

The government had been pursuing projects such as Kalabagh, Bhasha-Diamer and Akhori dams that needed around $18 billion financing. More than half of this amount would be required in foreign exchange. There had practically been no progress on developing political consensus on Kalabagh dam, whose technical feasibilities were 100 per cent completed while the Bhasha-Diamer dam still required two-three years to reach the kick-off stage. Akhori dam, too, was yet to reach the developmental phase.Sources said that there were clear indications that none of the five large water projects announced by President General Pervez Musharraf in January last year could be completed before the 2016 deadline and, hence, a lot more would be needed to be done to simultaneously overcome the energy crisis in the country. In this connection, the ministries of water and power and finance were firming up plans to develop about 350 small-to-medium power plants of about 25,000 MW generation capacities through private-power partnership in the upper areas of the Indus basin.

The sites for the run-of-the-river projects were identified on river Neelum and Jhelum besides tributaries like Kunhar, Hunza, Gilgit and Chitral.