ISLAMABAD, April 25: The World Bank has agreed to arrange $9 billion to help build one major water reservoir and two run-of-the-river projects, to enable Pakistan to cope with water and electricity shortages.

Sources said on Friday that the government was setting up a multi-purpose water reservoir financing cell on the advice of the World Bank to oversee the construction of five large dams. Initially, the sources said, the WB funding would include $8 billion for the Diamir-Bhasha dam and the two run-of-the-river projects, each costing $500 million. The dam’s feasibility study is expected to be completed in April and the project is likely to be completed by 2016.

The WB has indicated that it will raise a consortium for the projects.

The government has directed Wapda to hasten work on the Bhasha dam because it is in an advanced stages compared to other projects, like Kalabagh, Munda, Kurrum Tangi and Akhori dams.

The sources said that Wapda had informed the government that the dam’s cost include an additional $1 billion for laying a transmission line, building road network and other civil works. “For the power house and reservoir, foreign funding needs to be arranged while the additional funding will have to be arranged by the government if … it wants to complete the project on time,” they said.

Wapda is expected to sort out issues like resettlement, cost of land, acquisition of land and environmental impact studies. The sources said that the project’s cost would have to be re-evaluated to include the impact of inflation.

It is learnt that the dam’s storage capacity is likely to be reduced from 7.34 million acre feet (MAF) to 6.34 MAF because of the likely modification in its design.

The Diamer-Bhasha dam – to be located on River Indus about 314 km upstream of Tarbela and about 165 km downstream of Gilgit – is expected to create a reservoir with a gross capacity of 7.3 million acre feet. The dam will have a power generation capacity of 3,360 megawatts.

The sources said that the government was planning to borrow $20 billion from international banks to build Bhasha and Kalabagh dams and the Neelum-Jhelum hydro-electric project.

The World Bank and the ADB want the government to complete feasibility studies for the projects. So far, the study for Kalabagh dam has been prepared.

The chief executive of the Infrastructure Project Development Facility, an office of the ministry of finance, Mr Ijaz Ahmad, said that the government had changed its strategy for arranging funds for large dams. “A separate company will be set up to raise finances for each dam, and the government has decided to arrange $16 billion for the Neelum-Jhelum, Kalabagh and Diamer-Bhasha dams,” he said.